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Binance Labs: Empowering Web3 and Blockchain Technologies

2022-07-20

Key Takeaways:

  • Binance Labs is an investor and incubator that supports founders and project teams at all stages of development.

  • Through strong partnership and dedicated guidance, Binance Labs helps blockchain and crypto startups extend the use cases of cryptocurrencies and drive adoption of Web3 and blockchain technologies.

Prologue

Binance Labs is the venture capital and incubation arm of Binance, the largest global crypto exchange by volume. By identifying, investing in, and empowering viable blockchain entrepreneurs, startups, and communities, Binance Labs is committed to supporting top projects that promote Web3 and blockchain technologies. Binance Labs envisions Web3 as the next generation of the internet, with digital information interconnected in a decentralized manner and publicly owned by users, enabled by blockchain technologies.

Due to the strength and diversity of its ecosystem, Binance Labs is among the best programs for blockchain startups and projects seeking product-market fit and competitive advantage. To date, Binance Labs has incubated over 100 projects in more than 25 countries across the globe. 

The History

Binance Labs was established in April 2018. After becoming the fastest company to reach unicorn status earlier that year, Binance aimed to create a more robust blockchain ecosystem through investments, incubations, and empowerment. Binance believes that having more blockchain unicorns in the space would be beneficial for all, especially users.

Since its inception, Binance has believed that blockchain technology has the potential to increase the freedom of money for everyone worldwide. However, before the ecosystem can support its first billion users, blockchain infrastructure requires significant improvements. Protocols need to be more scalable and smart contracts more secure, on top of making blockchain applications simpler, more user-friendly, and capable of serving many use cases. Through Binance Labs, Binance provides capital to the best blockchain projects for their development, and as a result, more people can access and join the blockchain revolution.

The Portfolio 

By applying effective investment strategies and conducting thorough due diligence, Binance Labs boasts an impressive portfolio filled with the most successful and popular emerging blockchain projects. Prominent examples include Axie Infinity, Polygon, and CertiK.

1. Axie Infinity

Axie Infinity is one of the market leaders in NFT gaming. This Pokemon-inspired digital pet universe is the first blockchain game that popularized the ‘play-to-earn’ model, which has revolutionized the gaming industry by allowing players to earn money as they progress through the game. 

The Axie Infinity ecosystem is governed by the Axie Infinity Shards (AXS). Binance Labs recognizes the potential of games to facilitate mainstream crypto adoption, and invested in token ownership of the AXS, which was officially launched on Binance Launchpad in October 2020

2. Polygon

Polygon, which is formerly known as Matic Network, is an Ethereum sidechain solution aimed at scaling up Ethereum through faster transactions and lower gas fees. To date, Polygon has scaled the performance of over 3,000 decentralized applications (DApps).

Binance Labs incubated Polygon through Binance Labs Incubation Program Season 2. Shortly after, Binance Launchpad supported Polygon and hosted its token sale on the platform. The partnership between Polygon and Binance Labs continued long after, with the two teams announcing an international Gaming Oasis Hackathon in August 2021.

3. CertiK

CertiK, a security audit firm that reviews smart contracts and blockchain platforms, is one of Binance’s early portfolio companies. Since 2018, Binance Labs has been actively supporting CertiK to build up the project pipeline. At the initial investment and incubation, the team was small but mighty, and has since surpassed 100 members. 

Now, Binance Labs is connecting CertiK with its portfolio companies. CertiK’s latest funding round valued the company at $2 billion, up from the $17.5 million valuation we invested at, and the company is now a market-leading audit firm with more than 3,200 enterprise clients. 

The Investment Strategy

Over the past few years, Binance Labs has made many investments across various sectors. Many of these projects have been adopted extensively across the globe. Binance Labs has a strong conviction in its investment strategy, which it has applied throughout the last few years and will continue to champion. 

1. Execute the investment organically with the entire Binance ecosystem

Within the Binance ecosystem, Binance Labs plays the role of a venture capital firm. The team is dedicated to uncovering the most promising projects and entrepreneurs globally that can make a positive impact on the industry. Subsequently, the team will then make an initial investment in the selected projects.

When considering the next project that could be listed on their respective platforms, both Binance Launchpad and Binance Launchpool will review the portfolio projects of Binance Labs. 

Through Binance Launchpad, Binance pioneered the Initial Exchange Offering (IEO), which could be described as an IPO made exclusively for blockchain projects. Meanwhile, Binance Launchpool includes additional features, allowing users to farm new assets and acquire new token rewards at no cost in return for staking tokens. Therefore, at this stage, projects in Binance Labs’ portfolio are considered solid enough to be introduced to Binance’s global user base. The crypto startups and entrepreneurs are provided with the support and guidance required to launch and advertise their tokens effectively.

On top of support and guidance, projects under development also require access to platforms and a pool of interested users as a testbed for their DApps. 

2. Strategically invest in projects and work collaboratively as one team 

Beyond acting as a strategic investor in promising projects, Binance Labs views its portfolio companies and projects as highly valuable ‘partners’. At the time of funding, the Labs team recognizes that the projects are usually at the earlier stages of product development. Therefore, the Labs team provides the founders and creators with support in many business areas, including legal, finance, networking, and marketing.

Trust Wallet is a great example of a project that received strategic investment and hands-on, tailored support from Binance. When Binance first invested in Trust Wallet, it did not have revenue and was fighting against more well-known wallets with better visibility. After being acquired by Binance in August 2018, Trust Wallet received essential support across product development and business operations, while still being able to operate independently. Now, Trust Wallet has become one of the leading wallets with more than 5 million users. The mobile application supports 53 blockchains and more than 1 million assets.

3. Discover promising global entrepreneurs through the Binance Labs Incubation Program 

Binance Labs runs its Incubation Program seasonally to discover and support the most promising entrepreneurs and blockchain projects worldwide. The program lasts for 8 to 10 weeks each time and seeks innovative ideas that could increase crypto adoption globally. The first three seasons of the program have garnered much interest and success within the industry, and the fourth season recently started with 14 promising projects being incubated.

Through the Binance Labs Incubation Program, entrepreneurs benefit from the program’s dedicated set of resources. 

  • Seed Investment. Binance Labs accept maximum project valuations of up to $3M, providing entrepreneurs with the initial funding and traction needed to grow their startup.

  • Mentorship. Binance Labs connects founders to business leaders from the Binance ecosystem who possess a wide range of expertise, from tokenomics and blockchain infrastructure technology to startup operations.  

  • Extensive Network. Startups can connect directly with Binance’s diverse network of industry leaders. There are ample opportunities given to entrepreneurs to have conversations with Binance CEO CZ, Binance co-founder and CMO He Yi, the Labs alumnus, and many other industry leaders. With honest feedback from these leaders, the entrepreneurs and projects are facilitated to grow even further.

  • Holistic Support. Binance Labs provide multi-faceted support for the startups, including regulatory and legal advice, recruiting, technical execution, fundraising, marketing and PR, and many others. 

Moreover, participating in the Binance Labs Incubation Program offers valuable exposure to the blockchain entrepreneurs and teams. They are given a chance to obtain funding from other venture capitalists that have connections with Binance Labs, since the demo day of Labs incubation is open to many global top-notch investors.

Through product launches and major funding rounds, blockchain startups that graduated from the Binance Labs Incubation Program have contributed significantly to the blockchain ecosystem’s development worldwide. Successful projects include Cere Network, Perpetual Protocol, and Dune Analytics.

4. Evaluate, anticipate, and lead the market trend 

Within the crypto and blockchain industry, the market changes and evolves very rapidly. This makes it hard to predict which sector will be the next ‘hype’ or ‘craze’ among crypto enthusiasts. That is why Binance Labs does not specify any sector for investment, but looks extensively for blockchain projects that have the potential to facilitate mass adoption of crypto globally. The Labs team believes that evaluating projects through the lens of ‘mass adoption’ would allow Binance to anticipate and spearhead the market trend. So far, this investment strategy of Binance Labs has yielded great success.

In the past year, decentralized finance (DeFi) and non-fungible tokens (NFTs) were among the biggest trends, with crypto users showing a deep interest in these sectors. When looking back at the portfolio of Binance Labs, many projects have been playing an important role within the DeFi and NFT spaces, thereby demonstrating the Labs team’s ability to evaluate projects and anticipate the market trend. Recently, Binance Labs has also been investing heavily in the metaverse through strategic investments with Community Gaming, Ultiverse, Mythical Games, and more.

5. Form strong investor partnerships and networks

Venture capital is not a winner-take-all game. Some of the industry ‘competitors’ are not really competitors; rather, they are often our peers and partners in our mission and our investments to make the ecosystem more mature. Binance Labs values and facilitates strong and positive long-term relationships with the leading financial and strategic investors in the space to leverage each other’s strengths in sourcing, finding, and enabling investments. 

Binance Labs is looking forward to developing and building on relationships with investors in the space to facilitate similar investments and partnerships in the near future.

Suggestions for Users

As one of the very first crypto venture capitalists, Binance Labs is committed to investing in and incubating promising entrepreneurs and projects within the blockchain ecosystem. This aligns closely with Binance’s mission to increase the freedom of money for all, regardless of their social status or geographical location. As more and more people use and trust a project, Binance Labs believes that the value will increase over time.

Aside from investment strategies, there are many questions that the Labs team frequently receives, such as “how do you determine what kind of projects you invest in?” or “how can I make a life-changing investment?”. Considering Binance Labs’ stellar track record over the past few years, many are keen to learn more about the process behind it. 

Here are some questions that the team ponders when doing due diligence for each portfolio.

  • Is this project needed in the world? Does the new solution create 10x value as compared to its traditional counterpart? 

  • What would people’s reaction be when this project is launched? Would people like it and use it? 

  • What does the business model look like and will this business be sustainable for the next 10 years? Were there any similar business models in the past?

  • How scalable is the project?

  • Who is the founder and what is the project’s vision? What does the team believe in?

  • What are some comparable projects out there and what is the fair evaluation?

Epilogue

Binance Labs hopes to empower the decentralized web through investments. Up until now, Binance Labs has made investments in 100+ projects and entrepreneurs from all over the world (25+ countries). This is only the beginning, and Labs is excited to make more investments that can disrupt the industry. 

Here are some recent investments that Binance Labs made:

Follow Binance Labs on Twitter for more investments to come.