Investors move into cross-chain, Bitcoin layer-2 and institutional tools

Venture capital firms are moving to seize market share amid the current bull cycle. March’s developments include the acquisition of quantitative trading firm CFT Capital by Web3-native investment company Borderless Capital.

The move adds artificial intelligence and quant proprietary trading products to Borderless’ businesses, targeting more efficiency in capital deployment across Web3 verticals, said the company, which has$600 million in assets under management.

Borderless is an early investor in Algorand, Blockdaemon and Securitize — the latter of which is BlackRock’s new partner in a tokenized digital fund.

The acquisition will also place Borderless in Latin America. “We are currently actively looking for Argentina, Uruguay, Brazil, Chile and Mexico,” Borderless co-founder and managing partner David Garcia told Cointelegraph.

For 2024, the venture firm expects cross-chain standardization to be the next chapter in the evolution of the crypto space. “The advent of modularity in blockchains is a long-term trend, and we anticipate new L1s, L2s, and even L3s will emerge. […] For mainstream adoption, we believe Web3 needs an aggregation layer that can interoperate across any chain,” Garcia said.

According to Garcia, another key investment focus at Borderless is decentralized physical infrastructure (DePIN). “We strongly believe DePIN represents a new coordination and innovation paradigm across many diverse industries, including communication, distributed computation, mapping, and transportation.”

In this edition of Cointelegraph’s VC Roundup, we feature startups that raised capital during the last weeks of March.

Morph receives $20 million in angel and seed funding

Ethereum Virtual Machine (EVM) layer-2 Morph has raised $19 million in a seed round led by DragonFly Capital with additional participation from Pantera Capital, Foresight Ventures, The Spartan Group, MEXC Ventures, Symbolic Capital, Public Works, MH Ventures and Everyrealm. The firm raised an additional $1 million secured in an angel round. The company plans to use the capital toward talent acquisition, developer incentives, and marketing efforts.

The blockchain is built on three pillars: decentralized sequencers, optimistic zkEVM integration and modular design. “Being one of the first to launch with a decentralized sequencer on Ethereum is also an example of our commitment to decentralization from the beginning,” said Morph co-founder and chief operating officer Azeem Khan.

FLock.io secures $6 million seed round to decentralize AI training

London-based Web3 decentralized AI startup FLock.io announced a $6 million Seed fundraising on March 28, co-led by Lightspeed Faction and Tagus Capital. The company aims to deploy its Federated Learning-powered Training Platform with the new funds, designed to decentralize AI agent training, fine-tuning, and inferencing while ending user data collection.

“Now, anyone can contribute knowledge and enrich AI models themselves. The result? Community-owned models built by the many, not just the few, with data contributors being fairly rewarded and far more use cases,” said the startup in a statement.

Keyring Network raises $6 million for digital asset compliance 

Keyring Network, founded by a former Nomura quant analyst and a J.P. Morgan investment banker in 2022, has secured $6 million in seed funding, co-led by Gumi Cryptos Capital and Greenfield Capital, with additional support from Motier Ventures, Kima Ventures, UDHC Finance, Eberg Capital and notable angel investors. The platform leverages zero-knowledge technology to address regulatory compliance and market liquidity for financial organizations, enabling private data sharing and identification of qualified participants for secondary market tokenized transactions.

“Keyring’s asset-level solution is the most flexible ZK compliance tool catering to financial institutions’ individual DeFi risk appetite. Users can restrict themselves in terms of counterparty interactions, so they can be as conservative as they would like to,” noted Felix Machart, partner at Greenfield Capital. 

Rails secures $6.2 million for self-custodial perpetuals exchange

Crypto perpetuals exchange Rails has raised $6.2 million in a seed round led by Slow Ventures, Round13 Capital, CMCC Global and Quantstamp. The exchange offers self-custody trading of perpetual contracts — a type of futures contract without an expiry date, allowing traders to better employ risk management strategies. The funds will be used to support the development of the platform, which uses smart contracts powered by zero-knowledge proofs.

Rails was created as a result of the FTX collapse, said its co-founder Satraj Bramba in a statement. “In addition to getting rugged on FTX, the harder pill to swallow was the loss of the most efficient, productive trading environment we had ever used. […] This massive gap in the market led to the creation of Rails.” 

Build on Bitcoin raises $10M seed round led by Castle Island Ventures

Hybrid layer-2 solution BOB, or “Build on Bitcoin,” has successfully raised $10 million in a seed funding round led by Castle Island Ventures with contributions from Mechanism Ventures, Bankless Ventures, CMS Ventures, UTXO Management, Asymmetric, Antalpha, Web3.com Ventures, BTC Frontier Fund and Zeeprime.

The funds are earmarked for launching the first Bitcoin layer-2 with Ethereum Virtual Machine (EVM) compatibility, designed to stimulate the onboarding of decentralized applications (DApps) on the Bitcoin network. BOB has also formed a strategic partnership with Anduro, a project by Marathon Digital, to collaborate on Alys, a Bitcoin layer-2 solution for institutions.

RACE unveils $5M raise amid testnet launch

Tokenization platform RACE has disclosed a $5 million funding raise aimed at supporting its recently released testnet. The platform offers tokenization of assets such as aircraft, real estate, private credits, art, jewelry and gold to accredited and institutional investors. RACE plans to build Decentralized Investment Committees (DICs) composed of industry experts who will perform due diligence on assets, including underwriting, legal services, asset custodianship and financial analysis.

“The DIC’s primary role is to conduct thorough due diligence of all potential opportunities before they are tokenized and made available on its infrastructure platform,” the company said in a statement. Investors backing the startup’s funding round were not disclosed.

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