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Fintech Deals Thought Bubble

Andreessen Horowitz is raising even more money to invest in crypto startups, this time seeking $4.5 billion across two new funds.

According to a report in the FT, the firm told investors that it planned to raise $3.5 billion for its latest crypto venture fund and another $1 billion for a fund focused on seed investments in digital asset startups. (A16z declined to comment on the report.)

Why it matters: A16z was already at the forefront of Silicon Valley VCs in terms of investing in crypto and web3 startups, but the influx of capital would put it well ahead of its peers — even without key partner Katie Haun.

The amount the firm is raising underscores a16z's belief that it is getting on the ground floor of a new world order. 

With $1 billion earmarked just for seed investments in the sector, that fund is not only one of the largest dedicated to crypto — it's likely the biggest seed commitment of all by a wide margin. 

Greylock raised $500 million for a dedicated seed fund in September that it dubbed the industry's largest focused at that stage.

Context: A16z raising more cash for crypto shouldn't be a surprise, as Axios' Dan Primack reported last month that Fund III was already fully deployed at the time Haun left to launch her own fund. What's surprising is the amount being raised and the velocity with which the firm is deploying crypto capital.

These would be a16z's fourth and fifth dedicated crypto funds. They follow a $300 million Fund I launched in 2018, a $515 million Fund II in early 2020, and a $2.2 billion Fund III announced just last July.

Haun has a potential $900 million fund, Paradigm has a $2.5 billion fund, and Pantera Capital is said the be raising a potential $1 billion fund. Not to mention, a third of Europe-focused Blossom Capital's most recent $432 million fund is dedicated to crypto startups.  

Be smart: It's not just about GP conviction. Seeing the massive potential returns, limited partners have also gladly piled into crypto funds at volumes unseen in years past. The belief in crypto is going up the chain.

1 big thing: A16z's eye-watering crypto cash

Autograph, an NFT collections startup, raised $170 million in funding. Andreessen Horowitz and Kleiner Perkins led the Series B round. Katie Haun's new firm is also investing.

Why it matters: If the dollar amount isn't enough — after all, it seems as if every NFT-based startup is raising funds right now — the company is co-founded by Tom Brady.

Yes, that Tom Brady. The Tampa Bay Buccaneers quarterback. Former New England Patriots quarterback. Seven-time Super Bowl champion. Also, a crypto enthusiast who last year took a stake in FTX. 

Autograph's other co-founders are father-and-son duo co-chairman (and former MySpace owner) Richard Rosenblatt and CEO Dillon Rosenblatt.

Between the lines: Celebrities and the cryptocurrency world have a messy relationship. Earlier this month, Kim Kardashian and Floyd Mayweather were sued over allegedly promoting a token and artificially boosting its price.

It doesn't help that there's a sense that celebrities are diving into a world that they don't fully understand when it comes to crypto. As the SEC put it during the first crypto surge of 2017, "Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate."

Yes, but: If investors pitched crypto's potential to upend the backend of banks in the industry's last surge of 2017, much of this most recent bull run has been about the consumer, with whom celebrities have outsized cultural equity.

At $13.3 billion, NFT marketplace OpenSea is now considered the second most valuable crypto startup in the world.

Dapper Labs, the startup behind NFT marketplace NBA Topshot, raised $250 million last fall at a $7.6 billion valuation.

Meanwhile, many celeb-backed NFTs have traded at lower prices in secondary markets. Still, some celebrities have held successful NFT auctions: A number of Paris Hilton drops for example resold for a higher valuation.

Bottom line: Investors are now looking to make the celebrity successes more common — and betting crypto could go mainstream with the help of the right star power.

2. The BFD: Tom Brady's NFT play

Illustration of Tom Brady in football uniform catching a stack of cash.

Gemini, the cryptocurrency exchange founded by Cameron and Tyler Winklevoss, is betting big on institutional interest in crypto assets. To that end, it has made a couple of acquisitions to offer a better trading platform for big-time clients like hedge funds, market makers, family offices, and wealth managers.

What’s happening: In the past two weeks, Gemini has acquired two startups — Bitria and Omniex — that, once integrated with its existing trading platform, will round out its offering and power a new prime brokerage it calls Gemini Prime. 

The Bitria purchase is aimed at tackling the needs of wealth managers and financial advisors who need more robust tools for managing and rebalancing clients’ crypto portfolios.

Meanwhile, Omniex targets hedge funds and market makers who need the ability to order and execute trades across a number of exchanges. 

Why it matters: After many years of skepticism, institutional investors are coming around to crypto as an investable asset class. And Gemini wants to service those clients because frankly, that's where the money is.

According to a report by Fidelity published last year, more than half of institutions surveyed across Asia, Europe, and the U.S. said they invest in digital assets. And more than 90% of those interested in crypto expect to have some allocation in their institution’s or clients' portfolios in the next five years.

Still, the tools for managing those assets have not kept pace with institutional interest. That survey cited a desire among big-money managers to have better electronic trading, market data, and analytics capabilities for managing their crypto portfolios.

The big picture: Institutional interest in crypto isn’t purely speculative. Wealth managers and hedge funds are merely reacting to clients who have seen the returns of early crypto investors over the last decade, and — in the never-ending hunt for yield — want exposure to the burgeoning new asset class. 

3. Gemini targets institutional crypto traders

Illustration of gold coins with binary code and the letter "C" against a backdrop of a stock chart

Truist Financial joins the no overdraft club (American Banker)

As consumers and regulators have soured on overdraft fees — saying they disproportionately affect the financially vulnerable — banks have increasingly let go of that money-making lever. BofA, JPMorgan Chase, Ally Bank, and Capital One have all made moves in the same direction.

JPMorgan raises the pay for its junior bankers (Bloomberg)

It's a seller's market out there. Salaries for first-year investment bankers will start at $11o,00, up from the $100,000 it announced in June, per Bloomberg. Our question: When are the crypto bonuses coming?

Instacart launches a credit card with Mastercard and JPM (Mastercard)

For its first-ever credit card, delivery decacorn Instacart has signed up with Mastercard and JPMorgan to offer a co-branded card — allowing Instacart customers to earn points with the startup.

 Stash gives users cryptocurrency exposure (Stash) 

Automated investing startup Stash has added cryptocurrency to its roster of available assets to users, marking the ever-growing interest in the asset class.

4. Credit report

Illustration of a Scrabble board with letter tiles spelling "credit."

Gale Healthcare Solutions, a Tampa, Fla.-based healthcare and payments startup, raised $60m. FTV Capital invested. http://galehealthcaresolutions.com/

M2P Fintech, an Indian payments infrastructure startup, raised $56m. Insight Partners led, and was joined by MUFG Innovation Partners and insiders Tiger Global and Better Capital. http://axios.link/YWJD

BlockFills, a Chicago-based trading and financial technology company, raised $37m in Series A funding. Susquehanna Private Equity Investments, CME Ventures, Simplex Ventures, C6E, and Nexo invested. https://www.blockfills.com/

Lean Technologies, a Saudi fintech focused on accessing bank customer data, raised $33m. Sequoia Capital India led, and was joined by Jeff Immelt. http://axios.link/SMCV 

Carry1st, an African mobile games publisher and payments company, raised $2m. Andreessen Horowitz led and was joined by Avenir, Google, Nas and others. http://axios.link/KXFJ

Honeycomb, a Denver-based multi-property tech company, raised $15.4m in Series A funding. Ibex Investors led the round. https://honeycombinsurance.com

Ancient8, a Vietnam-based play-to-earn gaming guild, raised $4m in seed funding. Dragonfly Capital, Pantera Capital, and Hashed invested, as did Mechanism Capital, Coinbase Ventures, Alameda Research, 3twelve Capital, Alameda Research, GuildFi, Coin98 Ventures, Kyros Ventures, Raydium, Jump Capital, and Sipher. http://axios.link/Ux33

ApexEdge, a white-label subscription management platform for banks, raised $4m in seed funding. Florida Funders invested. www.apexedge.com

Vinter, a Stockholm-based crypto assets index provider, raised $3.4m, led by Octopus Ventures. www.vinter.co 

FV Bank invested in DIRO, a document and identity verification company. Financial terms weren't disclosed. https://diro.io/

Plaid has acquired Cognito, an identity verification and compliance (KYC, AML) platform. http://axios.link/Wrm1 

KKR acquired Merchants Mortgage & Trust Corp., a Denver-based lending platform for home flippers. http://axios.link/zep3

Inflection raised a new $40m fund to invest in crypto, web3, and blockchain startups. http://axios.link/9Rw3

5. Deals of the day

Kim Milosevich, who left a16z to join Coinbase as VP of comms, is rejoining the VC firm as its CMO of crypto. http://axios.link/dy3S'

Digital Currency Group hired Rumi Morales to lead its VC efforts. She's ex-Outlier Ventures and, before that, CME group.

Sultan Meghji, chief innovation officer at Federal Deposit Insurance Corporation (FDIC), is stepping down a year after taking the position. http://axios.link/pKix

Ashneer Grover, co-founder of unicorn fintech BharatPe, is taking a leave of absence amid allegations of problematic work conduct. http://axios.link/9LV6

Meanwhile, Better.com CEO Vishal Garg is back at the helm after his own hiatus. http://axios.link/SjIJ

6. It's personnel

7. Memes and mumbles

a meme image bearing the words "NFTs SO HOT RIGHT NOW"

Situational awareness: Today we're hosting an Axios Pro virtual kickoff event at 12:30 ET. Ryan will interview Affirm CEO Max Levchin and ask about the company’s first year in the public markets and Max's outlook for the BNPL industry as a whole. Register here.

A minor correction: Yesterday, we said you could slide into Ryan's DMs but gave you a dead link to his Twitter profile. Apologies! You can read his bad sports takes here.

January 20, 2022

1 big thing: A16z's eye-watering crypto cash