Cryptocurrencies depreciate, Binance sets up a web 3.0 investment fund

That includes backing from venture capital firms DST Global and Breyer Capital as well as unnamed corporate and family offices. The move comes after Andreessen Horowitz last week announced a massive $4.5 billion fund to invest in crypto startups.

Binance Labs plans to use the capital to invest in companies building "Web3", towards the future of the decentralized internet incorporating blockchain, the foundation behind most of today's major cryptocurrencies.

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The launch of Binance's new fund comes at a time when bitcoin and other cryptocurrencies are plummeting in price. Bitcoin is down more than 50% since hitting an all-time high — almost $69,000 in November — that has taken a toll on publicly listed crypto companies like Coinbase — whose shares have fallen 69 % since early 2022. Investors fear the drop will affect privately held crypto startups.

'Although startups valued at $1 billion or more are faltering, the private markets are slowing down a bit,' said Ken Li, managing director of investments and mergers and acquisitions at Binance Labs. the first stage has not been affected.'

Binance Labs hopes to capitalize on the recent drop in digital assets to find founders with ambitions to build the next big thing in tech. The fund's investments will be divided into each stage of the startup (funding, early stage, growth), and will invest in tokens as well as stocks.

Li said: 'We are looking for projects that have the potential to accelerate the development of the Web3 ecosystem.' Such projects can include infrastructure, NFTs, and decentralized organizations. Binance estimates there are currently between 300,000 and 500,000 active Web3 developers, a number it hopes will grow "significantly".

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Binance has made a series of major equity investments over the past year. This is the first time the company has officially raised a venture capital fund with funding from outside investors.

Binance Labs' portfolio includes business news magazine Forbes and Sky Mavis, the company behind the popular NFT game Axie Infinity.

Binance Labs "always conducts in-depth due diligence and has strong faith in its investment strategy," Li said. He added: 'We know that early-stage investing is fraught with risk. The industry is still nascent'

Binance is also planning to buy a $500 million stake in Twitter to support Elon Musk's bid to acquire the social networking service, a move the company hopes will advance its goal of "bringing social media and Web3 to the ground." together."

Binance is the world's largest digital currency exchange, founded by Chinese-Canadian businessman Changpeng Zhao in 2017. The platform processed $490 billion in spot trading volume in March, according to data from Binance. CryptoCompare.

In an interview with CNBC earlier this year, Zhao said Binance had "billions of dollars ready to invest" in Web3. The trend has been met with skepticism from some notable figures in the tech industry, including Musk and Twitter co-founder Jack Dorsey. Zhao said he is a believer in the concept, but it will take time to make it a reality.

"Exactly how it will form, exactly what Web3 will look like, which companies, which projects - no one knows," he said.

"Before Facebook started, no one could have predicted it," Zhao added. "We'll have to wait and see what happens."

Marvin Fry

Update 04 June 2022