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Binance Labs raises $500M crypto fund from outside investors

Illustration of a hand cursor holding hundred dollar bills.

Illustration: Shoshana Gordon/Axios

Binance Labs, the VC arm of the giant crypto exchange, accepted money from external LPs for the first time and raised a new $500 million fund to invest in web3 startups.

Why it matters: Binance Labs is just the latest fund to increase exposure LPs can have to the crypto ecosystem, as unprecedented sums of LP money pour into web3 venture funds, even as crypto startup funding begins to slow down.

Driving the news: Binance Labs will now deploy funds from some family offices, private equity funds, and major corporations after running an incubator program and making early-stage and growth equity investments with Binance, the world’s largest global crypto exchange by volume, as its sole LP for the last four years.

  • Binance will remain an investor — but it won’t be the only one.
  • Other named LPs in the fund include DST Global Partners and Breyer Capital.

How it works: Binance Labs wants to be the lead or first institutional investor in the startups it backs, investment director Ken Li tells Axios. That's in contrast to a lot of other CVCs that typically only co-invest or follow other institutional VCs.

  • For the incubator/accelerator program, Labs is “partnering with founders at the very earliest stages. Sometimes they might not even have any products or white paper,” he says.
  • In that program, Labs invests capital but also has a structured program that includes curriculum and mentorship from internal and external sources, wrapping up with a "BUIDLer" demo day.
  • For early-stage investments, Binance Labs looks for startups that already have a product, have some traction and are just raising their first or second private round of financing.
  • Growth deals typically go to equity-based companies that might not have a token but are more mature and have a clear understanding of VC principles like LTV, CAC and other business fundamentals, Li says.
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