Binance raises $500 million fund to invest in 'Web3' as crypto slides into bear market

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Binance, the world's largest cryptocurrency exchange, is launching its own venture capital fund.

The company's venture arm, Binance Labs, said Wednesday it has raised $500 million for its debut start-up fund, securing backing from venture capital firms DST Global and Breyer Capital as well as unnamed family offices and corporations.

Binance Labs plans to use the capital to invest in companies building «Web3.» Though still an ill-defined term, Web3 loosely refers to a hypothetical future iteration of the internet that's more decentralized than online platforms today and incorporates blockchain, the shared digital ledgers behind most major cryptocurrencies.

The launch of Binance's new fund arrives at a time when bitcoin and other digital currencies are down sharply. Bitcoin has plunged more than 50% since reaching an all-time high of nearly $69,000 in November. That's taken a toll on publicly-listed crypto companies like Coinbase, whose shares have plunged 69% since the start of 2022. Investors fear the slump will feed through to privately-held crypto start-ups.

While start-up valuations of $1 billion or more are «slowing down a bit,» there's «no current impact in early-stage private markets,» Ken Li, Binance Labs' executive director of investments and M&A, told CNBC.

Binance Labs is hoping to capitalize on the recent plunge in digital assets to find founders building what it sees as the next big thing in tech. Its bets will be split into pre-seed, early-stage and growth equity, and the fund will invest in tokens as well as shares.

«We are looking for projects with the potential to drive the growth of the Web3 ecosystem,» Li said. Such projects may include infrastructure, nonfungible tokens, and