Binance, the world’s largest cryptocurrency exchange, has launched its own venture capital fund.
The company’s division, Binance Labs, said Wednesday that it has raised $ 500 million for its debut startup fund, providing support from partners at DST Global and Breyer Capital, as well as unnamed family offices and corporations. This comes after Andreesen Horowitz announced a huge $ 4.5 billion fund last week to invest in crypto startups.
Binance Labs plans to use the capital to invest in companies building “Web3”. Although still a poorly defined term, Web3 freely refers to a hypothetical future iteration of the Internet that is more decentralized than online platforms today and includes blockchain, the shared digital books behind most major cryptocurrencies.
The launch of the new Binance fund comes at a time when bitcoin and other digital currencies are falling sharply. Bitcoin has fallen more than 50 percent since reaching an all-time high of nearly $ 69,000 in November. This has affected publicly traded crypto companies such as Coinbase, whose shares have fallen 69% since early 2022. Investors fear the decline will also affect private crypto startups.
Binance is the world’s largest cryptocurrency exchange, handling $ 490 billion in spot trading in March 2022.
Akio Kon | Bloomberg | Getty Images
While initial estimates of $ 1 billion or more are “slowing down a bit,” there is no “ongoing impact on early-stage private markets,” Ken Lee, executive director of Binance Labs’ investments and mergers and acquisitions, told CNBC.
Binance Labs hopes to take advantage of the recent decline in digital assets to find founders who build what it sees as the next big thing in technology. Its bets will be divided into initial start-up capital, early stage capital and equity, and the fund will invest in tokens as well as shares.
“We are looking for projects with the potential to stimulate the growth of the Web3 ecosystem,” Lee said. Such projects may include infrastructure, indispensable tokens and decentralized autonomous organizations. Binance estimates that there are currently about 300,000 to 500,000 active Web3 developers, a number that hopes to grow “substantially.”
Binance has made a series of high-profile capital investments in the last year. This is the first time the company has officially raised a VC fund with external investor funding.
Binance Labs’ investment portfolio includes business news magazine Forbes and Sky Mavis, the company behind the popular Axie Infinity token game. He was also an investor in Terraform Labs, the struggling Singapore-based startup behind the failed Terra stablecoin project.
Binance Labs “always does due diligence and has a strong belief in its investment strategy,” Lee said. “We know that investing at an early stage involves risks,” he added. “The industry is still young and it was younger then.”
Binance also plans to take a $ 500 million stake in Twitter to support Elon Musk’s bid to acquire the social media service, a move the company hopes will strengthen its goal of “merging social media and Web3 “.
Founded in 2017 by Sino-Canadian entrepreneur Changpen Zhao, Binance is the world’s largest digital currency exchange. According to CryptoCompare, the company managed spot trading volumes of $ 490 billion in March.
In an interview with CNBC earlier this year, Zhao said Binance has “billions ready to invest” in Web3. The trend has been met with skepticism by some notable technology figures, including Musk and Twitter co-founder Jack Dorsey. Zhao said he believed in the concept, but that it would take time to make it a reality.
“How exactly it will take shape, what exactly Web3 looks like, which company, which projects – no one knows,” he said.
“Before Facebook started, no one could have predicted that,” Zhao added. “We just have to see what happens.”