Binance is the largest cryptocurrency exchange in the world, managing $490 billion in spot trading volumes as of March 2022.
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Binance, the world’s largest cryptocurrency exchange, is launching its own venture capital fund.
The company’s venture capital arm, Binance Labs, announced on Wednesday that it has raised $500 million for its first seed fund, securing backing from venture capital firms DST Global and Breyer Capital as well as family offices and financial institutions. limited companies.
Binance Labs plans to use the capital to invest in companies building “Web3”. Although still an ill-defined term, Web3 loosely refers to a hypothetical future iteration of the Internet that is more decentralized than today’s online platforms and incorporates blockchain, ledgers numbers shared behind most major cryptocurrencies.
The launch of Binance’s new fund comes at a time when bitcoin and other digital currencies are in steep decline. Bitcoin has plunged more than 50% since hitting an all-time high of nearly $69,000 in November. This has weighed on publicly traded crypto companies like Coinbase, whose shares have fallen 69% since the start of 2022. Investors fear the crisis could spill over to private crypto start-ups.
While valuations for startups of $1 billion or more are “slowing down a bit,” there’s “no current impact on early-stage private markets,” Ken Li, executive director of the companies, told CNBC. investments and mergers and acquisitions of Binance Labs.
Binance Labs hopes to capitalize on the recent drop in digital assets to find founders building what it sees as the next big tech breakthrough. Its bets will be divided into pre-seed, early stage and growth stocks, and the fund will invest in tokens as well as stocks.
“We are looking for projects that can drive the growth of the Web3 ecosystem,” Li said. These projects can include infrastructure, non-fungible tokens, and decentralized autonomous organizations. Binance estimates that there are currently around 300,000 to 500,000 active Web3 developers, a number it hopes to increase “significantly”.
Binance has made a series of prominent equity investments over the past year. This is the first time the company has officially raised a venture capital fund with funding from external investors.
Binance Labs’ investment portfolio includes business news magazine Forbes and Sky Mavis, the company behind popular non-fungible token game Axie Infinity. He was also an investor in Terraform Labs, the beleaguered Singapore-based startup behind the failed stablecoin project Terra.
Binance Labs “always does due diligence and has strong conviction in its investment strategy,” Li said. “We know investing in the early stages comes with risks,” he added. “The industry is still young and was younger then.”
Binance also plans to take a $500 million stake in Twitter to back Elon Musk’s bid to acquire the social media service, a move the company hopes will bolster its goal of “bringing social media together.” and the Web3″.
Founded in 2017 by Chinese-Canadian entrepreneur Changpeng Zhao, Binance is the world’s largest digital currency exchange. The company handled $490 billion in spot trading volumes in March, according to data from CryptoCompare.
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 from some notable tech figures, including Jack Dorsey, co-founder of Musk and Twitter. Zhao said he believed in the concept, but it would take time to make it a reality.
“Exactly how it’s going to play out, what exactly Web3 looks like, what company, what projects – nobody knows,” he said.
“Before Facebook started, no one could predict it,” Zhao added. “We’ll just have to see what happens.”