Monthly Report: VC firms pumped funds into crypto and Web 3 despite May being harsh to investors

• Hong Kong-based BABEL Finance hits a $2 billion valuation following latest funding 
• Gaming portal and game creator Kongregate tables a blockchain game development fund with Immutable X
• Venture capital firm Andreessen Horowitz plans to heavily support start-ups in the blockchain space by allocating significant investments 
• Israel-based StarkWare sets out to advance its ecosystem with new capital backing

The first four months of 2022 appeared to bear the worst of the year in the crypto market, but the slump in Q1 is nothing close to the bloodbath witnessed this month. The total cryptocurrency market capital fell from $2.18 trillion at the start of the year to $1.755 trillion by the end of January. It briefly recovered at the beginning of February before charting successive days above $2 trillion in the first week of April.

The picture has been different altogether in May. The extended bearish cycle has pushed Bitcoin and company deep in the red, leaving traders buried in losses. The global crypto market capital has almost halved this month from $1.7 trillion at the start of May to $1.18 trillion at writing. 

This harsh market weather has, however, not hampered funding action. On the contrary, financial backers and other institutions have scaled up their efforts and increased their resource (capital) allocation to start-ups, developer teams, and other entities in this space.

Here is a roundup of various firms that completed major funding rounds this month:

Pioneering blockchain game developer Kongregate partners with Immutable X

Blockchain game developer Kongregate and Ethereum scaling start-up Immutable this week shared a PR revealing a $40 million fund to support initiatives in the blockchain gaming niche. The partnership comes at a time Kongregate has shifted focus to improving customer experiences through new blockchain innovations.

The web game creator has sights on establishing a destination for gamers and developers to interact – chat and play games. This goal will be funded by part of the sum from the partnership with the leading layer 2. The $40 million package includes IMX tokens that will be directed to blockchain game integration as grants. 

The developer anticipates that this aggressive plan will inspire a new generation of gamers when they relaunch later in the year. Kongregate’s CEO remarked that cooperation with Immutable X will give users “a deeper experience in ways not possible with traditional games”. Leveraging green and scalable technology also means that they will be able to offer their customers the best NFT experience in a sustainable way.

The gaming giant recently announced a retro-style 8-bit web 3 gaming universe dubbed Bitverse. Games in this Bitverse have different game styles. Featuring a unique combination of fungible and non-fungible tokens, players will collect and earn tokens according to engagement levels with the platform. 

The company has already integrated blockchain technology to a few games on its site but are all closed systems. Kongregate hopes to break and make games that are wholly blockchain-enabled through their partnership with Immutable X.

BABEL Finance raises $80 million in a new fund

Crypto financial services provider Babel Finance also this week announced an $80 million Series B round. The recent funding pushed the firm’s total valuation to $2 billion. In the last two years, the firm has invested in more than ten companies focusing on brokerage trading, decentralised finance and crypto finance.

The firm’s impressive growth could be a sign of approval of the potential of digital assets by banks and investors. The fresh capital pump was from Jeneration Capital, 10T holdings supported by existing shareholders BAI Capital and Dragonfly Capital. Seed funding and angel VC firm Circle Ventures participated.

Worth noting, Babel Finance has extended its reach beyond crypto lending to miners by offering derivatives trading. It, however, limits itself to Bitcoin, Ethereum and Stablecoins. The majority of its clients are in Asia but others are in Australia, Africa and Latin America.

Currently holding licenses in Luxembourg, Hong Kong and the UK, the firm intends to move into Singapore, Dubai and Australia, as well as acquire more permits from native Hong Kong. Babel Finance intends to use the raised funds to grow in other areas of interest as well as ensure they achieve compliance to promote their brand as a trusted crypto financial institution.

a16z launches a record-breaking crypto-investment

Private VC company Andreessen Horowitz recently announced a mammoth $4.5 billion fund with a motive of taking advantage of the current market weather. The recent $4.5 billion raise will be invested in blockchain-related industries and is the highest fund amount to ever be invested in the crypto space. This, coming in turbulent times for the digital assets class left some surprised. 

The Silicon Valley firm has assured investors not to worry about its bet. Citing technical diligence in projects they invest in, Arianna Simpsons, a general partner in the firm assured investors that they only invest in top ventures.

In an interview with CNBC, she claimed that people focused more on building technology during bear markets disregarding short-term price activity. Likening crypto opportunities to the next computing cycle, after PCs in the ’80s, the internet in the ’90s and mobile computing in the early 2000s, the firm also intends to increase its crypto team.

The venture capital is associated with big outfits like Solana, Axie Infinity and Uniswap and, recently, FlowCarbon which is building carbon-credit tokenisation. The initiative by A16Z to invest massively in the web3 platforms has also received an equal share of criticism by tech gurus claiming VCs and their partners stand to benefit the most from the projects.

A16Z justified their $1.5 billion seed investment and the $3 billion in venture a golden era of web3 likely to prosper as sufficient world-class talent joined the industry dedicating their brilliance and passion towards advancing blockchain technology.

Starkware reaches $8 billion market valuation after recent raise

Ethereum scaling company Starkware raised $100 million in a Series D funding that has seen the firm’s valuation reach a soaring high of $8 billion. Greenoaks Capital and Coatue led the raise backed by the existing and new investors as well as the crypto powerhouse Tiger Global. 

Coming barely six months from the Series C funding in which they raised $50 million and at a valuation of $2 billion, the firm intends to make blockchain as mainstream as the common phone applications. The company claims to offer products that will alleviate the blockchain ‘bottleneck’, thereby improving the system’s overall efficiency.

The raise by Starkware in the midst of the crypto winter boosts investor confidence in the web3 technology. The firm’s vision is to build products for the long haul, recently launching StarkNet Alpha 2 scaling solution. 

The firm’s STARK-based proofs provide users with a fast and secure user experience. The company currently boasts of equities locked in their platform valued at $1 billion. StarkEx scaling engine also processed more transactions per month compared to rival Bitcoin. The cumulative trades on the platform of over $600 billion seemingly can’t go without mention.