The upstarts of crypto aren’t just aiming to disrupt the startup status quo, some are rivaling traditional venture capital investors, too. That’s particularly evident today after Binance, the world’s largest crypto exchange based on daily trade volumes, announced a $1 billion fund to back blockchain and crypto startups.
The ‘Community Influence’ fund, which will be denominated in Binance’s BNB coin, will be aimed at nascent startups and also funds themselves, Ella Zhang — who heads the Binance Labs division — revealed today in an online web broadcast held today in Chinese.
For fund of funds investments as an LP, Binance is looking to back funds with at least $100 million in capital and, of course, a focus on blockchain and crypto. Correction: Zhang clarified that Binance’s approach is more flexible and aimed at helping create new funds. The firm is looking to work with fund managers who have managed $100 million in assets, not just those with $100 million pots. “We like small funds managed by experienced investors,” she said on Twitter.
The firm will also launch a Binance Ecosystem Fund which it said will include 20 partners. A Binance spokesperson told TechCrunch that further details of both initiatives will be released soon.
Data from Coinmarketcap.com ranks Binance as the world’s most active crypto exchange, with over $5 billion of crypto traded in the past 24 hours at the time of writing. The company calls Hong Kong home but it is in process of relocating to Malta, where it has been welcomed by regulators after it was forced out of Japan when regulators cracked down on its business.
This isn’t Binance’s first run at investment, it has already made deals via its Labs division, which was unveiled earlier this year and is described by Zhang as a “social impact fund.” It led a $30 million investment in MobileCoin — a startup that’s advised by Moxie Marlinspike, the founder of encrypted messaging app Signal and Open Whisper Systems — and it is establishing an incubator that will nurture ideas and young projects with financial backing and mentorship.
The company revealed today that its first incubation project will be Dache Chain, a new blockchain-based ride-hailing service in China. The company is already getting hype because one co-founder is Chen Weixing, the CEO of app development startup Funcity who initially founded Kuaidi Dache, a Chinese ride-hailing startup that eventually became Didi Chuxing, the country’s dominant service that forced Uber’s exit from China.
“This project will utilize blockchain technology to redesign the relationship between the interests and power of entrepreneur, labors, consumers, investors, and organizers. Dache Chain will establish a community ecosystem with value anchoring, and it is expected to achieve a pure shared ecosystem and solve the problem of unfair distribution of productivity and wealth,” Binance said in a statement.
Binance also revealed that, besides MobileCoin, it has made investments in smart contract startup Oasis Labs, verification service Certik, and crowdfunding platform Republic.
This initiative is another example of a major crypto company using its wealth to become an investor and grow its platform through deals with younger companies. I wrote about the trend earlier this year, and since then we’ve seen some notable vehicles emerge including the Ethereum Community Fund, Ripple’s Xpring initiative and EOS-creator Block One’s $1 billion commitment, which has birthed multiple funds that cover some $600 million.
Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.