After hitting an all-time high last November when Bitcoin peaked at $69,000, the crypto market crashed drastically in May 2022, losing nearly a trillion dollars in value.
It was also the month that Bitcoin bottomed out at under $30,000. Crypto is currently in a bear market, an economic cycle that encourages investors to buy while prices are low. And that is when the world’s largest crypto exchange launched its own venture capital fund.
According to CNBC, Binance Labs has raised nearly half a billion dollars dedicated to investing in Web 3.0 startups. Web3 is the upcoming internet iteration characterized by decentralization and a greater focus on blockchains, the digital ledgers that store cryptocurrency. This capital came from other VC firms, including DST Global, Breyer Capital, and a sizeable group of unnamed corporations.
This launch is happening as some digital assets have lost more than 50% in value after the November spike. This plunge has taken a significant toll on publicly listed crypto companies. Coinbase, perhaps the most well-known of such businesses, has seen its shares drop by 69% since the beginning of the year. Investors are concerned this market slump will affect private crypto startups.
Enter Binance Labs. The firm’s executive director of investments, Ken Li, told CNBC, “While startups valued at a billion dollars and up are slowing down, the current market conditions are not impacting early-stage private startups.”
This is the very purpose of Binance Labs, which hopes to capitalize on the crypto crash by finding the next great thing in the technology sector. Investments will be spread across startups’ pre-seed, early stage, and growth stages. Funds will be in the form of shares and crypto tokens. Li confirmed that the VC wing is explicitly looking for projects that will enhance the development of Web3. And this new arm of Binance has no shortage of potential customers. The exchange estimates that there are currently between 300,000 and 500,000 Web3 developers out there waiting for their chance to bring their vision to life.