Katherine Ross

Stablecoin payments processor Loop Crypto raised a strategic round co-led by VanEck and Fabric Ventures, the firm exclusively told Blockworks.&nbsp;



This brings the total funding raised by the firm to $6 million, but the team declined to give specifics on the most recent round.&nbsp;



Co-founders Eleni Steinman and Shane van Coller noted that they — like many in crypto — couldn’t have foreseen the rapid rise in stablecoins.&nbsp;



For Steinman specifically, Stripe’s acquisition of Bridge earlier this year showed that bigger players “see the value in rebuilding the payment rails and that it&#8217;s working…people really are choosing stablecoin payments because of their value proposition of being faster, cheaper, and just inherently global.”



<a href="https://blockworks.co/tag/vaneck">VanEck’s</a> Wyatt Lonergan said: “Once you start moving to stablecoins, like everything is instant, and in fact, that win, win, lose is inverted. The losers are kind of the banks that sit between you and the merchant, and the merchant can get access to their funds, and you can do all these really expressive, interesting things with stablecoins.”



“And that&#8217;s a lot of the tools that Loop has built to enable what feels like the same payment process for a merchant or a business to accept money,” Lonergan added.



Read more: <a href="https://blockworks.co/news/two-vaneck-funds-back-depin-dawn">Exclusive: 2 VanEck funds back Solana-based DePIN DAWN</a>



Loop has, as an example, built out the ability to charge a subscription using stablecoins.&nbsp;



“We basically get an approval from the user who&#8217;s paying in that stablecoin for our smart contract to spend that stablecoin on their behalf. So when they sign up for the subscription, the first thing that they do is sign this approval transaction, which gives us the ability to go and pull money from their wallets when that subscription becomes due in the future. So it really is a pull payment from the wallet, versus a payment that a lot of other payment solutions do,” van Coller explained.&nbsp;



Loop currently serves merchants such as Helius, OpenPay, Kaito, and Privy, just to name a few. A press release noted that paid transaction volume in the second quarter of this year jumped by 344% in comparison to the same time period last year.&nbsp;



Loop, the team noted, has had both crypto native and non-crypto native merchants looking for stablecoin payment solutions.&nbsp;



Read more: <a href="https://blockworks.co/news/vaneck-venture-fund-crypto-ai">Is crypto’s ‘ChatGPT’ moment nearly here?</a>



“​​Our game plan is to keep trying to grow…basically, how many merchants are using us, right? Are we solving their problems? And the quality of that merchant really matters to us too, so we don&#8217;t want to serve just like 1,000 merchants who are maybe doing a few transactions, but can we solve problems for 10 really good merchants and build tools that really meet their needs,” Steinman told Blockworks.&nbsp;



Lonergan added that he sees a “huge role” for projects in the space that are “neutral,” meaning that they aren’t pushing their own stablecoin and instead allow merchants to have a slew of choices based on their needs.&nbsp;



“It feels like even though it&#8217;s been massive growth, like it&#8217;s still really tiny compared to the payments. B2B payments is a $190 trillion category…And so I&#8217;m not quite sure that we know what businesses and consumers want yet. I think the winners are going to be ones that still could play that neutral role and just, again, facilitate whatever the customer needs,” Lonergan said.&nbsp;



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raise

Exclusive: Loop Crypto raises round led by VanEck, Fabric Ventures

David Canellis

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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We know there’s an obvious disconnect between the average retail investor and the whales with enough size to really influence markets.



Perhaps the most extreme gap is between, say, someone who holds a few thousand dollars’ worth of coins they’ve bought on an exchange, and a VC fund that holds the exact same tokens. The VC fund very likely acquired those coins for much, much cheaper. By orders of magnitude, even. In fact, it was never possible for the retail investor to have bought the tokens at the same price, considering the VC bought them for a flat price years before they were ever listed on an exchange.



Over the past year or two, liquid funds have become increasingly common in crypto markets. These operate similarly to traditional hedge funds in that they freely buy and sell publicly-tradable tokens according to their mandate.&nbsp;



In many cases, liquid funds trade via the same spot markets utilized by retail traders and market makers, although often with more sophisticated trading systems for more precise execution, with liquidity sourced via OTC desks, and so on.



“What is your mandate, Seth?” Yano asked Seth Ginns, Managing Partner and Head of Liquid Investments at CoinFund, on today&#8217;s Empire podcast episode.



“Our mandate is, as an investment firm, to find the best, fundamentally driven opportunities on the venture and liquid side. And then [on] the liquid side, we drive absolute return strategies,” Ginns said.&nbsp;



“So we’re investing in secular growth opportunities where we think that the addressable market is very large, the team is fantastic, and there&#8217;s the opportunity to have a large return based on a fundamental underwrite over a multi-year period.”



Ask a retail investor what their mandate is and they’d probably tell you something similar, albeit with less jargon: find the least risky coins with the most potential to go up, and buy that.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/QX6jxGQlM-w?si=mxChyLkfoXldLOje" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Cosmo Jiang, General Partner and Portfolio Manager at Pantera Capital, distilled his firm’s strategy into generating outperformance — which generally means beating bitcoin’s returns by picking tokens.&nbsp;



Both Jiang’s and Ginns’ funds hold between 10 and 20 or so different coins right now.&nbsp;



Jiang said: “The edge of other managers is going to be around perhaps the acquisition part of the token, and others might be around the execution side — that’ll be the market-neutral guys, the market makers and things like that.



“But on the far end where I&#8217;m on, I believe the vast majority of our performance, if I were to do performance attribution, comes from token selection and less so the actual execution.”



He explained that Pantera uses a variety of options, primarily spot trading with some derivatives to access liquidity elsewhere. Pantera’s fund is domiciled in the US, which means it cannot trade on international exchanges.



As for how these funds actually pick their coins, Ginns had this to say:



“It’s an environment where if you do the work, if you have the connectivity, if you&#8217;re going to the developer conferences, if you can see where the tech is going, you can actually drive really good returns like that.”



He continued: “That was the biggest frustration over the last few years: You could do the work, but you weren&#8217;t seeing those positive fundamentals reflected in the token valuations. And there&#8217;ve been some really big changes that have happened, so it&#8217;s not just the change in [US] administration that&#8217;s been a catalyst.”



Catch the full episode (which includes insight into both portfolios) on <a href="https://www.youtube.com/@empirepod">YouTube</a>, <a href="https://open.spotify.com/show/4UTePv1CR3APdKOiosR3Iq">Spotify</a>, <a href="https://podcasts.apple.com/us/podcast/empire/id1554930038">Apple Podcasts</a> and <a href="https://x.com/theempirepod">X</a>.



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altcoins

How liquid funds thrive in spot crypto markets

Shalini Nagarajan

Crypto had a messy 2022. But if the venture capital (VC) scene is anything to go by, things may be looking up.



Crypto deal activity improved last quarter, per Galaxy Digital, with 439 deals compared to just 366 in the fourth quarter of 2022. The 20% jump was largely driven by pre-seed deal activity, which more than doubled from the previous period.



But a higher number of deals didn’t convert to more capital. The crypto and blockchain sectors saw lower venture capital funding in the first quarter, altogether hitting $2.4 billion — the lowest amount since Q4 2020.



“In Q1 2023, crypto and blockchain startups raised less than half the amount raised just two quarters ago,” Alex Thorn, head of firmware research at Galaxy, wrote in the report.



Companies involved in Web3, NFTs, DAOs, metaverse and the gaming subsector scored the most deals. Meanwhile, companies tied to trading, exchange, investing and lending raised the majority of venture funding ($538 million).&nbsp;



Wallet-based startups were a close second at $519 million.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="2367" height="1134" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=1024&amp;h=1024" alt="" class="wp-image-51720" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=2367 2367w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/vcdeals.jpg?w=80 80w" sizes="auto, (max-width: 2367px) 100vw, 2367px" /><figcaption class="wp-element-caption">Crypto venture funding fell four quarters in a row (image source: Galaxy Research)</figcaption></figure>



Capital raises were dominated by US-based companies, followed by France. And it was mostly younger companies, established in 2021 and 2022, that raised venture deals.



Thorn wrote that if VC activity continues at this rate, 2023 would be a hot year for the industry.



“Despite significant drawdowns from the all-time highs in venture activity seen in 2021 and 2022, crypto VC activity remains elevated when looking back to the crippling previous crypto winter, even despite the rising rate environment stifling allocator interest,” he said.&nbsp;



“If the current pace holds exactly, albeit an unlikely scenario, 2023 will see more money invested than 2018, the biggest year for crypto VC prior to the last bull market.&#8221;



Mirva Anttila, director of digital assets research at WisdomTree, agreed that the crypto industry currently faces a positive trajectory.



“We believe we could be on the cusp of the fourth major bull market in crypto, although the exact timing is uncertain,” she said in a recent <a href="https://www.wisdomtree.eu/nl-be/blog/2023-03-31/digital-assets-outlook-2023" target="_blank" rel="noreferrer noopener">note</a>.&nbsp;



“Our belief is that the next bull market will be enabled by advancements in speed and scalability of the blockchain networks, more intuitive user interfaces, and innovations in blockchain wallets, as well as developments in digital identity, which will pave the way for Web3 applications.”



Venture funding aside, crypto markets are enjoying a healthy bear market reprieve. Bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) is up by over 80% this year, while ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>) is up 60%, as some <a href="https://www.reuters.com/business/finance/svb-collapse-may-prompt-fed-go-slow-rate-hikes-2023-03-13/" target="_blank" rel="noreferrer noopener">forecast</a> that recent bank failures could inspire the Federal Reserve to taper its aggressive monetary tightening.



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Galaxy Digital

Crypto Saw 20% More VC Deals In First Quarter: Galaxy

Bessie Liu

<div id="highlights-block_631f1a3df8a2b" class="highlights">
 <ul>
 <li>Blockchain gaming and metaverse raises dominated funding discourse last week</li>
 <li>Animoca Brands raised $100 million while Mysten Labs netted $300 million</li>
 </ul>
 
</div>



As traders <a href="https://cms.blockworks.co/the-flippening-will-ether-flip-bitcoin-in-the-next-year/" target="_blank" rel="noreferrer noopener">debate</a> whether Ethereum’s Merge represents a “buy the rumor, sell the news” event, metaverse and Web3 gaming projects continue to draw major funding.



Last week, the Hong Kong-headquartered Animoca Brands <a href="https://cms.blockworks.co/singapores-temasek-aims-100m-at-metaverse-giant-animoca/" target="_blank" rel="noreferrer noopener">secured</a> $100 million in a strategic funding round led by Singapore state-owned Temasek the likes of Boyu Capital and GGV Capital. Previous backers Mirae Asset Management and True Global Ventures (TGV) also participated, among others.



“Animoca Brands has grown significantly as a company in the last year, and our new investors will contribute strategic advice and perspective as we build the world’s leading company furthering digital property rights in the Web3 industry,” Yat Siu, co-founder and executive chairman of Animoca Brands said in a statement.



The blockchain gaming giant — the largest in Asia — appears quick to put that money to use. Word broke last week that Animoca had backed San Fransisco-based ​​Revolving Games in its <a href="https://cms.blockworks.co/animoca-brands-among-backers-in-13m-raise-for-revolving-games/" target="_blank" rel="noreferrer noopener">latest $13 million seed raise</a> alongside Pantera Capital, Polygon and Rockstar Games co-founder Dan Houser.



Revolving Games previously raised $12 million in pre-seed funding from backers including NBA TopShots’ Dapper Labs, Permanens Capital Partners, Kenetic, Saramayacar and DWeb3 Capital earlier this year.&nbsp;



Companies building new blockchains to underpin video games are also garnering interest.



Mysten Labs, another San Franciscan Web3 startup, in a Series B netted <a href="https://cms.blockworks.co/mysten-labs-300m-fundraise-values-business-at-more-than-2b/" target="_blank" rel="noreferrer noopener">$300 million</a> funding from investors to scale its fledgling blockchain, Sui. FTX Ventures led the round, with prominent investors from a16z, Jump Crypto and Apollo joining in.



Although a launch date has not yet been set, Mysten Labs envisions Sui as a low-cost creator-owned network, geared specifically for games.



“We believe that Sui’s novel architecture will meaningfully improve scalability and lower transaction costs, unleashing new web3 applications and experiences for a broader audience,” Arianna Simpson, a general partner at a16z said in a statement.



Meanwhile, the NEAR Foundation — the Swiss firm behind upstart layer-1 network NEAR — has just debuted a $100 million venture capital fund in partnership with newly-launched Caerus Ventures.



The fund, which initially closed with $50 million in capital, will focus on seed to Series A investments across Web3 culture and entertainment projects.



Separate from gaming, Seattle-based Web3 startup SpiceAI, which wants to make blockchain data more accessible, received <a href="https://cms.blockworks.co/web3-startup-spiceai-cooks-up-13-5m-raise-to-make-data-more-accessible/" target="_blank" rel="noreferrer noopener">$13.5 million</a> from Madrona Venture Group. Australian venture capital firm Blackbird Ventures and many angel investors also took part in the round.&nbsp;



In its current state, SpiceAI platform is a query interface integrated with GitHub and gives developers access to data from various protocols.



Other noteworthy raises last week include:



<ul class="wp-block-list"><li>Web3 UX startup Slide <a href="https://www.businesswire.com/news/home/20220908005232/en/Web3-UX-Startup-Slide-Raises-12.3M-Seed-Round-Co-Led-by-Polychain-Capital-Framework-Ventures" target="_blank" rel="noreferrer noopener">secures</a> a $12.5 million seed from Framework Ventures.</li><li>Software development and decentralized data storage startup Community Labs raises a $30 million Series A led by Lightspeed Venture Partners.</li><li>Gameplay Galaxy secures a $12.8 million seed from Blockchain Capital.</li><li>Synquote, a decentralized trading platform for cryptocurrency options, closed a $2.8M seed round.</li><li>Trystack.io received $2.7 million from Madrona to build crypto education trading platform.</li></ul>



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