According to a report released by CEX Bybit in June, institutional investors increased their holdings in spot Memecoins 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. Subsequently, after market sentiment worsened and Memecoins faced sell-offs, total holdings decreased to $139 million, but this holding increase also represented a 125% growth since 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 now become an important narrative and hot topic in this market cycle.
Starting from the second half of 2024, some VCs have announced plans to invest in Memecoin infrastructure, shifting from previous VC opposition to Memecoins to gradually accepting them. How are these venture capital firms getting involved in Memecoins?
a16z
A16z, fully known as Andreessen Horowitz, is a renowned venture capital firm in the United States, founded in 2009 by Marc Andreessen and Ben Horowitz, headquartered in Silicon Valley. It early invested in Facebook, Twitter, Instagram, and Airbnb, and has continued to make strides in the Web3 and blockchain fields, having invested in Coinbase with significant returns, and established multiple crypto funds to become one of the important investors in the crypto industry.
However, as a mainstream venture capital firm, a16z has not been very friendly towards the initial attitude of Memecoins that have seized the market. Between February and April of this year, the Memecoin market soared, with the average weekly increase of 20 popular Memecoins like PEPE reaching 6 times, or with WIF and BOME quickly launching on CEX, seizing market share from VC Tokens.
Eddy Lazzarin, CTO of a16z Crypto, harshly criticized Memecoins in a tweet on April 25, 2024, stating that they undermine the 'long-term vision' of cryptocurrency, tarnishing the views of 'the public, regulators, and entrepreneurs' towards the industry, and serve as a casino for 'a relatively small crowd.'
Chris Dixon, managing partner and CTO of A16Z, also posted to disparage Memecoins, stating that Memecoins are essentially a casino.
However, recently a16z has changed its critical stance on Memecoins, frequently participating in MemeCoin.
Initially, a16z co-founder Andreessen Horowitz tipped $50,000 in BTC to the bot account Truth Terminal on X, which led to the recent surge of the Goat Coin (GOAT), propelling GOAT from an obscure project to a stunning peak market value of $850 million, making Truth Terminal the first AI millionaire and thereby promoting the AI + Meme development craze.
Source: Marc Andreessen
Subsequently, on the morning of October 28, Marc posted two pieces of content related to AI16Z, quickly sparking interest in AI16Z. This '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 Marc Andreessen's personality.
Before October 27, the fund's market cap was around $4 million. However, after Marc retweeted a comic image featuring an ai16z T-shirt, the market cap of AI16Z surged more than 20 times in just 12 hours, reaching a near $100 million high.
Although some sources link it to the famous venture capital firm a16z, suggesting that the fund may have received support from the firm, Andreessen Horowitz has not officially confirmed any relationship with the project. Therefore, it remains unclear whether the token genuinely received support from a16z or merely borrowed a similar name to attract attention. However, it is clear that a16z no longer disparages Memecoins as before.
DWF Labs
DWF Labs was established in 2022 and is the next generation of Web3 investors and market makers, investing in several well-known projects, including dYdX, SushiSwap, Injective Protocol, Astar Network, and Morpheus Network.
Currently, DWF Labs has invested in multiple Memecoins and has been involved for a while, having invested multiple times in the pet Shiba Inu 'Floki' (FLOKI) in 2023 and further invested $12 million in 2024. These funds supported several development projects of FLOKI, such as FlokiFi (decentralized finance), Floki University, an educational platform for the Floki Inu ecosystem, and its metaverse game Valhalla. This series of investments not only pushed FLOKI's price up but also helped it successfully list on several important trading platforms.
Additionally, on June 3, 2024, they invested $5 million 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 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 Tokens launched on the GraFun platform, aiming to enhance liquidity for Memecoin projects released on the GraFun platform.
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 expressed his agreement, stating: 'Collaborating with DWF Labs is an important milestone for both GraFun and the Memecoin ecosystem. We believe this partnership will bring tremendous value to our community and the broader market.'
Furthermore, Andrei Grachev stated on the X platform: 'The Memecoin market has become a mature and solid part of the industry. It capitalizes on extreme fear and greed, allowing savvy investors and traders to amass significant wealth. DWF Labs institutionalized its investment in Memecoins years ago, and this remains one of our priorities.'
Binance Labs
Binance Labs is a leading global blockchain and cryptocurrency investment institution, affiliated with the CEX Binance, established 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 multiple Memecoins and maintained enthusiasm for the MemeCoin sector in 2024. In January 2024, Binance Labs invested in the native ecosystem token MEME of Memeland. Memeland primarily revolves around NFT and social functions and was included in Binance Launchpool in October 2023.
Subsequently, Binance Labs supported the development of its Whyanelephant project, which features a dancing elephant characterized by being absurd, carefree, and highly volatile, representing you and me in the crypto market.
Coinbase Ventures
Coinbase Ventures, established in 2018 and headquartered in San Francisco, California, is the investment division of Coinbase, Inc., primarily investing in early-stage companies in cryptocurrency and blockchain technology. They have invested in Compound, Chainlink, Dapper Labs, Etherscan, Ripple, and more.
Regarding Memecoins, Coinbase Ventures also participated early, having supported Dogecoin as early as 2018, although the specific investment amount was not disclosed, the project has garnered significant support in the community. In 2021, Coinbase Ventures invested in Shiba Inu, and its parent company, Coinbase, announced at the end of 2023 that it would add Bonk to its tradable asset list.
The latest news is that after the success of GOAT, Coinbase CEO Brian Armstrong proposed setting up a crypto wallet for Truth Terminal.
Then Coinbase Ventures released a proposal stating that the combination of artificial intelligence and blockchain technology will shape the future. Coinbase stated in its post: 'The future of artificial intelligence 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 AI have the potential to change the way humans and machines interact with the digital economy.'
As can be seen, Coinbase plays an important institutional role in the cryptocurrency market, besides launching the highly popular Layer 2 Base chain and becoming the custodian for all Bitcoin spot ETFs, they also participated early in the Memecoin sector.
Crypto Labs
Crypto Labs is a venture capital firm established in 2018 and headquartered in Singapore, investing in several well-known crypto projects, including Ripple, Filecoin, Dapper Labs, SushiSwap, Aave, and Chainlink.
On October 9, 2024, it was reported that PPKING, the fair launch platform for Memecoins on the TON public chain, announced the completion of a $2 million seed round financing, led by Crypto Labs. This project aims to create an efficient, safe, 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.
Pantera Capital
Pantera Capital is a venture capital firm founded in 2013 and headquartered in California, with founder Dan Morehead previously being a Goldman Sachs trader, possessing extensive financial experience. They have invested in several well-known crypto projects, including Bitcoin, Ethereum, Chainlink, Dapper Labs, and Polkadot.
Pantera Capital has long shown a strong interest in the memecoin sector, having invested in Shiba Inu in 2021.
Paul Veradittakit, a partner at Pantera, emphasized that Memecoins play an important role in attracting young users to Web3. He views Memecoins as the 'Trojan Horse' for cryptocurrency adoption, interacting with DeFi, NFTs, and other decentralized services through viral popularity. By making crypto and blockchain applications more accessible to mainstream audiences, Pantera believes that memecoins have significant value in overcoming the distribution limitations faced by NFTs, potentially achieving 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. Pantera also adopts a positive attitude towards participating in the MemeCoin track.
OKX Ventures
OKX Ventures is the venture capital department of the OKX platform, investing in several well-known crypto projects, including Solana, Polygon, Tether, SushiSwap, and other leading crypto projects.
OKX Ventures also participated early in Memecoin investment activities, engaging in the investment of SHIB during this wave of enthusiasm in May 2021. Subsequently, they also invested in Floki Inu, BabyDogeCoin, and others.
Moreover, OKX began supporting the listing of various leading Memecoins early this year, indicating that OKX Ventures is more sensitive to Memecoins based on its trading platform.
Others
Overall, due to the inability to directly issue Memecoins for profit, most venture capital firms collaborate with projects through investments, and they invest in popular Memes with backgrounds and stories. Some investment institutions, unable to participate directly or indirectly at the beginning, once exhibited a confrontational mentality; others are actively laying out launchers for various public chains to further boost the spread and vitality of Memecoins.
According to RootData, an incomplete statistic shows that since 2024, more than 10 new Meme Launchpads or projects with Meme Launchpad features have emerged, supporting different public chains, with the most projects for Meme Launchpad being on Base and Solana. Behind these, some venture capitalists can also be seen.
Summary
Looking back at the competition between VC Tokens and Memecoins, it can be seen that most governance Tokens supported by venture capitalists find it hard for retail investors to gain profit due to overvaluation and low circulation. Against this backdrop, retail investors' dissatisfaction with VCs' market manipulation has been rising, stating 'these VC coins are a feast for capital and a nightmare for retail investors; I'd rather take a chance on a small dog token than a VC token.' In response to this, Memecoins, which are highly communicative, have low barriers, are user-friendly, and have a rapid wealth creation effect, have emerged.
This phenomenon once led to a confrontation between venture capitalists and retail investors earlier this year. Some VCs accused Memecoins of disrupting the market, while retail investors countered by accusing VCs of wrongdoing. However, due to the current development trend of Memecoins, VCs have had to reassess the market and adjust their layouts and investment directions.
Although some VCs still look down on Memes, it is undeniable that Memecoins have become a priority in activating public chain ecosystems. After leading centralized exchanges (CEX) launched Memecoins successively, they attracted a large number of users, making chains like Base, Blast, and Solana active. As of November 5, 2024, the market cap of Memecoins is approximately $61 billion. In the future, combining the power of AI, Memecoins may show even greater potential and become true market game changers.
Lastly, according to statistics released by some KOLs on social networks, most Meme participants have experienced some degree of loss, as extreme market conditions often lead to high risks. The next step for the Meme craze is uncertain, whether it will continue to amplify or follow in the footsteps of NFTs, remains to be seen. Again, everyone is reminded to DYOR before making any important decisions.
