Binance, the world’s largest cryptocurrency exchange, is establishing its own venture capital firm. Binance Labs, the start-up unit of Binance, announced Wednesday that it has gathered $500 million for its debut startup fund. Binance Labs was backed by venture capital firms DST Global and Breyer Capital, as well as unspecified family offices and corporations.
Binance Labs raises $500m to invest in web amid the crypto bear market
The term Web3 is still largely undefined, although it roughly describes a possible future iteration of the internet that is more decentralized than current online platforms and incorporates blockchain, the shared digital ledgers behind most major cryptocurrencies.
Binance Labs, a division of the world’s largest cryptocurrency exchange by volume, will use the money to invest in firms developing Web 3. Binance Labs also has plans to allocate $500 million from the fund to projects at various stages of development, including incubation, early-stage growth, and late-stage expansion.
The debut of Binance Labs’ new fund comes at a time when Bitcoin and other digital currencies have been plummeting. Since peaking at nearly $69,000 in November, Bitcoin has dropped more than 50%. The price collapse has had a significant impact on publicly listed crypto firms like Coinbase and Binance, whose stock prices have tumbled by 69 percent since the start of 2022. Investors are concerned that the slump will seep into the world of privately owned crypto businesses.
Changpeng “CZ” Zhao, CEO of Binance, talked about how important it is for the crypto ecosystem to connect with people’s values and economies.
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. “In a Web3 environment, the connection between values, people, and economies is essential. If these three elements come together to build an ecosystem, that will accelerate the mass adoption of the blockchain technology and crypto.
Changpeng “CZ” Zhao, CEO of Binance.
According to CNBC, Ken Li, the executive director of investments and M&A at Binance Labs, said that while start-up valuations of more than $1 billion are slightly slowing down, there is no current impact in early-stage private markets.
Binance Labs is hunting for technology entrepreneurs who are building what it considers to be the next big thing in tech. The fund will invest in digital assets as well as equity, and its bets will be divided into pre-seed, early-stage, and growth capital.
Ken Li, the executive director of investments and M&A at Binance Labs, says that Binance Labs is looking for projects that have the potential to drive the growth of the Web3 ecosystem. This includes projects related to infrastructure, non-fungible tokens, and decentralized autonomous organizations. Binance estimates that there are currently about 300,000 to 500,000 active Web3 developers, a figure it aims to “substantially” increase.
Binance shines through with global investment portfolios
Binance has made a slew of high-profile equity investments in the past year. This is the first time Binance has raised a VC fund using money from external investors. Binance Labs’ investment portfolio includes business news magazine Forbes and Sky Mavis, the creator of the popular non-fungible token game Axie Infinity. It was also an investor in Terraform Labs, the Singapore-based start-up behind Terra, a failed stablecoin project.
The Binance-Supported Deal to Go Public via SPAC, however, has been shelved. Forbes will no longer pursue its previous plan to go public through a special purpose acquisition firm (SPAC).
According to The Times, the move would have taken Forbes public at a $630 million valuation through a merger with Hong Kong-based SPAC Magnum Opus Acquisition, which was attributed to declining interest in the formerly popular investment vehicle. According to The Times, the decision may be made as early as this week.
Binance announced in February that it would invest $200 million into Forbes and Magnum Opus Acquisition to assist Forbes with its digital expansion, becoming one of the media firm’s top investors.
Li stated that Binance Labs does its homework and has a strong conviction in its investment approach. The organization understands that investing in the early phases entails dangers. This is because the sector is still young, which was even more so in the past.
Binance is also considering a $500 million investment in Twitter, to assist Elon Musk’s attempt to acquire the social media service, in hopes of “bringing social media and Web3 together.”
Furthermore, several former Binance executives led fundraising rounds in helping multi-strategy blockchain investment fund Old Fashion Research (OFR) invest in over 50 blockchain ventures in just one year.
According to recent reports, the fund was formed by Ling Zhang, the former Binance vice president of mergers and acquisitions and investments, and Wayne Fu, the firm’s previous head of corporate development.
Despite the fact that Binance’s newest fund is sizable, it isn’t uncommon. Last week, venture capital behemoth Andreessen Horowitz unveiled a $4.5 billion fund, which makes it the industry’s largest ever.
The fund, too, is designed for Web3 startups. It places a big bet on the fusion of technologies such as machine learning, artificial intelligence, and blockchain to achieve what some are hoping is the next evolutionary stage of the internet.
Binance Labs is well-versed in the investment game, having invested in or assisted more than 100 projects across 25 countries since its inception in 2018. Its lineup includes top-tier firms such as 1inch, Audius, Axie Infinity, Dune Analytics, Elrond, Injective, Polygon Optimism The Sandbox, and STEPN.