Private Equity

Top 10 Hottest web3 Start-Ups to Watch in 2022

2022's shaping up to be another record year for web3, but what are the start-ups to watch?

[Editor's note - Dec 2022]: Well... this post aged like a turnip left outside on a hot summer day! In only 10 months, several bankruptcies, multiple government investigations and the whole crypto sector cratering in on itself in the wake of rising interest rates and shattered investor confidence. We have left the original post in tact, however added where possible comments on the latest events surrounding each of the companies. Please enjoy what in hindsight may have been our most "peak-of-the market" list ever.

After a year dominated by crypto, NFTs and the metaverse and it is no wonder that so much attention is turned towards web3, which seems to seamlessly incapsulate all three of those concepts together. Although the term has attracted as much criticism as hype in recent months, one thing is for sure, this new industry (and the hundreds of start-ups leading it) are here to stay. In this article we take a look at the top 10 hottest web3 start-ups globally, as measured by their recent fundraising momentum, hiring and publicity.

1. FTX

Cryptocurrency exchange platform that allows users to trade crypto assets
  • HQ: Hong Kong / Bahamas
  • Staff: 160
  • Founded: 2018
  • Valuation: $25bn
  • Raised to date: $1bn

FTX is one of the world’s largest digital currency exchanges, competing with the likes of Coinbase, Binance and Kraken. The company acts as a gateway to the crypto ecosystem, allowing retail investors to convert traditional fiat money into a variety of crypto currencies and vice versa. The founder of the company, Sam Bankman-Fried, who studied physics at MIT, is something of a celebrity in crypto circles. According to Forbes, the 29-year-old entrepreneur is worth c.$20+ billion, making him the richest person in crypto. He is also the co-founder of Alameda Research, a quantitative trading firm, and has invested in a number of crypto start-ups. Sam Bankman-Fried is known for his active support of "effective altruism," the utilitarian-inflected notion of doing the most good possible. He has donated a sizeable portion of his wealth to causes like voter registration, global poverty mitigation and artificial intelligence safety.

Similarly to Coinbase Ventures, FTX has recently announced a $2 billion crypto investment fund, which it aims to deploy in new projects and companies that are adjacent to their ecosystem.

[Update]: FTX collapsed in Nov 2022, filing for Chapter 11 bankruptcy when it became apparent that the exchange is over-levered and does not have sufficient capital reserves to meet customer liquidity demands.

2. OpenSea

NFT marketplace that enables users to discover, collect, and sell blockchain-based digital assets
  • HQ:  New York
  • Staff: 220
  • Founded: 2017
  • Valuation: $14bn
  • Raised to date: $430m

OpenSea is a marketplace that allows to buy and sell NFTs, such as the famed CryptoPunks or Bored Ape Yacht Club. The company has gone through an astonishing recent period of growth as it was well positioned in the NFT niche when they exploded in 2021, seemingly out of nowhere. OpenSea has increased revenues from $95m in February 2021 to $2.8bn in September 2021, and the valuations have followed in-line. Their business model is similar to any other marketplace, with the company taking a 2.5% fee of every transaction conducted on their platform (which compared to Apple’s extortionate 30% take rate, feels extravagant in its consumer-friendliness.)

One of the company’s recent growth roadblocks has been infrastructure issues native to Ethereum on which it is built around. The popular blockchain has at times struggled to keep up with the NFT boom, leaving users paying for high “gas” fees needed to to make a transaction. Though these fees have largely cooled down since, OpenSea is also aiming to make a move toward long-term scalability by bringing support for several more blockchains.

3. Dapper Labs

Consumer-focused blockchain products made for fun and games that supports digital collectables.
  • HQ: Vancouver, British Columbia, Canada
  • Staff: 430
  • Founded: 2018
  • Valuation: $7.6bn
  • Raised to date: $610m

Dapper Labs is the company behind CryptoKitties, one of the world's most popular blockchain applications (remember the cute cats that you could cross-breed to form new ones?). Formed in February 2018, Dapper Labs was started to spread the benefits of decentralization through the power of play. Since the spin out, they have launched several new projects, including NBA TopShot (NTF-based video collectables) and are currently working on what seems to be a similar partnership with UFC.

Roham Gharegozlou is by no means a new comer to the crypto scene. Prior to Dapper, he was the founder Axiom Zen (started in 2013), an award-winning venture studio that specializes in mainstream applications of new platforms and emerging technologies including blockchain and artificial intelligence.

4. Celsius Network

Financial platform that facilitates trading, borrowing and earning money against crypto assets.
  • HQ: Hoboken, NJ
  • Staff: 450
  • Founded: 2017
  • Valuation: c.$2.6bn
  • Raised to date: c.$800m

Celsius Network, operates as a crypto bank that allows clients to deposit cryptocurrency and borrow either cryptocurrency or US dollars. The platform can legitimately claim to have pioneered the ‘yield for staked assets’ concept that powers much of decentralized finance today, launching their first product early in 2018. Today, the company has more than 1m of registered users and oversees $22bn+ in assets (AUM).

Celsius is lead by a colourful CEO, Alex Mashinsky, who a Russian-Israeli immigrant and claims to permanently live in the future.

5. Forte

Blockchain platform that allows for game makers to incorporate NFTs and rich token economies into their software development projects
  • HQ:  San Francisco
  • Staff: 200
  • Founded: 2019
  • Raised to date: $900m

Forte is a developer of a blockchain technology platform created to upgrade the gaming industry. The company's platform makes it easy for developers to apply blockchain technology to their games providing features such as embeddable token wallets, NFT minting and selling, payment rails, etc. This in turn enables game developers to have deeper monetization and engagement with their players.

In a traditional video game, players have no ownership of the game account assets - i.e., the items that players have earned or spent money on. When abandoned by the player, these items have no value. In contrast, video games built with Forte enable the players to own those in-game assets and once the value of the item’s NFT rises, players can sell their NFT to achieve profit. Game companies can get a certain fee in the transaction and realize profit as well.

As of 2021, there are more than 40 Forte game developer partners and more than 15 million partner game players.

6. Sorare

Blockchain-based fantasy football game where players can buy, trade, and play with official digital cards.
  • HQ:  France
  • Staff: 30
  • Founded: 2018
  • Valuation: $3bn+
  • Raised to date: $740m

Remember playing with the old football card when you were a kid? Well, now you can do that for a lot more money and on Ethereum! Sorare has built a fantasy football platform based on NFTs. Each digital card is registered as a unique token on the Ethereum blockchain and players can buy and sell these cards from other players.  What makes Sorare unique is that it has partnered with more than 150 football organizations, including some of the most famous clubs in Europe (e.g., Real Madrid, Liverpool and Juventus). These partnerships create a barrier to entry for other companies in the space and perhaps are some of the reasons for today's astronomical valuation of the company.

7. MoonPay

Financial technology company that builds payments infrastructure for crypto.

  • HQ:  Miami, Florida
  • Staff: 160
  • Founded: 2018
  • Valuation: $3.4bn
  • Raised to date: $600m

MoonPay’s software lets users buy and sell cryptocurrencies using conventional payment methods like credit cards, bank transfers or mobile wallets like Apple Pay and Google Pay. It also sells its technology to other ecosystem players, a model CEO Ivan Soto-Wright calls “crypto-as-a-service.” The company is positioning itself as a “gateway” to digital assets, which for now include bitcoin, ether and other digital tokens like NFTs. However Soto-Wright’s vision is to expand the platform to include everything from digital fashion to tokenized stocks.

MoonPay was founded in 2018 by Ivan Soto-Wright and Victor Faramond, who had previously worked together at in London.

8. Gemini

Licensed digital asset exchange and custodian built for both individuals and institutions
  • HQ: New York
  • Staff: 700
  • Founded: 2014 by
  • Valuation: $7.1bn
  • Raised to date: $400m

The Winklevoss brothers (Cameron and Tyler Winklevoss from the movie Social Network) are at it again, chasing and the next big thing in crypto. Gemini is a next-generation cryptocurrency exchange and custodian that allows customers to buy, sell, and store digital assets. The company has recently completed a number of acquisitions, including BITRIA, a San Francisco-based start-up whose tools help advisors manage holdings of bitcoin and other tokens.

9. Consensys

Software engineering studio / firm that specializes in the development of blockchain-powered infrastructures
  • HQ: Brooklyn, NY
  • Staff: 560
  • Founded: 2014
  • Valuation: $2.8bn+
  • Raised to date: $300m

The business has worked on several NFT projects, where they have created anything from token launches to whole marketplaces. The firm’s success has garnered financing from large payment industry players such as MasterCard, JPMorgan Chase, and UBS.

Consensys is led by Joseph Lubin a Canadian-American entrepreneur, who was one of the core contributors to the Ethereum project.

10. Axie Infinity (Sky Mavis)

Game studio behind the incredibly popular Axie Infinity crypto-game
  • HQ: Ho Chi Minh City, Vietnam
  • Staff: 90
  • Founded: 2018
  • Valuation: $2.9bn
  • Raised to date: $150m

Sky Mavis is the gaming studio behind the incredibly popular Axie Infinity franchise, which is a trading and battling game that allows players to collect, breed and trade creatures known as "Axies". New players need to purchase at least three axies to begin playing and only 18 months after launch Sky Mavis estimated that the average player had spent around US$400 on the game.

As of 2022, Axie Infinity has close to 2 million daily active users, which is impressive for such a recent new-comer. This has caught the attention of leading VC investors, with the company raising a $150m round from Andreessen Horowitz in 2021.

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