SBI Holdings, a major financial conglomerate in Japan, has announced its plan to start operating an investment fund by the end of 2023, focusing on startups in sectors like Web3, artificial intelligence (AI), and the metaverse. As reported by Nikkei on November 8, 2023, this fund aims to bolster the burgeoning startup ecosystem in Japan.
The fund is expected to reach up to 100 billion yen, with individual investments ranging from several hundred million to a few billion yen. It aims to invest in 150 to 200 companies. SBI is drawing investment from major and regional banks in Japan, supporting the development of domestic startups.
Collaborative Funding from Major Financial Institutions
Significant financial players, including Sumitomo Mitsui Banking Corporation, Mizuho Bank, Nippon Life Insurance, and Daiwa Securities Group, have already committed over 50 billion yen. This level of venture capital (VC) funding is relatively rare in Japan, and an SBI representative emphasized to Nikkei the importance of having financially robust backers to nurture globally competitive startups.
Japan’s Current Landscape and Goals for Startups
Japan currently faces challenges in cultivating startups. In November 2022, under Prime Minister Kishida’s administration, the “Startup Development 5-Year Plan” was established, addressing the lower rates of new business openings and unicorn companies (privately held startups valued at over 100 billion yen) compared to the US and Europe.
The administration aims to implement “New Capitalism,” seeing startups as vital in transforming societal challenges into engines for sustainable economic growth. The 5-Year Plan sets a target to increase startup investment from 800 billion yen (as of 2022) to over 10 trillion yen by 2027. It also aims to establish Japan as Asia’s leading startup hub by creating 100 unicorns and 100,000 new startup companies.
Enhancing the Ecosystem for Web3
For startups, particularly in emerging fields like Web3, both financial support and a conducive environment are essential. The Japanese government recognizes the need for tax reforms pertinent to Web3 companies in its “New Capitalism Grand Design and Implementation Plan 2023 Revised Version.”
Corporate taxes for Web3 companies have been partially reformed in the fiscal year 2023, exempting self-issued cryptocurrencies from market value evaluation under certain conditions. Financial Services Agency and the Ministry of Economy, Trade and Industry are advocating for further reforms for third-party held cryptocurrencies in the fiscal year 2024 tax revisions. The final decision on these reforms by the Tax Commission is expected to be concluded by mid-December.
Web3, often termed as the “next generation of the internet,” is a decentralized network built on blockchain technology, encompassing elements like NFTs and cryptocurrencies. It marks a shift from the one-way information flow of the initial Internet (Web1) and the current centralized Internet (Web2).
Blockchain technology is making waves across the African continent, as it continues to provide fertile ground for the growth and implementation of this cutting-edge technology. According to the African Blockchain Report 2022 by Crypto Valley VC, the funding for blockchain deals in Africa raised a whopping $474 million in 2022, representing a staggering 429% increase in African blockchain venture funding. This surge in funding for African blockchain ventures outpaced the global average of only a 4% increase in blockchain funding.
The report revealed that African blockchain funding demonstrated a growth rate that was over 12.5 times higher than that of general African venture funding on a year-on-year basis. Specifically, African blockchain ventures raised $474 million through 2022, reflecting a 429% increase in funding. In contrast, overall African venture funding saw a 34% increase, with $3.14 billion raised across 570 deals during the same period.
Africa experienced the highest growth rate in funding among all regions, with Seychelles and South Africa responsible for 81% of the blockchain venture funding in Africa, having raised $208 million and $177 million, respectively. This can be attributed to the fact that the number of African blockchain deals increased by only 12% year-on-year, from 26 to 29, indicating that the median deal size has significantly risen. This suggests that businesses are securing more substantial funding, and investors are becoming more confident in African blockchain ventures.
In the past year, Nigerian blockchain startups raised the highest number of deals in the continent, followed by South Africa, Seychelles, and Kenya. However, despite Nigeria’s high number of deals, it only accounted for 3.4% of all African blockchain venture funding, with an average deal size of $1.25 million.
Meanwhile, the United States remained steady at $15.2 billion in funding, while Asia and Europe saw a year-on-year increase of 50% and 35%, respectively, with $4.74 billion and $4.88 billion in funding. African blockchain venture funding made up 1.77% of global blockchain venture funding, which saw an impressive 407% year-on-year increase, with several countries contributing to the surge. In comparison, the US concluded 137 deals, while Asia and Europe had 84 and 78, respectively.
Overall, the remarkable growth in African blockchain ventures indicates a promising future for the industry in the region. As more businesses secure larger investments, and investor confidence grows, the African blockchain industry is poised for continued success and innovation. With Nigeria leading the charge in the number of blockchain startups receiving funding, the future looks bright for African blockchain ventures.
American venture capitalist and entrepreneur Tim Draper has advised business founders to diversify their cash holdings in the wake of the collapse of Silicon Valley Bank (SVB). In a report directed at business founders, Draper suggests that Bitcoin and other cryptocurrencies can serve as a hedge against a “domino run” on banks and overbearing government intervention. He notes that businesses can no longer rely on a single bank or governing body to manage their cash, and that diversification is essential.
To that end, Draper recommends that business founders keep at least six months of short-term cash in two separate bank accounts: one with a local bank and another with an international bank. In addition, he advises keeping at least two payrolls worth of cash in Bitcoin and other cryptocurrencies. Draper believes that these preventative steps are necessary because, for the “first time in many years,” governments are seizing control of banks, and governments themselves are “at risk of becoming insolvent.”
Draper’s advice comes at a time when the collapse of SVB has caused significant uncertainty in the tech industry. SVB, which was once known for its support of startup companies, has recently faced a number of challenges, including a significant data breach and an investigation into its lending practices. This has left many startups scrambling to find alternative sources of funding and cash management solutions.
According to Draper, many startups have already sought emergency relief from him after SVB and other banks shut down. He believes that the collapse of SVB serves as a warning to businesses that they need to be prepared for any eventuality. By diversifying their cash holdings and embracing cryptocurrencies like Bitcoin, businesses can ensure that they are not overly reliant on any one institution or government.
Draper has long been an advocate for Bitcoin and cryptocurrencies, and his recent advice to business founders reflects his belief that these digital assets are the future of finance. He has previously predicted that the price of Bitcoin could reach $250,000 by 2023, and he has invested heavily in a number of Bitcoin-related startups.
Overall, Draper’s advice serves as a reminder to businesses that they need to be proactive in managing their cash holdings and prepared for any eventuality. By diversifying their cash holdings and embracing cryptocurrencies, businesses can protect themselves against the uncertainty and volatility of the current financial landscape.
At Paris Blockchain Week 2023, a panel of experts in Web3 gathered to discuss the ways in which this new paradigm is transforming the startup and investor landscape. The panel discussion titled “Crypto, Culture, and Capital: How Web3 is Changing the Game for Startups and Investors” focused on the opportunities and challenges that come with the emergence of Web3.
Web3 represents a fundamental shift from the traditional Web2 paradigm, with new opportunities for startups and investors. The panelists discussed how Web3 startups are different from Web2 startups, with different cultures shaping and affecting the various ecosystems.
Laurenz Apiarius, founder and managing partner of Blockwall Digital and Blockwall Capital, noted that there are positive and negative effects of the Web3 revolution. While there have been awesome milestones achieved by Web3 entrepreneurs, there are also negative effects resulting from entrepreneurs who take advantage of the Web3 narrative. Some entrepreneurs overestimate their valuation, failing to deliver on their promises, which harms investors who lose money in the process.
Amos Meiri, founding partner of Node Capital, emphasized the need for investors to understand the technical, legal, and marketing aspects of the projects being built. Meiri stated that it is crucial for investors to support entrepreneurs in the right way, helping them navigate the challenges of the Web3 landscape.
Igneus Terrenus, head of partner relations of BitDAO, spoke about the decentralized autonomous organization (DAO) model of Web3 startup governance. DAOs are organizations that operate through rules encoded as computer programs, with decisions made through a consensus mechanism. Terrenus noted that while the DAO is not a perfect model, it offers exciting opportunities for startups and investors. DAOs can help to reduce the need for intermediaries, increasing efficiency and reducing costs.
However, the success of DAOs depends on incentivization and education of stakeholders. DAO stakeholders need to be incentivized to participate in the decision-making process, and educated about the rules and processes involved.
The panelists also discussed the challenges that entrepreneurs face in navigating the Web3 landscape. Web3 startups require a deep understanding of technology and legal frameworks, which can be daunting for many entrepreneurs. In addition, the lack of clear regulatory frameworks for Web3 startups can make it difficult for entrepreneurs to operate in a compliant manner.
Despite these challenges, the panelists were optimistic about the potential of Web3 to transform the business landscape. With its disruptive potential and new opportunities for startups and investors, Web3 represents a major shift in the way we think about business and innovation.
The emergence of Web3 has also led to a renewed focus on building community resilience to crises through mutual aid. The Web3 paradigm emphasizes decentralized, peer-to-peer networks that enable individuals and organizations to collaborate and support each other. This can be seen in the rise of decentralized finance (DeFi) platforms that allow individuals to lend, borrow, and invest in a decentralized manner, without the need for intermediaries.
Overall, the panel discussion highlighted the exciting opportunities and challenges that come with the Web3 revolution. With its potential to disrupt traditional business models and provide new opportunities for startups and investors, Web3 is set to transform the way we think about innovation and entrepreneurship.
The use of blockchain technology is on the increase, and the majority of businesses are investigating the technology in some form. As blockchain technology grows more widespread, users of all stripes will want access to the possibilities offered by this platform in the most effective manner possible.
The development of blockchain chips as energy-efficient accelerators is one of the measures that have been taken as a result of this. Chain Reaction, a blockchain chip business located in Tel Aviv, said on February 23 that it has funded $70 million in order to grow its technical staff in preparation for the development of its next chip.
According to Alon Webman, co-founder and CEO of Chain Reaction, the new chip will be a “completely homomorphic encryption” device. This kind of chip would allow the user to continue working on data even while the chip is in the process of encrypting it.
“Today, if you have data (which) is encrypted into the cloud, and in order to perform any data operation or data analytics, or do A.I., you need to decrypt the data,” said the researcher. “This is a must.”
He went on to explain that governments and big companies, such as the military industry, that may use cloud services but are now barred from doing so owing to worries about security.
“As soon as the data is encrypted, it is vulnerable to assault by a hostile person who may read it, steal it, or even modify it.”
A chip that is encrypted and also provides access to data that is encrypted might be helpful in this situation. According to Webman, Chain Reaction anticipates releasing that chip as soon as the year 2024 comes to a close.
According to Webman, Chain Reaction plans to begin mass manufacturing of its existing blockchain chip, Electrum, in the first quarter of 2023. This information comes from Webman. The chip was developed to facilitate hashing in a speedy and effective manner. Additionally, it has applications in the mining of several cryptocurrencies.
The software maker Intel also introduced a blockchain chip created by Nvidia in February 2022. This chip was meant to speed up energy-intensive blockchain operations that demand enormous quantities of computational power.
Additionally, Nvidia has a dedicated processor designed just for the mining of Ethereum.
New York, United States, 10th January, 2023, Chainwire
The program aims to help Web3’s rising stars boost their media presence, community growth and brand awareness in exchange for project tokens.
The Web3 space is growing rapidly and new startups are emerging daily, with investment into Web3 projects skyrocketing to $30 billion in 2021 and around $36 billion in 2022.
While many Web3 founders have great ideas and a strong value proposition to bring to the space, this is a challenging field riddled with competition and a lack of trust from the broader audience.
Founded in 2013, Cointelegraph has grown to become a world leader in the digital assets, metaverse and emerging technologies media space, with over 20 million readers worldwide.
The company is now looking to help other rising stars reach their full potential and is delighted to introduce its Accelerator program — a startup booster leveraging the company’s capabilities as a strong media and strategic partner, including content, branding, network, marketing, investor relations and much more.
What is the Cointelegraph Accelerator program?
Cointelegraph Accelerator will leverage the expertise of the global Cointelegraph team, which consists of over 150 professionals working across and developing global media products in 11 different languages.
The program focuses on decentralized finance, nonfungible tokens, GameFi, Web3 social, cross-chain and layer 2 solutions, as well as other segments of the broader Web3 industry. It has already onboarded over a dozen companies and publicly opened the application process for new candidates.
While many accelerator programs focus on advisory, followed by monetary investments, Cointelegraph takes a different route. Participants will be able to receive contributions from Cointelegraph in the form of media products available in our ecosystem including advertorials, individually tailored special projects, educational materials, native content integrations and much more.
One of the program’s key features is that it will be run by a separate commercial arm independent of Cointelegraph’s editorial team. Startups will be able to participate in the program in exchange for their projects’ native tokens or equity, subject to specific conditions. By doing so, Cointelegraph will align its interest in the project’s success and growth in token value with supported teams.
Strategic support in the program will typically run from nine to 24 months and will be based on the participating startup’s roadmap milestones, marketing and strategic goals. With long-term success in mind, Cointelegraph will leverage its vast partner network to offer a comprehensive, 360-degree marketing strategy to support the program’s portfolio of projects.
This support comes in various shapes and forms, depending on each individual project’s needs. Cointelegraph can offer support in marketing, branding and introductions to investors, exchanges, mentors, market makers, technological partners and online and offline events.
Paul Solntsev, Head of Cointelegraph Accelerator, said: “We are excited to expand our product suite with the Accelerator program, bringing more knowledge and education to our worldwide audience, especially regarding emerging tech startups and evolutions in Web3.”
Paul continued: “We welcome companies with strong convictions and innovative projects to apply for the program and join our partner network to bring long-lasting value to the industry.”
How to participate
Cointelegraph is looking to support projects in their early stages of development that have already designed a product ready for market, usually between pre-seed and Series A stage. A well-outlined roadmap and project documentation with clearly defined utility for the token are also required.
To become part of the Cointelegraph Accelerator program, projects should visit the official Accelerator program website, where they can familiarize themselves with Cointelegraphs offers as a recognized media leader and brand establishment partner. From there, they can also apply.
Digital asset company Castle Island Ventures completed the largest financing in history, up to $250 million to invest in startups focused on building currency networks, financial services and Internet architecture, such as web3.
Castle Island Ventures is a venture capital firm founded by Fidelity alumni Nic Carter and Matt Walsh, focused on public blockchains. They invest in infrastructure and application companies that will enable these transformative protocols to power services for the next billion users.
Castle Island Ventures has raised a total of $30M across 2 funds.
Walsh expressed his hope that in addition to leading the pre-seed stage investment of excellent blockchain startups, he also hopes to lead more excellent web3 companies in Series A investment.
“The market opportunity and the wave of entrepreneurs that are actually starting things is just a lot bigger. The way we’ve reacted to the explosion in the space is to beef up our team and give ourselves the ability to go out and be a lot more aggressive in deploying capital in some of these companies.”
As reported by blockchain.News on January 21, Wallet Street Venture Capital firm, Andreessen Horowitz (a16Z) is rallying investors for a $4.5 billion dual fund targeted at making strategic investments in the cryptocurrency ecosystem.
$3.5 billion is billed to be earmarked for its newest cryptocurrency enterprise fund, while $1 billion will be reserved for strategic investments in crypto startups seeking seed funding.
Investments pumped into blockchain startups topped $30 billion in 2021, a figure that surpasses funding received in 2018, 2019, and 2020 combined.
Last year was impressive for blockchain startups, as research from CB Insights found that venture capital funding reached new heights during every quarter of 2021. According to CB Insights’ “State Of Blockchain 2021” report, $25.2 billion worth of venture capital funding went to global blockchain startups last year, demonstrating a 713% increase from $3.1 billion in 2020.
The report also found that the United States led the greatest amount of funding deals in Q4 of last year, generating $6.26 billion for 157 deals. The document notes that global growth was driven by increasing consumer and institutional demand for crypto-related products and services.
VC funding focused on crypto adoption
Chris Bendtsen, a senior analyst at CB Insights, told Cointelegraph that CB Insights’ report contains data aggregated from private marketing funding from over 3,000 blockchain and crypto companies that the firm regularly tracks. Bendtsen further explained that while the title of the report references blockchain, this serves as an overarching category that includes cryptocurrency, nonfungible tokens (NFT), enterprise blockchain and decentralized finance (DeFi). Bendtsen pointed out that the majority of VC funding mentioned throughout the report was allocated to crypto-focused startups. The report states:
“Over $100M mega-rounds (worth $100m+) were the driving force behind blockchain’s record funding year. The 59 mega-rounds in 2021 accounted for just 5% of total deals but 60% of total funding. The biggest mega-round deals went to crypto exchanges, brokerages, NFTs, gaming, and payments.”
According to the report, $1 out of every $4 worth of funding went to crypto exchanges and brokerages, which also equates to a quarter of all global blockchain funding in 2021. Bendtsen remarked that while the biggest deals went to major crypto exchanges such as FTX — which ranked as the second-largest equity deal for brokerages and exchanges in Q4 of 2021 — funding for country-specific exchanges has also been on the rise.
For instance, CoinSwitch Kuber, one of the largest crypto trading platforms in India, ranked No. 4 for top equality deals for brokerages and exchanges in Q4 of 2021, generating over $260 million in its recent Series C funding round. “Based on these findings, it’s become evident that we are seeing the globalization of crypto, as more country-specific exchanges are raising impressive rounds,” said Bendtsen.
Bendtsen further pointed out that global VC funding for crypto custody and wallet providers reached $6.3 billion last year. “Toward the beginning of 2021, a lot of funding was going to consumer-driven exchanges, but there was a shift later in the year that saw major funding rounds go to crypto custody providers and custodians,” he remarked.
For example, the New York Digital Investment Group (NYDIG) ranked as the top equity deal in Q4 of 2021 under the category of custody and wallet providers. In December 2021, the institution specializing in Bitcoin (BTC) financial services secured a $1-billion equity investment led by WestCap Group. Fireblocks, the digital asset custody platform, ranked directly under NYDIG with its $550-million raise from Sequoia Capital.
Michael Shaulov, CEO of Fireblocks, told Cointelegraph that he believes investors are paying more attention to custody and wallet providers because this has been the biggest barrier to entry for institutional participation. “Having a direct custody solution and technologies that can plug and play into the crypto capital markets is a game-changer for businesses and individuals alike,” he said.
“Our investors see us as the picks and shovels of the crypto industry. This includes everything from direct custody wallets and settlement networks to compliance integrations with Chainalysis and Elliptic, along with access to staking providers.”
In regard to the company’s latest funding round, Shaulov said that Fireblocks plans to expand its offerings to include securing high-value transactions around DeFi and NFTs. This is important, especially now as the number of scams and fraudulent activities within the DeFi and NFT sectors has increased.
Although criminal activity within the NFT space has started to quickly unfold, the CB Insights report found that funding allocated to NFT startups grew by a margin of 130 times. In 2020, NFT startups generated $37 million in VC funding, which reached $4.8 billion in 2021. “Gaming, marketplaces, and infrastructure are the top 3 NFT categories driving the funding craze,” the report highlighted.
Animoca Brands, which ranked as the No. 1 investor by company count in Q4 of 2021 according to CB Insights, made at least 49 investments in blockchain projects last year. Yat Siu, co-founder and executive chairman of Animoca Brands, told Cointelegraph that NFT and blockchain gaming overall were major drivers of the growth in funding last year:
“We have always believed that NFTs, and in particular gaming, are key to the mass adoption of blockchain, and I think what happened in 2021 strongly suggests that this thesis will be realized in 2022. It’s interesting to note that in 2021, many new blockchain users entered the world of crypto not because of cryptocurrencies but because they were seeking to acquire NFTs.”
Traditional VCs take an interest
In addition to where funds are going, Bendtsen noted that the CB Insights report found that more traditional investors started taking interest in blockchain startups last year:
“Over the course of 2021, Andreessen Horowitz jumped out as a smart-money investor. They are one of the biggest VC firms in the world and announced a huge crypto-focused fund in June of last year.”
As Cointelegraph previously reported in June 2021, the Silicon Valley venture firm launched “Crypto Fund III,” a $2.2-billion venture fund co-led by Andreessen Horowitz general partners Chris Dixon and Katie Haun. According to the CB Insights report, Andreessen Horowitz was ranked as the No. 3 blockchain investor in 2021, falling under Coinbase Ventures and China’s AU21. “Our numbers show that Andreessen Horowitz invested in 46 blockchain startups last year, the third-most of any investor out there, including the crypto-focused funds. This shows that we are seeing more traditional firms coming into the crypto space,” remarked Bendtsen.
While this may be, Siu noted that Andreessen Horowitz has had a much longer history with blockchain investments. For instance, the venture firm invested in blockchain-company Dfinity in 2018. As such, Siu remarked that while Andreessen Horowitz isn’t new to the space, the company did ramp up its investments in Web3 startups throughout 2021.
“It is very clear that A16z and other major investors like Sequoia China understand the enormous potential of Web3 and of the value that the application of blockchain can deliver, and they are investing accordingly,” he said. Given this, Siu believes that more well-known venture capitalists and firms will continue to invest in blockchain startups, particularly those innovating with NFTs.
Will crypto price volatility impact funding?
While recent growth for blockchain startups has been impressive, crypto price volatility and unclear regulations may create challenges for companies looking to raise funds in the future. For instance, rising inflation in the United States may further impact the price of Bitcoin. Also,
Virtual world project The Sandbox announced its metaverse accelerator program that will push the development of the open metaverse by investing $50 million in startups. The Animoca Brands subsidiary is partnering with the venture accelerator firm Brinc to target 30 to 40 blockchain startups a year for the program.
The Sandbox Metaverse Accelerator Program will allocate up to $250,000 in investment to each potential project and will give additional incentives to top-performing projects. The bonuses include The Sandbox (SAND) digital asset and LAND, digital real estate within The Sandbox’s metaverse. Apart from this, the best-performing startups will also have access to additional investment grants and high-profile mentors.
According to The Sandbox Co-Founder Sebastien Borget, the program is an expansion of its goal to support a new wave of metaverse entrepreneurs. Through this, startups across the world can make their ideas come to life. “We’re especially eager to support underrepresented founders in their ambitions as they explore the infinite possibilities offered into The Sandbox ecosystem,” he said.
Applications are now open, and the first batch of investments is scheduled to proceed by the second quarter of 2022. The program runs within Launchpad Luna, a collaboration effort by Animoca Brands and Brinc that aims to support the development of startups.
The program supports the development of an open metaverse, the metaverse that is not owned by any single entity. According to Animoca Brands Co-Founder and Executive Chairman Yat Siu, the open metaverse “presents an incredible opportunity to create a participatory and collaborative nonzero-sum environment based on openness, equitability, user governance, and digital property rights.”
Related:NFT-focused Animoca Brands valued at $5B following $358M raise
Apart from supporting businesses, the development of the metaverse may also help the environment in the long run. Manav Gupta, the founder and CEO of Brinc believes that “as digital experiences develop, we will find ourselves having fewer reasons to emit carbon to travel for work or play.” Gupta says that this can decrease the demand for physical products like art and merch that have unsustainable production methods.
Crypto startup Palm NFT Studio announced a Series B raise of $27 million on Thursday led by Microsoft’s venture fund M12. Palm NFT, cofounded by ConsenSys founder and Ethereum cofounder Joseph Lubin, provides strategic and technical services for creators to build NFT marketplaces.
Other major backers include Griffin Gaming Partners, RRE, Third Kind Venture Capital, Sfermion, the LAO, Warner Bros., and SK Inc.
According to the statement issued on their company blog, the raise will enable the team to scale the Palm NFT Studio’s technology platform and offer it to third parties looking to deploy NFT projects across movies, games, music and art with regulatory compliance and environmental sustainability.
Dan Heyman, cofounder and CEO of Palm NFT Studio, believes that “within three years, most NFTs will be given away for free,” and added:
“We envision programs that mint millions of NFTs with utility; social objects that connect communities, drive engagement and reward true fans. We’re grateful that incredible partners like M12 share that vision.”
Palm NFT Studio co-created the Palm Network, an Ethereum sidechain that allows users to establish NFTs. Any NFTs made on the Palm Network or Ethereum mainnet can be bridged from the Ethereum mainnet to the Palm Network sidechain or vice versa, according to the company.
As new board members, M12 also published a statement to welcome Palm NFT to their portfolio and point out its focus on sustainability:
“The company and third parties have run tests that show the Palm Network requires magnitudes less computation and subsequent energy to execute transactions than proof-of-work chains. The Palm Network also has a carbon tax built into its bridge configuration, enforcing payment when mainnet resources are used.”
Since its launch earlier this year, Palm NFT Studio has collaborated with DC Comics to release an NFT collection of tokenized comic book covers, and worked with Damien Hirst to drop The Currency collection.