Author: Huohuo | Blockchain in Plain Language

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. Subsequently, after the market sentiment deteriorated and Memecoins faced sell-offs, total holdings dropped to $139 million, but this increase still represents a 125% growth 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. Unlike the previous fleeting Memecoin craze, Memecoins have become a significant narrative and hotspot in this market cycle. Starting from the second half of 2024, some VCs have announced plans to invest in Memecoin infrastructure, transitioning from previous VC opposition to gradually being accepted. So how are these venture capital institutions participating in Memecoins?

01 a16z

A16z, short for Andreessen Horowitz, is a well-known venture capital firm in the United States, founded by Marc Andreessen and Ben Horowitz in 2009 and headquartered in Silicon Valley. It invested early in Facebook, Twitter, Instagram, and Airbnb, and has continued to make strides in the Web3 and blockchain fields. It has invested in Coinbase, yielding substantial returns, and has established several 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 have captured the market has not been very friendly. Between February and April of this year, the Memecoin market surged, with the average weekly increase of 20 popular Memecoins like PEPE reaching six times, and rapid listings on CEX like WIF and BOME snatching 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' towards the industry, acting as a 'casino for a relatively small group.'

Chris Dixon, a managing partner and chief technology officer at A16Z, has also publicly criticized Memecoins, bluntly stating that Memecoins are essentially a casino. However, recently a16z has changed its critical stance towards Memecoins in the first half of the year and has frequently participated in MemeCoin.

Initially, a16z co-founder Andreessen Horowitz tipped $50,000 in BTC to the bot account Truth Terminal on X, which gave rise to the recently popular goat coin GOAT, catapulting GOAT from an obscure project to a shocking historical market value of $850 million, while Truth Terminal became the first AI millionaire and thus promoted the development trend of AI + Meme.

Source: Marc Andreessen

On the morning of October 28, Marc published two posts related to AI16Z, quickly drawing attention to 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 and is dedicated to investing in Memecoins while mimicking Marc Andreessen's personality. Before October 27, the fund's market value was around $4 million. However, after Marc shared a cartoon image of a T-shirt with the ai16z logo, the market value of AI16Z skyrocketed over 20 times within just 12 hours, reaching a peak of nearly $100 million. While some sources linked it to the well-known venture capital firm a16z, suggesting the fund might have received support from the company, Andreessen Horowitz has not formally confirmed any relationship with this project. Therefore, it remains unclear whether the token 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 founded in 2022 and is a new generation of Web3 investors and market makers. It has invested in several well-known projects, including dYdX, SushiSwap, Injective Protocol, Astar Network, and Morpheus Network. Reports indicate that DWF Labs has invested in several Memecoins early on, having made multiple investments in the pet Shiba Inu 'Floki' (FLOKI) in 2023, and further invested $12 million in 2024. These funds support various development projects related to 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 facilitated its successful listing on several important trading platforms. Additionally, on June 3, 2024, it invested $5 million in Milady Meme Coin (LADYS). This investment aims to support the growth of Milady Meme Coin in the memecoin market, enhance its development capabilities, and promote community engagement.

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 globally renowned cat animation series and a highly popular cat meme. In September 2024, DWF Labs announced a partnership with GraFun to support the launch of tokens on the GraFun platform, aimed at enhancing liquidity for Memecoin projects released on the GraFun platform.

Andrey Grachev, the managing partner of DWF Labs, expressed great enthusiasm for this collaboration: 'Collaborating with GraFun is an exciting opportunity to support the next generation of Memecoin projects on the BNB Chain.' BigGra from GraFun agreed, stating, 'Collaboration with DWF Labs is an important milestone for GraFun and the Memecoin ecosystem. We believe this partnership will bring significant value to our community and the broader market.' Moreover, Andrei Grachev previously stated on the X platform: 'The Memecoin market has become a mature and solid part of the industry. It exploits extreme fear and greed, allowing savvy investors and traders to accumulate huge wealth. DWF Labs institutionalized its investment in Memecoins years ago, and it remains one of our priorities.'

03 BN Labs

BN Labs is a leading global blockchain and crypto investment institution, affiliated with the crypto CEX BN, 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, BN Labs invested in several Memecoins and continued to show enthusiasm for the MemeCoin track in 2024. In January 2024, BN Labs invested in the native ecosystem token MEME of Memeland. Memeland primarily revolves around NFTs and social functions, and the project was included in BN Launchpool in October 2023. Subsequently, BN Labs supported the development of its Whyanelephant project, which features a dancing elephant characterized by absurdity, flamboyance, and extreme emotional fluctuations, representing the diverse participants in the crypto market.

04 Coinbase Ventures

Coinbase Ventures was established in 2018 and is headquartered in San Francisco, California. As the investment arm of Coinbase, Inc., it primarily invests in early-stage companies in cryptocurrency and blockchain technology. It has invested in notable projects such as Compound, Chainlink, Dapper Labs, Etherscan, and Ripple.

Coinbase Ventures has also been involved with Memecoins early on, having supported Dogecoin as early as 2018, although the specific investment amount was not disclosed, but the project has garnered 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 came after GOAT's massive popularity; 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 AI have the potential to change the way humans and machines interact with the digital economy.' It is evident that Coinbase plays an important institutional role in the cryptocurrency market, having launched the highly popular Layer2 base chain and become the custodian of all Bitcoin spot ETFs, while also getting involved with Memecoin early on.

05 Crypto Labs

Crypto Labs is a venture capital firm founded in 2018 and headquartered in Singapore. It has invested in several well-known crypto projects, including Ripple, Filecoin, Dapper Labs, SushiSwap, Aave, and Chainlink. On October 9, 2024, it was reported that the TON public chain's Memecoin fair launch platform PPKING 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 a 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 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 a crucial role in attracting young users to Web3. He views Memecoins as the 'Trojan horse' for cryptocurrency adoption, leveraging viral popularity to establish interactions with DeFi, NFTs, and other decentralized services. By making crypto and blockchain applications more accessible to mainstream audiences, Pantera believes that memecoins hold 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 maintains a proactive and embracing attitude towards the MemeCoin track.

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, investing in SHIB in May 2021 during this wave. It has also invested in Floki Inu, BabyDogeCoin, and others.

Additionally, OKX began supporting the listing of various leading Memecoins early this year, indicating that OKX Ventures, relying on its trading platform, is more sensitive to Memecoins.

08 Others

Overall, due to the inability to directly issue Memecoins for profit, most venture capital institutions have collaborated with projects through investments, focusing on popular Memes with backgrounds and stories. Some investment institutions initially experienced a sense of opposition due to their inability to participate directly or indirectly. Additionally, some investment institutions are actively laying out launchpads for various public chains to further support the dissemination and vitality of Memecoins. According to RootData, since 2024, more than 10 new Meme Launchpad or Meme Launchpad-featured projects have emerged, supporting different public chains, with Base and Solana having the most Meme Launchpad projects. Behind these, the presence of some venture capital can also be seen.

09 Summary

Looking back at the competition between VC Tokens and Memecoins, it can be seen that most governance tokens supported by venture capital have high valuations and low liquidity, making it difficult for retail investors to find profit opportunities. Against this backdrop, retail investor dissatisfaction with VC market manipulation has been rising, expressing that 'these VC coins are a feast for capital, a nightmare for retail investors, and they would rather take on dog coins than VC coins.' In response to this, Memecoins, which are highly communicable, have low barriers to entry, are user-friendly, and have rapid wealth creation effects, have emerged. Although this phenomenon once led to opposition between venture capitalists and retail investors in the first half of the year, with some VCs accusing Memecoins of disrupting the market, retail investors in turn blamed VCs for their malfeasance. 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 Memecoins, it cannot be denied that Memecoins have become a focal point in activating public chain ecosystems. Following the successive launches of Memecoins on major CEX platforms, they have attracted a large user base, making chains like Base, Blast, and Solana more active. As of November 5, 2024, the market value of Memecoins is approximately $61 billion. In the future, with the power of AI, Memecoins may exhibit even greater potential, becoming true game-changers in the market. Finally, according to statistics released by certain KOL social networks, most Memecoin participants have experienced some level of loss, and extreme market conditions often lead to high risks. Whether the next step in the Memecoin craze will be further escalation or a repeat of NFTs is still uncertain. Everyone is reminded to DYOR before undertaking any operation.