Nestcoin, a development company housing modern finance project Onboard, has secured $1.9 million in a strategic funding round. Hashed Emergent, a Web2.5 fund for builders from emerging markets, led the round. Alter Global, Magic Fund, CMT Digital, and 4DX Ventures are among the existing investors that took part. Adaverse and Base Ecosystem Fund, two new investors, also participated.
It’s been almost a year since the implosion of the cryptocurrency exchange FTX caused Nestcoin, which raised $6.45 million in early 2022, to lose millions in assets (cash and stablecoins). Concurrently, Nestcoin slashed its headcount. The company had planned to create, invest in, and operate web3 products for customers in frontier markets across decentralized finance (DeFi), media, digital art, and gaming.
These unexpected events have required Nestcoin to reevaluate its objectives, CEO Yele Bademosi told TechCrunch. The two-year-old startup once served as a testing ground for new web/crypto products. Breach, a media platform; Brunch, a cryptocurrency-based group messaging tool; and Metaverse Magma (MVM), a gaming DAO that raised $3.2 million last September, all called the upstart home. But now Nestcoin is portraying itself as a development firm for Onboard. Meanwhile, MVM operates independently after being spun off.
“During this transition period, we were trying to make the best decision when there were no good decisions,” Bademosi recounts. “It helped that we were open and transparent with our investors and community. We had to make tough decisions regarding cutting product lines. We had to transition from a venture studio and investment holding company to a single-product company.”
Post-FTX crash
Nestcoin plans to use the money to not only shore up its finances, but also to continue with its mission to provide individuals in frontier markets with equitable access to economic possibilities through the development of Onboard. The firm claims that Onboard would help Africans unable to access financial services and possibilities to grow their wealth owing to location constraints or a lack of faith in the continent’s financial systems.
In a nutshell, Onboard is a noncustodial wallet. It competes with global services like MetaMask and Trust Wallet and domestic services like Ejara. These self-custody wallets let users securely store and protect cryptocurrencies, digital assets, and tokens. In contrast, Binance and Coinbase are centralized exchanges that entrust asset safekeeping to a third party.
“We believe this is the future of modern finance. People will shift to not trusting some third party or middleman to hold their assets,” Bademosi said on the call. “We also have many innovative features in the coming weeks. Rewards, credit and being able to pay or receive payments quickly are a few as we use underlying blockchain technology.”
Using emails instead of seed phrases to access wallets
Onboard, which launched in April, claims to have over 10,000 users. Per its website, users can “instantly” change crypto, especially stablecoins, to their local currency (the naira) via its wallet. A major differentiator from other self-custody wallets, Onboard notes, is that its users can use emails instead of seed phrases to access their keys. Seed phrases, if misplaced, can lead to the loss of crypto assets. On the other hand, Onboard claims to safeguard users’ assets with “secure key management and multifactor authentication.”
Similarly, Onboard, which isn’t disclosing its transaction volumes yet, provides a P2P marketplace for merchants to earn profits by trading digital assets. A virtual card product that allows users to spend stablecoins across 160+ countries is also in the works.
Two years ago, investors pushed money into blockchain technologies at a stunning rate, carried away by bullish optimism and frenzy buying of NFTs, DeFi, and web3 projects. As a matter of fact, in 2021, venture capital investments in blockchain companies hit a record high of $25.2 billion. However, it is common knowledge that investors are more conservative now. “From a fundraising perspective, this is the hardest time I’ve raised capital as an investor and a founder. It’s just a tough market,” said the founding partner of early-stage VC firm Microtraction. Bademosi has raised money from Binance, FTX, and now Coinbase through Base Ecosystem Fund for his blockchain projects.
Part of Coinbase’s ecosystem of decentralized apps
Base Ecosystem Fund invests in and supports early-stage projects built on Base, a low-cost, developer-friendly Ethereum L2 developed by crypto giant Coinbase. Coinbase’s goal with Base is to “make onchain the next online and onboard over 1 billion users into the crypto economy.” Onboard is integrated into the Base ecosystem of decentralized apps (dApps). For that reason, Bademosi considers it a global product, even if its initial clients (mostly tech professionals and enthusiasts) have come from Nigeria.
“Onboard was part of 15 global brands that took part in the launch of Base, including Coca-Cola, Atari, Open Sea and Optimus. We were the only sort of African brand and project. And I think we’re the fund’s second investment globally,” said the chief executive. “The problem we’re solving is global. One thing people should expect from us over the coming months is an intentional push beyond the continent’s shores.”
Last month, Coinbase CEO Brian Armstrong, in a tweet, described a P2P exchange fully onchain platform as one of the things he was excited about in crypto. Bademosi believes this validates what Onboard is building. But only time will tell.
“We’re grateful to be building on Base with Nestcoin and proud to support them with the Base Ecosystem Fund. We’ve been inspired by their work creating Onboard, empowering people across Africa to come onchain and experience increased access, freedom and opportunity. We are excited to work together to bring the next million builders and billion users onchain together,” Jesse Pollak, creator of Base, said of the investment.