VC Roundup: Capital flows and alternative funding models fuel crypto startups

Venture capitalists are back in crypto, bringing with them liquidity for alternative funding methods for startups, such as grants and node sales. 

Base-native lending platform Seamless, for instance, has announced a co-sponsored initiative with layer-3 Degen Chain and semi-fungible token protocol Pandora that will distribute nearly $600,000 in grants to creators and developers building on Base.

While Degen focuses on developers interested in building within Farcaster and Degen Chain, Pandora seeks creators interested in ERC-404 technology for their collections and memecoins.

“Members of the various communities will be evaluating applications, so it’s important that there’s a clear vision of how the grants will help uplift the relevant ecosystems. Useful and innovative ideas are encouraged,” told Cointelegraph Ras, a pseudonymous member of the Seamless Community Grants Program (SCGP).

New grant submissions are available through the Community Governance forum. Applicants must complete a form detailing their project and specific needs.

Another grant round is just around the corner, this time from the SingularityNET ecosystem. The Deep Funding Round 4, which will provide over $1 million in capital for decentralized artificial intelligence initiatives, is expected to be unveiled in early May.

While grants can be a valuable resource for new projects and developers, a more welcoming funding environment is also emerging for crypto startups. Investment in crypto firms  rose by 38% during the first quarter of 2024 , and the number of projects receiving funding grew by 49% — the highest since the fourth quarter of 2021.

In March alone, over $1.1 billion was invested across 180 crypto-related projects, a 52.5% month-on-month increase, with funds primarily directed toward infrastructure and decentralized finance projects.

Among April’s highlights to date, Paradigm led a $225 million round on layer-1 protocol Monad Labs, while Auradine, a crypto mining hardware provider, completed a Series B funding worth $80 million .

In this edition of Cointelegraph’s VC Roundup, we feature startups that raised capital during the first weeks of April.

AI-blockchain platform Sapien raises $5M in seed round

The artificial intelligence data labeling startup Sapien has secured a $5M seed investment from Primitive Ventures, Animoca, Ravikant Capital, and Yield Guild Games. Founded in 2023 by Trevor Koverko, previously of Polymath, Sapien aims to solve an AI bottleneck: data labeling. The company uses blockchain technology to implement gamification in data labeling and rewards for labelers to produce higher-quality work. The global data labeling market is currently estimated at around $3 billion, primarily dominated by labeling farms in developing countries. “This funding will allow us to expand our team, expand our frontend labeling infrastructure, and provide better quality data,” said Koverko in a statement. 

Ribbit Capital leads $10.6M funding round for Alpen Labs’s Bitcoin-based economy

Alpen Labs, a Bitcoin layer-2 developer, has successfully raised $10.6 million to enhance Bitcoin’s blockchain scalability using zero-knowledge proofs. Emerging from stealth mode, Alpen Labs aims to introduce smart contract functionality to Bitcoin through its rollup infrastructure. The funding round, led by Ribbit Capital, also saw participation from Castle Island Ventures, Robot Ventures, and Axiom Capital. The startup, which began its journey nearly two years ago, focuses on creating a programmable and scalable layer for Bitcoin, supporting various on-chain financial applications, including payments, lending, and stablecoins. The team has veterans from Blockstream Research, Nethermind, Aleo, and Palantir, building an ecosystem that will enable applications to settle transactions via Bitcoin.

Node sales generated $8M for Ethereum layer-2 HYCHAIN

Layer-2 decentralized network for gaming HYCHAIN has raised 2,098 Ether (ETH), worth over $8 million, within 48 hours through a node sale. The protocol employs a business model that allows community members to earn rewards by operating software nodes. Participants receive 25% of transaction fees indefinitely for contributing to network security. According to the platform, 16,876 node keys were created by 3,357 unique holders. The HYCHAIN mainnet launched on March 9, providing several features and bridges for connectivity with Ethereum and Polygon networks. 

Web3Firewall secures $2.5M in pre-seed funding

Web3Firewall completed a $2.5 million pre-seed funding round led by Laser Digital — Nomura’s digital asset subsidiary, gumi Cryptos Capital, and SPEILLLP, a Susquehanna International Group member. Founded in 2023 by Dr. Samer Fayssal, former chief information security officer at BitGo, the company offers an integrated risk and compliance platform designed for blockchain and digital asset companies, specifically targeting firms working in decentralized finance (DeFi), nonfungible tokens (NFTs), and decentralized autonomous organizations (DAOs). According to the startup, the platform will go live in the second quarter of this year, featuring real-time threat detection, prevention, and response powered by AI and machine learning. 

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