How did Binance Labs grow to become a $9 billion crypto-focused venture capital firm with the most comprehensive resources?

Source: Binance Labs

Original link: https://abmedia.io/how-did-binance-labs-grow-to-9bln-vc

Recently, after the US Securities and Exchange Commission (SEC) filed charges against Binance.US and Coinbase, the cryptocurrency industry has experienced a series of market fluctuations. Because this industry is still in its very early stages, many policies and regulations have not yet been fully established. Therefore, it is particularly important to support industry participants, expand the ecosystem, achieve larger-scale adoption, and promote the continuous development of the early industry. Binance Labs, the risk investment and incubation department of the world's largest trading platform Binance, is playing this crucial role.

Long-termism of Binance Labs, providing comprehensive resources as advisory investment

Binance Labs Introduction

Established in 2018, Binance Labs is the venture capital and incubation department of Binance. Binance Labs aims to find many excellent blockchain startup teams, companies, and entrepreneurs, and provide them with resources and guidance to promote the overall development and large-scale adoption of the blockchain ecosystem. Currently, Binance Labs' investment portfolio covers 6 continents and more than 25 countries, successfully investing in and incubating over 200 projects, covering the entire Web3 track: public chains, protocols, infrastructure, NFTs, chain games, metaverse, DeFi, and CeFi, etc.

From the technical infrastructure, data analysis, security, and more, to the end-user product applications, community, and ecosystem construction, the "comprehensiveness" of Binance Labs is its biggest characteristic and advantage.

He Yi, who has many years of experience in the cryptocurrency industry, also serves as the co-founder and CMO of Binance. In August 2022, she took on the role of head of Binance Labs. Under her management and leadership, the overall capital scale has grown from 7.5 billion US dollars to 9 billion US dollars.

Binance Labs Long-termism: Identifying Potential Projects Willing to Continuously Cultivate

According to official data, Binance Labs has achieved a 10x return in the past three years. In recent media interviews, He Yi has also shared many investment insights of Binance Labs.

She believes that regardless of a bull or bear market, it is important to have a clear understanding of what one truly wants. During a bear market, valuations are lower and investors should be more proactive in investing, but not just for the sake of investing. They are well aware that projects that are deliberately following trends in order to make quick money usually lack a solid business model and will be forced to exit the industry once the hype and funding fade away.

Therefore, in a sluggish market, it is possible to identify and screen out those entrepreneurs or teams who truly believe in the industry and have sustainable operations. The bear market has become an excellent opportunity to search for potential investment projects.

This also reflects the core philosophy of Binance Labs: long-termism.

Binance Labs Three Major Investment Types of Mutual Benefit Cycle

Binance Labs envisions a future where people can easily use native blockchain products in various situations in their daily lives, just as we in the 21st century are accustomed to having convenient smartphones and various internet services.

However, the blockchain industry is still in its early stages, and there are still some technological bottlenecks and areas for optimization. Therefore, establishing a sound infrastructure is definitely the primary goal and investment direction, such as the first layer or cross-chain protocols.

After obtaining the underlying technology, the next step is to consider how these technologies can be applied to solve problems and meet the needs of people's lives. This is crucial to whether blockchain can bring more users and provide more efficient and better experiences for users. They also focus on some typical basic questions: What is your business model? P2E, M2E, or what is your innovation? (Note: P2E - Play to Earn, M2E - Move to Earn)

Whether a positive and mutually beneficial cycle can be established between technology and application is most crucially bridged by "security and trust". Only with a secure infrastructure can user trust be gained, and only with enough users can resources be invested in developing the infrastructure. Therefore, the third type of project they focus on is those that provide blockchain services to support the overall development and progress of the industry, such as data security.

Binance Labs not only provides funding, but also serves as a guide for technology, security, and business

When Web3 startups raise funds, there is a key difference from past industry models: they may not need to raise funds through venture capital firms, but can instead directly issue tokens for sale to users.

Binance Labs believes that users and communities are the core of Web3 projects. Therefore, instead of simply providing funding, if a venture capital firm can provide more guidance on technology, security, or token economic models, it may bring greater value and impact to the project. This is also the core purpose of Binance Labs' incubation plan.

"Binance Labs Incubation Program" will design two courses for each project based on their needs - Web3 Knowledge Tips and Entrepreneurship Operations.

During the eight-week training, project leaders have the opportunity to have one-on-one consultations with industry experts and engage in direct conversations with Binance Labs Incubation Program alumni (including founders of well-known projects such as Polygon, Injective, and Celer Network). Incubation projects can gain methodology for project construction, testing, and learning, as well as learn from the successful experiences of other projects, gain market insights, and achieve rapid iteration of project concepts.

After the training is completed, Binance Labs will invite investors, entrepreneurial mentors, industry experts, and potential business partners to participate in the presentation event held for them, allowing incubated projects to showcase and promote their plans to the market. After the incubation period, Binance Labs will also gather all alumni to build a comprehensive alumni resource network for them.

Binance Labs Investment Types: Infrastructure, Product Applications, Web3 Tools

Binance Labs' comprehensive investment landscape has enabled vertical and horizontal integration of technology, products, and communities. Here are three representative successful case projects:

Infrastructure: Polygon, Aptos, Sui

Polygon is currently the preferred Layer 2 scaling solution for Ethereum, aimed at solving the slow and high-cost drawbacks of Ethereum by placing transaction and smart contract calculations on a sidechain, and then returning them to the main chain after calculation. Its native token is MATIC, and as of June 2023, it ranks in the top 15 in terms of total market value. Its application is mainly focused on DeFi and NFT, with over 350 DApps, including the most representative ones such as DeFi lending protocol Aave, decentralized trading platform SushiSwap, and automated market-making service Curve.

Aptos and Sui are both Layer1 public blockchain networks originating from the Meta team. They are developed using Rust-based Move programming language and use the same PoS consensus mechanism as Ethereum. Aptos achieves high throughput parallel processing through MOVE and MOVE virtual machine (MoveVM). Aptos uses an improved software transactional memory (STM) called Block-STM for processing, which does not require transactions to explicitly declare which part of the state they use. Sui's parallel processing method is different, requiring transactions to explicitly declare which part of the blockchain state they modify. Solana and Sui both use this method, but Sui uses a different version of the MOVE language. Sui's Move language changes the storage module and asset permission, which sets it apart from Aptos.

Aptos and Sui both aim to enable developers to create better user experiences in Web3 and welcome the next billion users. Their main features include powerful scalability, a more secure smart contract language, the ability to define complex on-chain assets, and an unlimited development toolkit SDK.

Product Application: Space ID, GOMBLE

Space ID is a decentralized domain name protocol based on the BNB Chain and Arbitrum One chain. Since 2022, it has provided a one-stop platform for Web3 domain names and identities, where users can easily search, trade, register, and manage Web3 domains. Domain name services can turn complex wallet addresses (such as 0x69...) into easy-to-understand personalized names (such as Jack), and now, in addition to the only .eth option in the past, top-level domains such as .bnb and .arb can also be selected through Space ID. According to official data, the number of .bnb domains currently provided has exceeded 450,000.

GOMBLE is a blockchain-based casual game development team, with its parent company being a well-known game developer 111 Percent based in Korea. Its representative games include Random Dice: GO, RandomDice: Defense, BBtan, and more. The games under 111 Percent have accumulated more than 200 million global downloads. GOMBLE's 3A-level social game Rumby Stars breaks the high threshold problem of Web3 games requiring NFT assets as participation requirements, aiming to create a casual game suitable for all ages and skill levels, bringing players a higher quality gaming experience.

Web3 Tools: SafePal, Trust Wallet

SafePal was founded in 2018 and is a comprehensive decentralized cryptocurrency wallet that has received support from industry leaders such as Binance Labs. SafePal aims to provide users with a secure way to manage and increase their assets in the decentralized world through its hardware wallet, mobile app, and browser plugin wallet solutions.

SafePal platform currently serves over 10 million users in more than 200 regions and countries worldwide. It supports 15 languages, over 100 blockchain and its tokens, as well as NFT. It also offers easy-to-use cross-chain swap, cross-chain bridge, DeFi investment and other tools.

Trust Wallet is a secure open-source decentralized cryptocurrency wallet that allows users to manage over 9 million types of tokens and 1 million series of NFTs on 73 blockchains. Trust Wallet does not store user wallets, hold private keys, or request personal information, so users have complete control over their mnemonic phrases. Another key feature is the built-in DApp (decentralized application) browser, which allows users to interact and trade without adding detailed information about the blockchain. Users can also store NFTs on different blockchains such as Ethereum and BNB Smart Chain in the application for easy collection and appreciation of digital art.

The Future Outlook of Cryptocurrency Venture Capital: Incubating More High-Quality Startups is the Key to Popularizing Blockchain Applications

思考：创投企业与项目方的界线

Thinking: The boundary between venture capital firms and project parties

From the above three case projects, we can see the comprehensive investment of Binance Labs, covering the technical side of blockchain and infrastructure, to the user side of product applications and communities, helping the balanced development of the entire industry chain, and achieving excellent results with over 10 times return rate in just three years.

Venture capital firms have brought many opportunities and resources to the blockchain industry. On the other hand, we can also discuss and reflect on several issues from different perspectives:

Do venture capital firms also need to fulfill the management and supervision responsibilities of project parties?

Do venture capital firms have the right and obligation to avoid the occurrence of certain controversial issues?

When the project develops to the point where it threatens venture capital firms, creates conflicts of interest, or becomes a competitor, will it have a negative impact on the industry?

Binance Labs: The most comprehensive resource integration platform and the most powerful venture capital incubator

Whenever a dispute occurs, these issues are always brought up for debate, and after the topic cools down, the public gradually forgets about them. However, real developers need to solve various new challenges for a long and continuous time to thoroughly prevent problems.

This is also why Binance Labs continues to invest resources steadily, regardless of market conditions. Even in the bleak end of 2022, the funding scale continued to grow from the original $7.5 billion to $9 billion, and more innovative and experimental projects were supported. The goal is to provide a more comprehensive resource integration platform for industry builders, allowing funds, technology, and knowledge to be more effectively utilized.

We also look forward to the future blockchain industry, which can attract more users, technical talents, resources and funds, to develop a more diverse ecosystem, promote positive competition and growth among each other, and give birth to more diverse and explosive innovative products and applications.

Binance 为何愿意投入这么多的资源？

"Why is Binance willing to invest so much resources?"

Binance Labs differs from typical venture capital firms in that they do not need to rush to recover profits, but instead focus on the overall development of the industry. Binance's core business is a trading platform, and they invest heavily in other public chains, protocols, infrastructure, NFTs, blockchain games, metaverse, DeFi, and CeFi, all in order to allow us to enjoy blockchain technology safely, simply, and conveniently. The more people use cryptocurrencies, the more users the trading platform will attract, and the more revenue it will generate. These profits can then be reinvested in incubating more projects, thereby establishing a virtuous cycle of industrial chain economic development.

If you want to learn more about the investment landscape of Binance Labs, click here to see the complete content. If you are a project team and want to learn more about incubators and venture capital news, please visit the official website of Binance Labs.

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