Hello everyone and welcome back to chain reaction.
Last week we talked about the difficult 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 Chain Reaction Podcast also.
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May has not been the friendliest month for crypto. Back-to-back weeks of drops have left whispers of “buy the dip” turning cold as industry players buckle up for the winter.
A brief moment of warmth came this week when Andreessen Horowitz (a16z) announced it had raised $4.5 billion for its fourth crypto fund, which is more than double the size of its last fund. It’s the largest institutional crypto firm to date, and it comes at an interesting time…
While VC firms around the world have been pushing their portfolio companies to lower burn rates and buckle for bad times, many crypto founders have already prepared for this moment by raising stupid amounts of money from VCs just to avoid raising it to need cash later. While the tech industry has by and large not suffered a prolonged recession since the early 2000s, crypto startups have experienced much narrower boom-and-bust windows. Although many coffers are full, it is safe to assume that a crypto winter will put many venture-backed startups on hold.
A16z hasn’t revealed too many details about their exact plans for this fund, but interestingly they have detailed that they plan to spend at least $1.5 billion of the fund on seed deals. That’s a lot of seed deals — probably hundreds of them — coming from a single fund.
The question is whether the rest of the venture ecosystem around crypto will persist. Many hedge fund newbies to the markets have been burned and other traditional venture firms seemed awkwardly poking their heads into this cycle and may be just around the corner.
For a market that’s been churning with dumb money for a couple of years, any sort of pullback will let startups down, and a16z’s focus on early-stage companies with its new fund could be difficult for companies with growth dollars in mind.
new man, new man?
Now that Lucas has given you the breakdown on a16z, Anita is here to catch you up on the latest episode of the Chain Reaction podcast, where we unpack the latest web3 news block by block for the crypto curious.
We’ve talked a lot about Andreessen Horowitz, who really said, “What downturn?” this week and announced the largest dedicated crypto venture fund of all time. Granted, much of this capital was likely raised before the crypto markets started to tank, but we unpacked the famous firm’s strategy and discussed a slightly dodgy investment it just made in a well-known grifter’s new blockchain startup (hint: He kind of looks like Jared Leto).
For our guest, Lux Capital investor Grace Isford joined us to talk about the infrastructure that works behind the scenes to make the Web3 technology run smoothly.
Subscribe to Chain Reaction Apple, Spotify or your alternative podcast platform of choice to keep up with us each week.
follow the money
Where startup funds are moving in the crypto world:
- Metaverse App from Singapore BUD closed $36.8 million in a Series B round led by Sequoia Capital India.
- NFT based social platform primitive raised a $4 million seed round with Redpoint as the lead investor.
- Launch of NFT fraud detection Double raised $5 million in seed funding led by FTX Ventures.
- DAO community management platform Spread raised $20 million from Spark Capital, Polychain and others.
- Carbon credit tokenization protocol Flowcarbon raised $70 million through a Series A round led by a16z and private token sale.
- Blockchain Infrastructure Provider StarkWare completed a $100 million Series D led by Greenoaks Capital and Coatue.
- DeFi app for personal finance pebble raised a $6.2 million seed round led by Y Combinator.
- Digital Wealth Manager babel finance raised $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 capital from Cassius Family, SV Angel, Angel investors Steve Aoki and David Guetta, and others.
- Crypto tax preparation software ZenLedger snagged $15 million in a Parafi-led Serie B.
the week on the web3
Everyone has been talking about a cooldown in crypto markets, but as reporters covering the space, we’ve felt busy as ever. It seems like venture investors are also busy trying to deploy huge amounts of capital, most of which they raised before the markets went down.
The firms that are currently raising new funds seem convinced that there are still some left lucrative opportunities out there in the crypto startup world, and that this downturn will simply separate the winners from the losers. (They hope their portfolios already contain the winners.)
- A16z Web3 fund whopper speaks of her commitment to the space even as other firms pull out, investor Arianna Simpson said Luke in an interview.
- Soona Amhaz’s Volt Capital announced a $50 million crypto fund, just over a year after the launch of its $10 million vehicle. Marc Andreessen and Chris Dixon are among the familiar faces behind Amhaz. Lucas has the details here.
- anita written about a Twitter drama that unfolded this week as the founder of fintech startup Eco took to the platform to accuse the founders of Y Combinator-backed Pebble of copying his business model. The battle between the startups, both of which use stablecoins to generate returns, has caused some to question the investment approach of accelerators like YC.
Curated analysis available to read on our subscription service TC+ (written by TC’s Jacquelyn Melinek):
The Terra community adopts the proposal to revive the LUNA cryptocurrency after the implosion caused by stablecoins
Nine days ago, Terraform Labs (TFL) founder Do Kwon shared a plan to revitalize the Terra ecosystem after its stablecoin and cryptocurrency collapsed earlier this month, taking crypto markets with it. Now the Terra community has approved the plan for a new Terra 2.0 that not everyone is sure will succeed. Will history repeat itself?
StarkWare Quadruples Valuation To $8B In 6 Months, Closes Round In Troubled Market
Crypto markets may be choppy at the moment, but major players are still raising capital as demand for scalable blockchain infrastructure remains strong. The most recent example of this fact is StarkWare Industries, which just raised $100 million at a valuation of $8 billion, the company announced on Wednesday. The new funding came just six months after the unicorn closed a $50 million Series C, quadrupling its valuation from $2 billion to $8 billion.
Mastercard exec bullish on crypto, sees mass adoption ‘sooner rather than later’
Both large and small companies maintain their crypto bullishness despite the recent market correction in the evolving tech space. According to Harold Bossé, VP of New Product Development and Innovation at Mastercard, mass adoption of blockchain technology and digital assets will happen sooner rather than later. But there are currently a number of challenges preventing companies from entering the market, Bossé said, including a lack of management understanding and regulatory concerns.
Luna Foundation Guard adviser says Do Kwon has not spoken since the UST crash
There seems to be no shortage of news surrounding Terraform Labs’ imploding cryptocurrency LUNA and algorithmic stablecoin TerraUSD (UST). Last Friday, one of the Luna Foundation Guard’s four advisors (the was Terra (Singapore-based nonprofit dedicated to protecting UST) told TechCrunch that there have been no meetings with Terra founder Do Kwon since UST crashed. How is the advisor keeping up with the Terra situation? Via Twitter like everyone else, he said.
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Can Andreessen Horowitz prevent the next crypto winter? – TechCrunch Source link Can Andreessen Horowitz prevent the next crypto winter? – TechCrunch
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