Ben Strack

<div id="highlights-block_627a8bb968baa" class="highlights">
 <ul>
 <li>The fund is the largest joint commitment made toward any blockchain ecosystem, according to the company</li>
 <li>The Flow blockchain has more than 7,000 developers </li>
 </ul>
 
</div>



Dapper Labs, the Web3 platform powering blockchain-based trading card platform NBA Top Shot, unveiled a $725 million ecosystem fund in a bid to spur community growth.&nbsp;



The fund is the largest joint commitment made toward any blockchain ecosystem, the company said in a statement Tuesday. Participants include venture capital firm a16z, Coatue, CoinFund, Greenfield One, Liberty City Ventures, Digital Currency Group and Union Square Ventures.



&#8220;As [Web3] accelerates and sophisticated app developers search for the best platforms, Flow is perhaps the best decentralized blockchain built for the scale, security, and ease of use most modern startups need to succeed,&#8221; CoinFund Managing Partner David Pakman said in a statement.&nbsp;



The fund will offer existing and future developers support to build applications on Flow blockchain through investments and FLOW token grants. It will focus on support for gaming, infrastructure, decentralized finance, content and creators, and the capital may also be used for team expansion, user acquisition and general operating expenses.&nbsp;



A spokesperson for the company did not immediately return a request for comment.&nbsp;



Originally developed by Dapper Labs, Flow is a blockchain built for consumers that has had daily transactions triple since September 2021, according to the company.



Flow has more than 7,000 developers building on the blockchain. The protocol has roughly 1,000 active projects and 175,000 monthly active users. The Web3 platform powers <a href="https://nbatopshot.com/?c=BS_HP&amp;gclid=Cj0KCQjwmuiTBhDoARIsAPiv6L-FFjSIRpXDXLPG42G8C9B1eDZzbN5KHBcYDl_wgMVfAhiAYc7uxJgaAs_HEALw_wcB&amp;gclsrc=aw.ds" target="_blank" rel="noreferrer noopener">NBA Top Shot</a>, which allows users to own, sell and trade NFTs of NBA and WNBA plays and players, as well as <a href="https://nflallday.com/" target="_blank" rel="noreferrer noopener">NFL All Day</a>, which offers licensed NFL video NFTs (non-fungible tokens).



FLOW has a market capitalization of roughly $1.5 billion, according to Blockworks data. The price was up 8.2% to trade at $3.999 in the last 24 hours as of midday Tuesday.&nbsp;



Dapper Labs <a href="https://cms.blockworks.co/dapper-labs-closes-250m-round-bit2me-ico-raises-23-4m/" target="_blank" rel="noreferrer noopener">closed a $250 million round</a> in September, which the company said would be used to support additional brand-driven sports-, entertainment- and music-based products. Coatue and a16z had invested then, as well.



The investment is the latest in a string of digital asset investments for a16z, which recently launched <a href="https://a16z.com/2022/04/21/announcing-a16z-crypto-research/" target="_blank" rel="noreferrer noopener">a crypto research lab</a>. The firm was <a href="https://cms.blockworks.co/what-does-binances-investment-in-twitter-mean-for-the-social-networks-future/" target="_blank" rel="noreferrer noopener">one of 18 investors</a> backing Elon Musk’s $44 billion bid to purchase Twitter, pledging $400 million. It also <a href="https://cms.blockworks.co/a16z-leads-25m-raise-for-nft-focused-cocreate-protocol/" target="_blank" rel="noreferrer noopener">led a $25 million seed round</a> to fund the launch of the NFT-focused Co:Create protocol.



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Flow Raises $725M To Fund Blockchain’s Growth

Casey Wagner

<div id="highlights-block_619d440c1055f" class="highlights">
 <ul>
 <li>Crypto native and traditional VC firms alike are investing in the space en masse</li>
 <li>Opinions are split on whether this is just what the industry needs or if the dollar flood is a little too frothy</li>
 </ul>
 
</div>



With more than $3 billion in venture capital funding this month alone, there is no shortage of cash in the crypto space.&nbsp;



In the first nine months of 2021, crypto startups raised more than $15 billion in venture funding, nearly five times the total amount for 2020, according to data from <a href="https://www.cbinsights.com/research/report/blockchain-trends-q3-2021/?utm_source=CB+Insights+Newsletter&amp;utm_medium=email&amp;utm_campaign=newsletter_general_thurs_2021_11_18&amp;utm_term=block-1&amp;utm_content=research-public" target="_blank" rel="noreferrer noopener">CB Insights</a>. 



“Early-stage rounds (seed/Series A) dominate the dealmaking, capturing almost 80% of deals in 2021 YTD,” Anand Sanwal, CEO and co-founder of CB Insights, wrote in a recent note.&nbsp;



So far in November 2021, <a href="https://cms.blockworks.co/paradigm-launches-2-5-billion-crypto-fund/" target="_blank" rel="noreferrer noopener">the largest crypto venture fund ever</a> — $2.5 billion — launched, <a href="https://cms.blockworks.co/blockchain-com-gives-bitcoin-mining-infrastructure-company-griid-525m-credit/" target="_blank" rel="noreferrer noopener">over $500 million</a> was invested in a mining infrastructure company and <a href="https://cms.blockworks.co/gemini-aims-to-raise-400m-to-bring-valuation-over-7b/" target="_blank" rel="noreferrer noopener">Gemini secured $400 million</a>, valuing the exchange at over $7 billion. 



“Investors like Coinbase Ventures are also bursting onto the scene — the VC arm was by far the most active blockchain crypto investor with 24 deals in the quarter,” Samwal wrote.&nbsp;



The money isn’t only coming from crypto-native firms, either. Traditional VC groups, from <a href="https://cms.blockworks.co/sam-bankman-frieds-ftx-raises-precisely-420-69m/" target="_blank" rel="noreferrer noopener">Sequoia Capital</a> to <a href="https://cms.blockworks.co/polychain-capital-paris-hilton-and-others-invest-20m-in-swiss-based-origyn-foundation/" target="_blank" rel="noreferrer noopener">Bill Ackman’s Table Management</a>, are beginning to enter the space, and experts are not surprised.  



“Venture capital is a great way for institutional investors to invest in crypto without in fact investing in crypto,” said David Tawil, president of ProChain Capital. “They get the exposure to the asset class in some way, but they don&#8217;t have to deal with the issues of the regulatory environment and compliance issues and risk related issues of Bitcoin or Ethereum and so on.”&nbsp;



<h3 class="wp-block-heading">Venture capital everywhere</h3>



It is no surprise that crypto projects are seeing an increase in funding given the broader success of venture capital investments in recent years, Tawil said, pointing to endowment funds.&nbsp;



“A limitless number of endowments clocked over 50% returns for the year, and the overwhelming majority of the outsized gains was attributable to venture capital-related investments,” Tawil said. “So although at some point, you would think that there would need to be a rotation, at least for now, it seems that there&#8217;s continued investment in venture capital in terms of leading the way for portfolio gains.”&nbsp;



There has also been a significant increase in the number of protocols and projects in the digital asset space seeking funding, Samwal and Tawil agreed. Tawil admitted that with so much money in the space and so many new projects, there are inevitably going to be companies or tokens that don’t succeed, but overall, he is confident that the VC trend will continue for some time.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“I believe that this technology is revolutionary, it has a crazy growth trajectory,” Tawil said. </blockquote>



“Crazy, like parabolic — in terms of what it is going to do for the world, how much revenue it&#8217;s going to generate. It&#8217;s going to take revenue away from other business lines — older line businesses, and so on — but there&#8217;s a ton of value to be generated.”



Others are less certain that the funding is being directed towards the best areas of the market.&nbsp;



“People are trying to put hundreds of millions of dollars into projects that have no product, no roadmap — just a general idea they wanna figure out with like, $1 to $2 [million] in funding,” Meltem Demirors, chief investment officer at CoinShares wrote in a <a href="https://twitter.com/Melt_Dem/status/1462956344403767298?s=20" target="_blank" rel="noreferrer noopener">Tweet</a> on Monday. 



David Pakman, a managing director at CoinFund thinks these seed and early-stage funding rounds are just what many companies in the digital asset space need. Over the last 18 months he has seen many projects develop with the support of small rounds, and now they are ready for larger investments.&nbsp;



Companies that were once largely overlooked are now “getting real revenue, and they&#8217;re accelerating rapidly — basically, they hit product-market fit,” he told <a href="https://fortune.com/2021/11/18/vc-crypto-funds-are-getting-bigger-so-are-the-opportunities/" target="_blank" rel="noreferrer noopener">Fortune Magazine</a>. 



Tawil is confident that even a bear market, which some experts have been calling for in recent months, will not dissuade venture money from entering the space.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The VC money and the VC investment is probably going to grow even while cryptocurrencies themselves may swoon or may just stagnate,” he said.</blockquote>



“That begs the question of how there could be such dislocation in terms of pricing trajectory? You would think that things would stagnate on the VC side if they would stagnate on the cryptocurrency side, but if they&#8217;re not, then clearly there are different dynamics driving each one of those markets.”



<hr class="wp-block-separator"/>
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<hr class="wp-block-separator"/>

November’s Crypto VC Funding Already Tops $3 Billion

<div id="highlights-block_6181717171898" class="highlights">
 <ul>
 <li>David Pakman is bullish on NFTs and gaming, he told the crowd at the NFT NYC conference Tuesday</li>
 <li>NFTs are already being used successfully in gaming, and the trend is not going to stop anytime soon, he said</li>
 </ul>
 
</div>



NFT NYC — Non-fungible tokens are not a fad, and the gaming industry is proof, David Pakman, managing partner at CoinFund and Dapper Labs board member, said during a keynote speech at the NFT NYC event in Times Square Tuesday. 



“It&#8217;s easy to get caught up in the hype. There&#8217;s so much going on, prices are going up. NFTs are everywhere,” said Pakman. “But as builders, as people whose job is to carry this flag for the next 10 or 20 years and build a completely new internet, build a completely new financial system and completely take back intellectual property, you are all owners.”&nbsp;



The phenomenon of digital commodities has attracted the attention of major names in finance and media, including <a href="https://cms.blockworks.co/visa-steps-into-the-metaverse-with-first-nft-purchase/" target="_blank" rel="noreferrer noopener">Visa</a> and the <a href="https://cms.blockworks.co/dapper-labs-superrare-consensys-and-nifty-gateway-make-nft-news/" target="_blank" rel="noreferrer noopener">National Basketball Association</a>, and drawn in no shortage of cash. As Ethereum rocks <a href="https://www.cnbc.com/2021/08/23/people-are-paying-millions-of-dollars-for-digital-pictures-of-rocks.html" target="_blank" rel="noreferrer noopener">sell for $1.3 million</a> though, skeptics wonder whether the craze is nothing more than a bubble. There are use cases, Pakman insisted during his talk, and they are going to be user driven. 



Gaming is going to be the tipping point for mainstream adaptation of NFTs, Pakman said, and it all starts with NFT collectables, which have already seen <a href="https://cms.blockworks.co/nft-craze-rages-on-as-august-sales-near-900m/" target="_blank" rel="noreferrer noopener">immense growth in recent months</a>. 



“It&#8217;s because of the blockchain that we can now collect digital items,” Pakamn said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“NFTs create scarcity, provable ownership and provenance for digital items and using a collectible in a game is step one.”</blockquote>



Digital collectables are not all that different from trading cards or physical commodities, but NFTs can evolve and change, which adds another layer to the phenomena, Pakman said.&nbsp;



Games that incorporate NFTs successfully are those that allow the NFT to progress and develop based on player usage. Axie Infinity is the prime example, he said, because players purchase NFTs to increase their score and earn rewards.&nbsp;



“Plus, it makes game play more fun,” Pakman said. <a href="https://cms.blockworks.co/axie-infinity-rolls-out-staking-program-shakes-up-gaming-business-model/" target="_blank" rel="noreferrer noopener">Axie Infinity’s success</a> is just the beginning, he predicted. 



“I’m confident that we will literally see tens of thousands of blockchain games based partly on the Axie model,” he said, referring to what’s become known as play-to-earn.&nbsp;



While the concept of NFTs can seem impractical and abstract to many, NFTs represent connection for those in certain communities.&nbsp;



“NFTs represent our token in a community and what we as humans like to do,” he said. “One of the reasons we collect is to connect with other people in the community.”

CoinFund Partner Thinks NFTs are the Future of Gaming

Morgan Chittum

<div id="highlights-block_614b75900e98a" class="highlights">
 <ul>
 <li>Pakman has been investing in crypto since 2017 and was an early-investor in Coinbase prior to their IPO, according to a press release</li>
 <li>At Venrock, Pakman helped to lead Series A funding rounds for non-fungible token projects like Rarible and Dapper Labs</li>
 </ul>
 
</div>



Long-time venture capitalist David Pakman has reportedly left Venrock to be managing partner at blockchain investment firm CoinFund, Axios first <a href="https://www.axios.com/david-pakman-leaves-venrock-coinfund-crypto-56c7b273-c9c1-48a1-a745-937d85d64383.html?utm_campaign=organic&amp;utm_medium=socialshare&amp;utm_source=twitter">reported</a> on Wednesday.&nbsp;&nbsp;



During his over a decade-long span at Venrock, Pakman led Series A and Series B funding rounds in Dollar Shave Club and sat on the board until the company was acquired for roughly $1 billion.&nbsp;



His soon-to-be role as managing partner is not Pakman’s first step into crypto investing; CoinFund and Venrock have been collaborating on joint deals since 2018 with projects such as Flow, RARI and 3Box, according to a <a href="https://www.businesswire.com/news/home/20210922005297/en/CoinFund-Appoints-Top-Venture-Capitalist-David-Pakman-as-Managing-Partner">press release</a>.



“David led Venrock’s efforts in crypto and had the insight to partner with CoinFund early on. Together they have built an impressive portfolio of high potential blockchain and crypto companies,” said Bryan Roberts, Partner at Venrock, in a statement.&nbsp;&nbsp;



Although his early venture days were focused on more traditional tech investments, via Venrock the VC has led Series A rounds for non-fungible token (NFT) projects like Rarible and Dapper Labs.



Pakman will continue to hold his seat on many Venrock boards including Dapper Labs, which is set to hit a $7.6 billion valuation following a funding <a href="https://www.newswire.ca/news-releases/dapper-labs-announces-250m-in-funding-from-coatue-a16z-gv-bond-gic-and-more-814831922.html">announcement</a> of $250 million on Wednesday.&nbsp;



In a blog post, Pakman detailed why he chose to shift full-time to focus on the asset class. He added the new job will give him “a chance to really build a firm, not just an investment portfolio.”



“Over its brief 13+ year lifespan, crypto has not only facilitated significant tech innovations but has proven to be the single best performing investment asset,” Pakman, who was an early investor in Coinbase, wrote. “If you are a professional investor tasked with finding the best returns in the market and you ignored crypto over the past decade, you missed the best asset class returns in eight of the last ten years and cumulatively overall.”



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Are you a UK or EU reader that can’t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a> in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.



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