Binance Raises $500 Million to Invest in ‘Web3’ as Crypto Slips into Bear Market


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

Akio Kon | Bloomberg | Getty Images

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

The venture arm of the company, Binance Labs, said Wednesday it has raised $500 million for its debut startup fund, drawing the backing of venture capital firms DST Global and Breyer Capital, as well as undisclosed family offices and companies. It comes after Andreessen Horowitz announced a massive $4.5 billion fund last week to invest in crypto startups.

Binance Labs plans to use the capital to invest in companies building “Web3”. While 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 includes blockchain, the shared digital ledgers behind most major cryptocurrencies.

The launch of Binance’s new fund comes at a time when bitcoin and other digital currencies are falling sharply. Bitcoin is down more than 50% since hitting an all-time high of nearly $69,000 in November. That has taken its toll on publicly traded crypto companies like Coinbase, whose shares have fallen 69% since the start of 2022. Investors fear the slump will spill over to private crypto startups.

While valuations of start-ups of $1 billion or more are “slowing down a bit,” there is currently “no impact on early-stage private markets,” Ken Li, Binance Labs executive director of investments and mergers and acquisitions, told CNBC.

Binance Labs hopes to capitalize on the recent plunge into digital assets to find founders building what it sees as the next big thing in technology. Bets will be split into pre-seed, early-stage and growth stocks, and the fund will invest in both tokens and stocks.

“We are looking for projects with the potential to drive the growth of the Web3 ecosystem,” Li said. Such projects may include infrastructure, non-replaceable tokens, and decentralized autonomous organizations. Binance estimates that there are currently about 300,000 to 500,000 active Web3 developers, a number it hopes to “grow significantly.”

Binance has made a series of high-profile equity investments over the past year. This is the first time the company has formally raised a VC fund with funding from outside investors.

Binance Labs’ investment portfolio includes business news magazine Forbes and Sky Mavis, the company behind the popular non-replaceable token game Axie Infinity. It was also an investor in Terraform Labs, the Singapore-based start-up behind the failed Terra stablecoin project.

Binance Labs “always does its due diligence and has a strong conviction in its investment strategy,” Li said. “We know that investing in early stages carries risks,” he added. “The industry is still young and was younger then.”

Binance also plans to take a $500 million stake in Twitter in support of Elon Musk’s bid to acquire the social media service, a move the company hopes will serve its purpose to “use social media and Web3 together” will strengthen.

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

In an interview with CNBC earlier this year, Zhao said Binance had “billions ready to invest” in Web3. The trend has been met with skepticism from some notable figures in tech, including Musk and Twitter co-founder Jack Dorsey. Zhao said he believes in the concept, but it will take time to realize it.

“Exactly how it’s going to take shape, exactly what Web3 looks like, what company, what projects — nobody knows,” he said.

“Before Facebook started, no one could predict that,” Zhao added. “We just have to see what it becomes.”

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