Alliance DAO is attracting fewer US founders amid crypto crackdown
The graduates of Alliance DAO serve as valuable barometers of investor sentiment and user adoption trends within the crypto space. The recent unveiling of the latest cohort of this stage-agnostic crypto accelerator coincides with a period of significant excitement in the recovering market.
Just two months ago, Bitcoin reached its all-time high. Although its value has since retreated, it remains substantially higher than during the market downturn following FTX’s collapse in late 2022. Venture investors are demonstrating confidence by injecting capital into web3 startups, driving total fundraising in the sector to approximately $1.9 billion in Q1, marking a significant 58% increase from the previous quarter, as per Crunchbase data.
The resurgence of enthusiasm among web3 advocates is evident in phrases like “we are so back” circulating in crypto circles and on Twitter. However, regulatory scrutiny persists. In the U.S., Binance’s founder Changpeng “CZ” Zhao faces the prospect of becoming the wealthiest individual ever to be imprisoned. Additionally, Uniswap, known for its decentralized approach to digital assets, received a notice from the U.S. Securities and Exchange Commission (SEC) last month.
Predictably, the ongoing regulatory actions in the U.S. are influencing the geographical makeup of Alliance DAO’s cohorts.
As illustrated in the graph shared by Qiao Wang, a founding partner of Alliance DAO, North American-based founders comprised 45% of the accelerator’s applicants in the second half of 2021. However, this share declined to just 26% in the first half of this year.
Wang attributes this shift to two primary factors: regulations and the emergence of product-market fit in emerging markets. He suggests that the U.S. is losing market share for crypto founders over the past three years due to regulatory pressures and the increasing alignment of crypto with the needs of emerging markets.
Indeed, Alliance DAO has observed a consistent increase in interest from Asia, which accounted for 24% of all applications in the first half of 2024, compared to 14% in the second half of 2021.
The decrease in North America’s participation in Alliance DAO does not necessarily indicate that founders are abandoning their crypto aspirations. Historically, web3 entrepreneurs have demonstrated flexibility and nomadic tendencies, relocating to regions with more favorable crypto environments in response to regulatory crackdowns. Consequently, some may establish physical bases in emerging markets with more accommodating regulatory climates.
Asia has emerged as a particularly attractive destination for crypto entrepreneurs due to its large, youthful user base and receptiveness to new technologies and financial assets. Jurisdictions like Hong Kong, Japan, and Singapore have taken significant steps to provide clearer regulatory frameworks for the crypto sector, offering reassurance to founders navigating policy uncertainties elsewhere.
Meet the batch
Alliance DAO’s 12th edition of its three-month program garnered a remarkable 1,503 applications, representing a substantial increase from the previous batch’s 1,083 applications. However, only 21 teams were accepted this time around, resulting in a competitive acceptance rate of 1.4%. Out of these, twelve teams are presenting at today’s demo day.
While projects built on Ethereum continue to dominate, being the most active blockchain in terms of developer activity, other ecosystems such as Solana and Bitcoin are experiencing a resurgence, according to Wang. The cohort showcases a variety of popular verticals, including decentralized AI, crypto infrastructure (with a focus on modular blockchain solutions), decentralized finance (DeFi), and crypto-based payment solutions.
Now, let’s turn to the projects:
Company name: Villcaso
What it does: Permissionless U.S. real estate investing
Founders: Nathaniel Sokoll-Ward, Val Lee
The pitch: REITs, or real estate investment trusts, are structured to provide investors with fractional ownership of real estate assets, thereby reducing barriers to entry into the real estate market. While they offer greater liquidity compared to traditional property investments, REITs are generally inaccessible to global investors, despite the growing proportion of global investment in U.S. real estate. Villcaso aims to address this limitation by leveraging a “fully legal permissionless token” to facilitate the scaling and distribution of fractional ownership of U.S. real estate to a global audience. The platform holds small equity positions in a diverse portfolio of homes across the country, enabling investors worldwide to participate in real estate ownership opportunities.
Stage: Raising seed
Company name: GoBankless
What it does: Transferwise with stablecoins
Founders: Ygor Francisco, Khayalethu Mtshali
The pitch: GoBankless is targeting the rapidly expanding cross-border payments market in Africa, which has seen significant growth in recent years. Traditional banks’ lengthy processing times and high settlement fees have posed challenges for businesses, while those avoiding SWIFT’s dominance are exposed to counterparty risks in informal markets. To address these issues, GoBankless is leveraging stablecoins to facilitate instant cross-border payments without the need for banking intermediaries.
Currently, the startup serves approximately 50 small businesses in Mozambique and South Africa, processing around $7 million in payments each month. By eliminating the delays and costs associated with traditional banking systems, GoBankless aims to provide businesses with a faster, more efficient, and secure means of conducting cross-border transactions.
Stage: Raising seed
Company name: Wasabi Protocol
What it does: Leverage trading protocol
Founders: Eren Derman, Kemal Hasan Atay
The pitch: Cryptocurrency trading, particularly the trading of new assets like memecoins and NFTs, has experienced a significant increase in daily trading volume. Platforms such as Aevo and Hyperliquid have gained popularity for providing users with early access to these assets. However, they are heavily reliant on market liquidity, which can lead to missed opportunities for trader. To address this issue, Wasabi takes a different approach by providing liquidity backing for user positions with underlying assets, rather than relying solely on algorithms. Launched just a few months ago, Wasabi has quickly gained traction, with its total value locked (TVL) reaching $60 million and over $200 million in trading volume.
By offering a solution that ensures liquidity for traders, Wasabi aims to capitalize on the growing demand for trading platforms that support a wide range of cryptocurrency assets, including emerging ones like memecoins and NFTs.
Stage: Recently closed a seed round; raising a strategic round
Company name: Lulubit
What it does: Coinbase for Central America
Founders: Ianir Sonis, Diego Hernan Cabrera, Alan Futerman
The pitch: Central America has emerged as a region experiencing rapid crypto adoption, yet the process of buying and selling cryptocurrencies remains challenging. P2P networks are often unreliable, while established exchanges impose high fees. In response to this need, Lulubit provides a solution that enables retail users in Central America to seamlessly buy and sell cryptocurrencies directly from their local banks. Additionally, Lulubit issues crypto debit cards, allowing users to spend their crypto assets easily. The platform also facilitates on-chain remittances, providing users with a cost-effective alternative to traditional methods.
Despite being launched less than a year ago, Lulubit has already gained significant traction, amassing over 18,000 users and processing more than $1.3 million in volume in April alone. With a month-over-month growth rate of 36%, Lulubit is poised to further expand its user base and influence within the Central American crypto market.
Stage: Raising seed
Company name: ZwapX
What it does: Marketplace for tokenized watches
Founders: Yohan Chiovetta, Noah Chiovetta, Rocco Di Capua
The pitch: The billion-dollar luxury watch market represents a significant opportunity, yet it remains underserved by technological innovation. Peer-to-peer marketplaces often suffer from scams, while business-to-consumer (B2C) platforms encounter challenges with online authentication. In response to these issues, ZwapX provides a solution that enables users to trade physical watches in the form of tokens, which serve as certificates of ownership and authenticity.
To date, ZwapX has tokenized 44 watches, achieving a total value locked (TVL) of $1.4 million and a trading volume of $240,000. By tokenizing physical assets, ZwapX offers investors a secure and transparent way to participate in the luxury watch market, mitigating the risks associated with traditional trading platforms. As the platform continues to grow and expand its offerings, it has the potential to revolutionize the way luxury watches are bought, sold, and authenticated in the digital age.Stage: Raising seed
Company name: Fractal Payments
What it does: Cross-border payments for global businesses
Founders: Pavel Skalin
The pitch: Money movement for businesses remains one of the largest industries globally, yet it continues to face persistent challenges such as high fees and slow processing times. Fractal Payments is a startup aiming to disrupt the traditional SWIFT system by leveraging stablecoins. Fully licensed in the European Union, the company asserts that it can make cross-border payments three times cheaper and six times faster than traditional banking methods.
Fractal Payments has facilitated over $5 million in payments volume and operates with a network of partners that support payments in over 60 countries. By offering a faster and more cost-effective alternative to legacy banking rails, Fractal Payments seeks to provide businesses with a more efficient solution for their money transfer needs.
Stage: Raising seed
Company name: Código
What it does: Crypto data for AI training
The pitch: The training data market for AI presents a lucrative billion-dollar opportunity, exemplified by successful ventures like Scale AI. However, existing solutions predominantly cater to web2 use cases, leaving a gap in AI training with crypto data. Código steps in to address this void by offering meticulously curated datasets tailored for training specialized models for critical crypto applications, particularly those related to financial transactions.
Código collects data automatically through crowdsourcing and subjects it to a decentralized review and augmentation process. This process allows reviewers to earn tokens while ensuring the quality and accuracy of the datasets. Within just six months, the platform has generated an impressive 4,000 dApps and four million lines of code, highlighting its rapid growth and impact within the crypto data training space.
Stage: Raising seed
Company name: Accrue
What it does: Stablecoin payment network for Africa
Founders: Clinton Mbah, Adesuwa Omoruyi
The pitch: Bank transfers in Africa are known for their high costs and slow processing times, presenting a significant challenge for individuals and businesses alike. Accrue aims to address this issue by establishing a payment network that facilitates instant and affordable transactions, all powered by stablecoins. To achieve this goal, the startup is leveraging Africa’s existing network of mobile tellers, who enable users to conduct bank transactions via mobile phones, often through simple text messages.
Accrue is tapping into a pool of mobile tellers, with approximately 10% of them possessing knowledge and experience with stablecoins. These mobile tellers are attracted to Accrue because it offers them a greater share of profits and the promise of an upcoming token. Despite being a relatively new entrant, the startup has already achieved cash-flow positivity and has processed $5 million in payments.
By harnessing Africa’s mobile infrastructure and stablecoin technology, Accrue aims to revolutionize the payment landscape in the region, making transactions faster, more accessible, and more cost-effective for users across the continent.
Stage: Raising seed
Company name: Fig Investments
What it does: Tokenizing hedge fund strategies
Founders: Guanzhi Ma, Tony Qian
The pitch: The interest in decentralized finance (DeFi) services from traditional finance (TradFi) has experienced a significant surge, evidenced by institutional players like Blackrock venturing into tokenizing stocks. Capitalizing on this trend, Fig, founded by banking veterans, offers an automated trading desk that effectively bridges TradFi interest in crypto with on-chain liquidity provider (LP) interest to generate returns.
Fig boasts of achieving a scale ten times larger than its competitors. Since its launch just four months ago, the platform has rapidly grown its total value locked (TVL) to $10 million, with an additional $40 million in the backlog. By providing a seamless integration between traditional finance and DeFi, Fig is at the forefront of meeting the increasing demand for innovative financial services that leverage the benefits of blockchain technology.
Stage: Raising seed
Company name: 0G
What it does: Modular AI chain
Founders: Michael Heinrich, Ming Wu
The pitch: 0G is carving its niche in the highly competitive field of modular blockchain, where it aims to facilitate the scaling of Ethereum transactions. The startup operates as a data availability layer, ensuring that nodes within a blockchain network can access and validate transaction data efficiently. In this space, 0G faces formidable competition from well-funded projects such as EigenLayer, backed by a16z, as well as industry leaders like Celestia and Avail, which emerged from Polygon.
Distinguishing itself with its unique technology, 0G claims to achieve remarkable performance, surpassing Celestia by 50,000 times in speed while offering a cost advantage of 100 times less than its rivals. By leveraging its innovative approach, 0G aims to address the scalability challenges inherent in Ethereum and provide a more efficient and cost-effective solution for processing transactions on the blockchain.
Stage: Recently closed a 20x oversubscribed pre-seed round; raising seed
Company name: Proto
What it does: Google Maps on-chain
Founders: Akshay Yeleswarapu
The pitch: Despite its widespread use, Google Maps often falls short in accuracy, particularly in developing countries where cities are densely populated and urban development occurs rapidly. Recognizing this gap, Proto aims to enhance navigation accuracy in underserved markets by crowdsourcing mapping data and enabling contributors to upload images easily using their mobile phones. To incentivize participation, Proto offers token rewards for users who contribute to the platform.
Since its launch in late January, Proto has made significant strides, achieving 75% coverage of Bangalore compared to Google Maps, thanks to its network of 400 users. By leveraging the power of crowdsourcing and incentivizing contributions, Proto is poised to revolutionize navigation services in developing countries, providing more accurate and up-to-date mapping data for users in these regions.
Stage: Raising seed
Company name: Dinari
What it does: The global tokenized stock exchange
Founders: Gabriel Otte, Chas Rampenthal, Jake Timothy
The pitch: Global demand for U.S. securities has surged, but access remains constrained due to barriers imposed by traditional brokerages and limitations in early attempts to tokenize securities. For foreign users, these obstacles present significant challenges. However, Dinari, registered with the SEC, presents a solution by enabling non-U.S. investors to purchase stocks using stablecoins.
Dinari distinguishes itself by offering tokens backed by real-world stocks, providing users with a unique advantage over other platforms. As a result, the platform has experienced substantial growth, with its total value locked (TVL) reaching $500,000. By leveraging stablecoins and real-world asset backing, Dinari aims to democratize access to U.S. securities for investors worldwide, unlocking new opportunities in the global financial market.
Stage: Closed a $10 million seed round; raising Series A
Alliance DAO offers its cohorts access to a diverse array of crypto experts who share their domain knowledge with participants. In the current session, guest mentors include Jacquelyn Melinek, founder of Token Relations and former crypto reporter at TechCrunch; Jason Yanowitz, founder of Blockworks; Ming Ng, founder of Jupiter; Greg DiPrisco, founder of Ajna and M^0 Labs; Seung Yoon “SY” Lee, founder of Story Protocol; David Vorick, founder of Sia and Glow; as well as Ilja Moisejevs & Richard Wu, founders of Tensor. With such a wealth of expertise, participants have the opportunity to learn from industry leaders and gain valuable insights into various aspects of the crypto space.