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The Binance Web3 fund will fund early-stage private projects across various stages, including incubation, early-stage and late-stage growth.
Binance has raised $500 million for a fund dedicated to Web3 start-ups through its Binance Labs venture arm. This comes amid a sustained general downturn in the prices of digital currencies since the record highs seen in November. However, from Binance’s perspective, Web3 is a fast-evolving, opportunity-laden concept where its new capital fund can help secure an early spot. The $500 million fund will facilitate projects in varying stages, including incubation as well as early-stage and late-stage growth. In addition, these projects will cover not just Web3 but also the interwoven crypto as well as blockchain adoption.
As Binance chief executive officer Changpeng “CZ” Zhao put it:
“The goal of the newly closed investment fund is to discover and support projects and founders with the potential to build and to lead Web3 across DeFi, NFTs, gaming, metaverse, social, and more.”
Binance’s new in-house venture capital fund received financial backing from several venture capital firms, including DST Global and Breyer Capital. In addition, the well-heeled Binance Web3 fund also benefited from the financial generosity of several unnamed family offices and corporations.
Binance Web3 Fund Undeterred by Recent Crypto Price Optics
The establishment of the new Binance fund comes at a time when Bitcoin (BTC) and several popular altcoins are trading downward. Since attaining its all-time high of $69K last November, BTC has given up around 50% of its price. The effect of this crypto malaise has also rubbed off on publicly-listed crypto companies such as the American exchange Coinbase. The shares of the Brian Armstrong-led company have plummeted 69% since the turn of the year, and investors opine the worst is yet to come. This is because prevalent among investor fears is that the same slump will soon creep into privately-held crypto start-ups.
However, Binance reckons that the negative impact of the crypto slowdown is only restricted to start-ups with unicorn status. According to Binance Labs’ executive director of investments and M&A Ken Li, there is “no current impact in early-stage private markets.”
In fact, Binance Labs is looking to take advantage of the recent crypto drawdown by aligning itself with the next watershed phenomenon in tech. It intends to do this by seeking out and sponsoring founders who are building something potentially groundbreaking. The executive director said:
“We are looking for projects with the potential to drive the growth of the Web3 ecosystem.”
The specialized fund will also invest in tokens in addition to shares and different projects. Some of these projects include non-fungible tokens (NFTs), infrastructure, and decentralized autonomous organizations (DAOs). In Binance’s estimation, there are already up to 500,000 active Web3 developers. Regardless, the crypto exchange hopes to grow that number.
Established in 2018, Binance Labs has invested in and incubated more than 100 projects globally. Some beneficiaries include Axie Infinity, Dune Analytics, Polygon, Elrond, 1inch, and The Sandbox.