Binance’s New $500M Web3 Fund Is Reserved for Institutional Investors

Following in the footsteps of venture capital firm Andreessen Horowitz and its recently launched $4.5 billion web3 fund, crypto exchange and blockchain firm Binance has launched its own web3 fund. For Binance, the valuation is slimmer, but still substantial at $500 million.

Is Binance’s new web3 fund accessible for retail investors, or is it reserved for institutional investors with more skin in the game? Here’s the scoop, plus what the $500 million fund will invest in itself.

Through Binance Labs, the world’s largest crypto exchange Binance has raised $500 million for a fund that aims to bolster web3, or the decentralized, third iteration of the internet. In some ways, web3 is already here with the use of blockchain technology and early-stage metaverse platforms. In other ways, it remains a speculative future banking on the promise of fleshed-out virtual worlds and a largely decentralized financial system.

Web3 is still an abstract concept, but investors are piling into the industry at a rapid pace. Major VC firm Andreessen Horowitz launched its own mega-fund specifically for early-stage and late-stage startups. Now, Binance is following suit. Like Andreessen, Binance Labs will also invest in startups.

Binance founder and CEO Changpeng Zhao said about the decentralized web earlier this year, “Exactly how it’s going to shape up, what exactly web3 looks like, which company, which projects — nobody knows.”

The timing of Binance’s web3 fund announcement is interesting given the current downward pressure in the cryptocurrency market.

Stablecoin Terra (LUNA) recently went through a reckoning that caused the asset to not only depeg from the U.S. dollar, but crash near zero. After recovering, it crashed again. Binance’s valuation also shrunk due to its sizable investment in LUNA.

Meanwhile, bitcoin (BTC) is down nearly 36 percent as of June 1. Other cryptocurrency assets tend to shadow movements from bitcoin, the original major cryptocurrency.

Still, Binance remains unphased. Ken Li, the executive director of investments and M&A at Binance Labs, told reporters that there is “no current impact in early-stage private markets” despite the broad condensing of unicorn valuations.

Unlike index funds or ETFs, venture capital funds usually aren't available to retail investors. In the case of Binance Labs, backers like DST Global and Breyer Capital have already committed.

Li says the fund is “looking for projects with the potential to drive the growth of the web3 ecosystem.” While retail investors aren't able to back this particular project, the capital could potentially propel some of the startups into the public market in due time. At this point, that remains a prospect on the horizon, much like the proposed web3 future itself.

While Binance isn't a publicly-traded company, crypto investors do have access to the Binance Coin (BNB), which trades on the Binance SmartChain. BNB is down 42.32 percent YTD and 15.85 percent in the 12 months ending on June 1.