Hey everyone, and welcome back to Chain reaction.
Last week we talked about the tough road ahead for Coinbase. This week we talk a little bit about Andreessen Horowitz’s multi-billion dollar bet on the continued viability of web3. Read on to see the latest episode of the Chain Reaction Podcast also.
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May has not been the friendliest month to crypto. Consecutive weeks of declines have left the “buy the dip” whispers turning cold as industry players cling to winter.
A brief moment of warmth came this week, when Andreessen Horowitz (a16z) announced it has raised $4.5 billion for its fourth crypto fund, more than doubling the size of its latest fund. It is the largest institutional crypto company to date and comes at an interesting time…
While VC firms around the world have been pressuring their portfolio companies to cut burn rates and push for bad times, many crypto founders were already prepared for this moment, raising stupid amounts of money from VCs, only to avoid having to collect cash afterwards. While technology generally hasn’t experienced a prolonged recession since the early 2000s, crypto startups have endured much tighter periods of boom and bust. Despite the treasury being full, it’s reasonable to assume that a crypto winter will put many venture-backed startups on ice.
A16z didn’t give too many details about their exact plans for this fund, but they did indicate interestingly that they plan to spend at least $1.5 billion of the fund on seed deals. That’s an awful lot of seed deals – probably hundreds – coming from a single fund.
The question is whether the rest of the venture ecosystem will stick around crypto. Numerous hedge fund entrants have been burned into the markets, and other traditional venture firms have seemed sheepish in this cycle and may already be close to the door.
For a market that has been buzzing with stupid money for a few years now, any slump will fail startups, and a16z’s focus on young companies with their new fund could prove difficult for companies seeking growth dollars.
neumann, new man?
Now that Lucas has given you the breakdown of a16z, Anita is here to update you on the latest episode of the Chain Reaction podcast where we unpack the latest web3 news block by block for the crypto-curious.
We talked a lot about Andreessen Horowitz, who really said, “what downfall?” this week, announcing the largest dedicated crypto venture fund ever. Admittedly, much of that capital was likely raised before crypto markets started to tank, but we unpacked the legendary company’s strategy and discussed a somewhat questionable investment it just made in a well-known scammer’s new blockchain startup (hint: he looks a bit like Jared Leto).
For our guest, we had investor Grace Isford of Lux Capital with us to talk about the infrastructure that works behind the scenes to make web3 technology run smoothly.
Subscribe to Chain Reaction at Apple† Spotify or your alternative podcast platform of choice to join us each week.
Follow the money
Where seed money moves in the crypto world:
- Metaverse app in Singapore KNOB closed $36.8 million in a Series B round led by Sequoia Capital India.
- NFT based social platform Primitives has raised a $4 million starting round with Redpoint as its lead investor.
- Start NFT Fraud Detection Double scored $5 million in seed funding led by FTX Ventures.
- DAO Community Management Platform Common has raised $20 million from Spark Capital, Polychain and others.
- Carbon Credit Tokenization Protocol Power carbon Raised $70 million through a Series A round led by a16z and a private token sale.
- Blockchain Infrastructure Provider StarkWare closed a $100 million Series D led by Greenoaks Capital and Coatue.
- DeFi personal finance app pebble has raised a $6.2 million seed round led by Y Combinator.
- Digital asset manager Babylon Finance scored $80 million in a Series B round from Jeneration Capital, 10T Holdings, Dragonfly Capital and others.
- NFT social marketplace bubble house raised $9 million in seed funding from Cassius Family, SV Angel, angel investors Steve Aoki and David Guetta, and others.
- Crypto Tax Preparation Software ZenLedger grabbed $15 million in a Series B run by Parafi.
the week in web3
Everyone has been talking about a cooling off in the crypto markets, but as reporters covering the space, we’ve been busy as always. It seems that venture capitalists are also busy putting to work huge amounts of capital that they had largely raised before the markets went south.
As for the companies currently raising new funds, they seem convinced that there is still lucrative opportunities out there in the crypto startup world, and that this downturn will simply separate the winners from the losers. (They hope their wallets already contain the winners.)
- A16z’s whopper of a web3 fund speaks to their commitment to the space, even as other companies pull out, investor Arianna Simpson told Lucas in an interview.
- Volt Capital of Soona Amhaz announced a $50 million crypto fund just over a year after it debuted its $10 million vehicle. Marc Andreessen and Chris Dixon are among the familiar faces behind Amhaz. Luke has the details here†
- Anita wrote about a Twitter drama that unfolded this week when the founder of fintech startup, Eco, took to the platform to accuse the founders of Y Combinator-backed Pebble of copying and pasting its business model. The battle between the startups, which both use stablecoins to provide returns, has caused some to question the investment approach of accelerators like YC.
Compiled analysis you can read on our subscription service TC+ (written by Jacquelyn Melinek of TC):
Terra’s Community Approves Proposal to Revive LUNA Cryptocurrency After Stablecoin-led Implosion
Nine days ago, Terraform Labs (TFL) founder Do Kwon shared a plan to revitalize the Terra ecosystem after its stablecoin and cryptocurrency took a nosedive earlier this month, bringing down crypto markets. Now the plan has been approved by Terra’s community for a new Terra 2.0, which not everyone is sure will succeed. Will history repeat itself?
StarkWare Quadruples Valuation to $8 Billion in 6 Months, Closing Round in Choppy Market
Crypto markets may be choppy right now, but major players are still raising capital as demand for scalable blockchain infrastructure remains strong. The most recent example of that fact is StarkWare Industries, which just raised $100 million at a valuation of $8 billion, the company shared Wednesday. The new capital came just six months after the unicorn closed a $50 million Series C, quadrupling its valuation from $2 billion to $8 billion.
Mastercard exec is bullish on crypto, sees mass adoption ‘sooner rather than later’
Both large and small companies are maintaining their crypto optimism despite the recent market correction in the evolving technology space. According to Harold Bossé, Mastercard’s vice president of new product development and innovation, the mass adoption of blockchain technology and digital assets will happen sooner rather than later. But there are a number of challenges currently holding companies back from entering the market, Bossé said, including a lack of understanding from senior management and regulatory concerns.
Luna Foundation Guard Adviser Says Do Kwon Hasn’t Contacted Since UST Crash
There seems to be no shortage of news regarding Terraform Labs’ cryptocurrency LUNA and its algorithmic stablecoin TerraUSD (UST) imploding. Last Friday, one of Luna Foundation Guard’s four advisers (who used to be Terra’s Singapore-based nonprofit dedicated to protecting UST), told MovieUpdates that there have been no meetings with Terra founder Do Kwon since UST crashed. How does the advisor keep track of the Terra situation? Via Twitter like everyone else, he said.
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