According to a report released by CEX Bybit in June, institutional investors' holdings of spot Memecoins increased from $62.5 million to $204.8 million between February and March this year, peaking at $293.7 million in April. The most popular Memecoins include DOGE, SHIB, PEPE, and BONK. Following a deterioration in market sentiment and a sell-off of Memecoins, total holdings dropped to $139 million, but this increase in holdings also represents a growth of 125% compared to the beginning of the year.
It can be said that since this year, Memecoins have increasingly become an important focus for institutional investors, and unlike previous fleeting Memecoin trends, Memecoins have become an important narrative and hot topic in this market cycle.
From the second half of 2024 onwards, some VCs have announced plans to invest in Memecoin infrastructure, transitioning from opposition to Memecoins to gradually accepting them. So how are these venture capital firms getting involved in Memecoins?
01
a16z
A16z, short for Andreessen Horowitz, is a prominent venture capital firm in the United States founded by Marc Andreessen and Ben Horowitz in 2009, headquartered in Silicon Valley. It was an early investor in Facebook, Twitter, Instagram, and Airbnb, and has continued to exert influence in the Web3 and blockchain fields, having invested in Coinbase with significant returns and establishing multiple crypto funds, becoming one of the key investors in the crypto industry.
However, as a mainstream venture capital institution, a16z's initial attitude towards the Memecoins that seized the market has not been very friendly. During the period from February to April of this year, the Memecoin market surged dramatically, with the average weekly increase of 20 popular Memecoins such as PEPE reaching 6 times, and the rapid launch of WIF and BOME on CEXs seized market share from VC Tokens.
Eddy Lazzarin, the chief technology officer of a16z Crypto, harshly criticized Memecoins in a tweet on April 25, 2024, stating that they undermine the 'long-term vision' of cryptocurrencies and tarnish the views of 'the public, regulators, and entrepreneurs' on the industry, acting as a 'casino for a relatively small group of people.'
Chris Dixon, managing partner and chief technology officer of A16Z, has also publicly disparaged Memecoins, bluntly stating that Memecoins are simply a casino.
However, recently a16z has changed its critical stance towards Memecoins from the first half of the year and has been frequently participating in the MemeCoin space.
First, a16z co-founder Andreessen Horowitz rewarded $50,000 in BTC to the Twitter bot account Truth Terminal, which gave rise to the recent popular Goat Coin (GOAT), propelling GOAT from an unnoticed project to a shocking historical market cap of $850 million, making Truth Terminal the first AI millionaire and driving the trend of AI + Meme development.
Source: Marc Andreessen
On the morning of October 28, Marc posted two pieces of content related to AI16Z, quickly sparking attention towards AI16Z. The 'AI16Z fund' was created by the Twitter account 'Marc ‘AI’ ndreessen', which launched the fund on daos.fun. The fund manages approximately 420 SOL in raised funds through AI dialogue, specifically investing in Memecoins and simulating the personality of Marc Andreessen.
Before October 27, the fund's market value was around $4 million. However, after Marc retweeted a cartoon image featuring the ai16z design on a t-shirt, the market value of AI16Z skyrocketed more than 20 times in just 12 hours, reaching a peak of nearly $100 million.
Although some sources link it to the renowned venture capital firm a16z, suggesting that the fund may have received support from the company, Andreessen Horowitz has not formally confirmed any relationship with this project. Therefore, it is still unclear whether this token has truly received support from a16z or merely borrowed a similar name to attract attention. However, it is clear that a16z no longer disparages Memecoins as it once did.
02
DWF Labs
DWF Labs was established in 2022 and is a new generation Web3 investor and market maker, having invested in several well-known projects, including dYdX, SushiSwap, Injective Protocol, Astar Network, and Morpheus Network.
Currently, according to relevant news, DWF Labs has invested in several Memecoins and has been involved since early 2023, making multiple investments in the pet Shiba Inu 'Floki' (FLOKI) and further investing $12 million in 2024. These funds supported multiple development projects for FLOKI, such as FlokiFi (decentralized finance), the educational platform Floki University within the Floki Inu ecosystem, and its metaverse game Valhalla. This series of investments not only propelled FLOKI's price increase but also helped it successfully list on several important trading platforms.
Additionally, on June 3, 2024, $5 million was invested in Milady Meme Coin (LADYS). This funding aims to support the growth of Milady Meme Coin in the memecoin market, enhance its development capabilities, and promote community participation.
In August 2024, DWF Labs collaborated with Floki and the BNB Chain to exclusively launch the Memecoin Simon's Cat on the BNB Chain. Simon's Cat is a world-renowned cat animation series and a very popular cat meme.
In September 2024, DWF Labs announced a partnership with GraFun to support the Token launched on the GraFun platform, aiming to enhance liquidity for Memecoin projects released on GraFun.
Andrey Grachev, managing partner of DWF Labs, expressed great enthusiasm for this collaboration: 'Working with GraFun is an exciting opportunity to support the next generation of Memecoin projects on the BNB Chain.'
BigGra of GraFun agreed, stating: 'The partnership with DWF Labs is a significant milestone for GraFun and the Memecoin ecosystem. We believe this collaboration will bring tremendous value to our community and the broader market.'
Moreover, Andrei Grachev stated on the X platform: 'The Memecoin market has become a matured and solid part of the industry. It exploits extreme fear and greed, allowing smart investors and traders to earn substantial wealth. DWF Labs institutionalized its investment in Memecoins years ago, and it remains one of our priorities.'
03
Binance Labs
Binance Labs is a leading global blockchain and crypto investment institution, affiliated with the crypto CEX Binance and founded in 2018. It has invested in several well-known crypto projects, including Coinbase, Polygon, Injective Protocol, Elrond, Terra, and 1inch.
As early as 2023, Binance Labs invested in several Memecoins, and in 2024, it continues to maintain enthusiasm for the Memecoin space. In January 2024, Binance Labs invested in the native ecological Token MEME of Memeland, which primarily revolves around NFT and social functionalities. This project was included in Binance Launchpool in October 2023.
Subsequently, Binance Labs supported the development of its project Whyanelephant, which features a dancing elephant characterized by absurdity, carefreeness, and extreme emotional fluctuations, representing you and me in the crypto market.
04
Coinbase Ventures
Coinbase Ventures was founded in 2018 and is headquartered in San Francisco, California. As the investment arm of Coinbase, Inc, it primarily invests in early-stage companies in the cryptocurrency and blockchain technology sectors. It has invested in projects including Compound, Chainlink, Dapper Labs, Etherscan, and Ripple.
Coinbase Ventures has been involved in Memecoins early on, supporting Dogecoin as early as 2018, although the specific investment amount was not disclosed. However, the project has accumulated significant community support. In 2021, Coinbase Ventures invested in Shiba Inu, and the parent company Coinbase announced at the end of 2023 that it would add Bonk to its list of tradable assets.
The latest news is that after GOAT's popularity skyrocketed, Coinbase CEO Brian Armstrong proposed setting up a crypto wallet for Truth Terminal.
Subsequently, Coinbase Ventures released a proposal outlining how the combination of artificial intelligence and blockchain technology will shape the future. Coinbase stated in its post: 'The future of AI can be built on blockchain technology, as crypto assets can help improve the accessibility, transparency, and use cases of emerging technologies. The efficiency, borderlessness, and programmability of cryptocurrencies, combined with artificial intelligence, have the potential to change the way humans and machines interact with the digital economy.'
It can be seen that as Coinbase plays a significant institutional role in the cryptocurrency market, in addition to launching the highly popular Layer2 base chain and becoming the custodian for all Bitcoin spot ETFs, it has also been involved early in the Memecoin space.
05
Crypto Labs
Crypto Labs is a venture capital firm established in 2018 and headquartered in Singapore, having invested in several well-known crypto projects, including Ripple, Filecoin, Dapper Labs, SushiSwap, Aave, and Chainlink.
On October 9, 2024, news emerged that PPKING, a fair launch platform for Memecoins on the TON public chain, announced the completion of a $2 million seed round financing led by Crypto Labs. The project aims to create an efficient, secure, and entertaining decentralized financial platform through innovative DeFi mechanisms and deep integration with MEME culture. The new funds will support its Memecoin trading and liquidity provision.
06
Pantera Capital
Pantera Capital is a venture capital firm founded in 2013 and headquartered in California. The founder, Dan Morehead, was a Goldman Sachs trader with extensive financial experience. It has invested in several well-known crypto projects, including Bitcoin, Ethereum, Chainlink, Dapper Labs, and Polkadot.
Pantera Capital has also long shown a strong interest in the memecoin field, having invested in Shiba Inu in 2021.
Pantera's partner Paul Veradittakit emphasized that Memecoins play an important role in attracting young users into Web3. He views Memecoins as the 'Trojan horse' for cryptocurrency adoption, utilizing viral popularity to interact with DeFi, NFTs, and other decentralized services. By making crypto and blockchain applications more accessible to mainstream audiences, Pantera believes memecoins hold significant value in overcoming the distribution limitations faced by NFTs and may achieve fractional ownership of NFTs through the ERC-404 standard.
In recent months, Pantera executives have mentioned that Memecoins are helping platforms like Solana build a more active user base. For the Memecoin space, Pantera also holds a positive and embracing attitude towards participation.
07
OKX Ventures
OKX Ventures is the venture capital arm of the OKX platform, investing in several well-known crypto projects, including Solana, Polygon, Tether, and SushiSwap.
OKX Ventures also participated early in Memecoin investment activities. In May 2021, OKX Ventures invested in SHIB during this wave of enthusiasm. Subsequently, it also invested in Floki Inu, BabyDogeCoin, and others.
Additionally, OKX began supporting the listing of various major Memecoins early this year, indicating that OKX Ventures, relying on its trading platform, is more sensitive to Memecoins.
08
Others
In general, because it is not possible to directly issue Memecoins for profit, most venture capital firms collaborate with projects through investment, focusing on hot Memes that have backgrounds and stories. Some investment firms initially could not participate directly or indirectly, leading to a sense of antagonism; others are actively laying out launch pads across various public chains to further support the dissemination and vitality of Memecoins.
According to RootData, there have been over 10 new Meme Launchpad projects or projects with Meme Launchpad features since 2024, supporting different public chains, with Base and Solana having the most Meme Launchpad projects. Behind these can also be seen the presence of some venture capitalists.
09
Summary
Looking back at the competition between VC Tokens and Memecoins, it is evident that most governance tokens supported by venture capitalists have high valuations and low circulation, making it difficult for retail investors to have profit space. Against this backdrop, retail dissatisfaction with VC market manipulation is also rising, expressing that 'these VC coins are a feast for capital and a nightmare for retail investors; I'd rather take a risk on a dog coin than on a VC coin.' In response to this, Memecoins, which are highly viral, have low entry barriers, and are very appealing, have emerged.
Although this phenomenon has led to a rift between venture capitalists and retail investors in the first half of the year, with some VCs accusing Memecoins of disrupting the market while retail investors accuse VCs of malicious behavior, the current trend in Memecoin development has forced VCs to reevaluate the market and adjust their layouts and investment directions.
Although some VCs still look down on Memecoins, it is undeniable that Memecoins have become crucial in activating public chain ecosystems. Following the launch of Memecoins on several major CEXs, a large number of users have been attracted, making chains like Base, Blast, and Solana more active. As of November 5, 2024, the market capitalization of Memecoins is approximately $61 billion. In the future, with the power of AI, Memecoins may exhibit even greater potential and become true game changers in the market.
Finally, according to statistics released by some KOLs on social networks, most Memecoin participants have experienced some degree of loss. Extreme market conditions often lead to high risks, and it remains unknown whether the next step of the meme boom will continue to drive prices up or follow in the footsteps of NFTs. Once again, it is reminded that before taking any important action, one must DYOR.
