Binance raises $500 million to invest in Web3 startups

Binance is the world’s largest cryptocurrency exchange, processing $490 billion in spot trading volume in March 2022.

Akio Kim | Bloomberg | Getty Images

Binance, the world’s largest cryptocurrency exchange, is launching its own venture capital fund.

The firm’s venture capital arm, Binance Labs, said Wednesday it has raised $500 million for its first start-up fund, with backing from venture capital firms DST Global and Breyer Capital, as well as an unnamed family office and firm.Last week, Anderson Horowitz announced a Huge $4.5 Billion Fund Invest in cryptocurrency startups.

Binance Labs plans to use the funds to invest in companies building “Web3”.Although still an ill-defined term, Web3 loosely refers to a Hypothetical future iterations of the Internet This is more decentralized than today’s online platforms and incorporates blockchain, the shared digital ledger behind most major cryptocurrencies.

The launch of Binance’s new fund comes at a time when bitcoin and other digital currencies fell sharply. Bitcoin has fallen more than 50% since reaching an all-time high of nearly $69,000 in November.This has implications for publicly listed cryptocurrency companies such as CoinbaseIts shares have plunged 69% since the start of 2022. Investors worry that the plunge will affect privately held crypto startups.

While valuations for startups of $1 billion or more have “slowed down,” there is “no impact on the early-stage private market right now,” Jian Li, executive director of investments and mergers and acquisitions at Binance Labs, told CNBC.

Binance Labs is looking to capitalize on the recent plunge in digital assets to find founders to build what it thinks is the next big thing in tech. Its stakes will be split into pre-seed, early-stage and growth equity, and the fund will invest in tokens and stocks.

“We’re looking for projects that have the potential to advance the Web3 ecosystem,” Li said. Such projects may include infrastructure, non-fungible tokenand Decentralized Autonomous Organization. Binance estimates that there are currently around 300,000 to 500,000 active Web3 developers, and it expects this number to grow “substantially.”

Binance has made a series of high-profile equity investments over the past year. This is the first time the company has officially raised a venture capital fund through financing from outside investors.

Binance Labs’ portfolio includes business news magazine Forbes and Sky Mavis, the company behind the popular non-fungible token game Axie Infinity.It’s also an investor in Terraform Labs, the company behind the troubled Singaporean startup The failed stablecoin project Terra.

Binance Labs “has been doing due diligence and has a firm belief in its investment strategy,” Li said. “We know that early stage investing involves risk,” he added. “The industry was still young, and it was young back then.”

Binance also plans to take a stake of $500 million Twitter support Elon Musk’s Bid to acquire the social media service, a move the company hopes will further its goal of “bringing social media and Web3 together.”

Founded in 2017 by Chinese-Canadian entrepreneur Changpeng Zhao, Binance is the world’s largest digital currency exchange. According to CryptoCompare, the company processed $490 billion in spot trading volume in March.

Zhao told CNBC earlier this year that Binance is “ready to invest billions of dollars” in Web3.Trends have been met Doubts from some of the biggest names in techincluding Musk and Twitter co-founders Jack Dorsey. Zhao said he is a believer in the concept, but it will take time for it to become a reality.

“How exactly it’s going to take shape, what exactly Web3 looks like, which companies, which projects — nobody knows,” he said.

“No one could have predicted this before Facebook started,” Zhao added. “We just have to see how it turns out.”