On August 21, L1 Story, which focuses on intellectual property (IP), announced the completion of an $80 million Series B financing round led by a16z, with participation from Polychain Capital, individual investors including Stability AI senior vice president and board member Scott Trowbridge, K11 founder and billionaire Adrian Cheng, and digital art collector Cozomo de' Medici. Together with the $29.3 million seed round and $25 million Series A round, also led by a16z last year, Story's total financing has reached $140 million.
Such a huge amount of financing shocked many practitioners. At the same time, there were also many doubts in the industry. As X user @wsjack_eth pointed out, "Does an ERC-6551 protocol really have such an exaggerated narrative space?" In the current hellish primary market, is the emergence of Story a real indicator or just "capital gathering?"
Story’s Technology Stack
With doubts, the author consulted Story's technical documents. In summary, Story plans to improve the situation in which IP in the Web2 world relies on traditional laws, which is "time-consuming and costly", through the three technical stacks of Story Network (L1), Proof of Creativity Protocol (smart contracts), and programmable IP licensing, thereby achieving its ultimate goal of "IP Lego".
Specifically, Story Network is an EVM-compatible L1 designed to process complex data structures such as IP quickly and cost-effectively. Its specific logic is to use precompiled primitives to traverse complex data structures in seconds at marginal cost, and then based on the consensus layer of the mature CometBFT protocol stack, ensure fast finality and low-cost transactions.
The Proof-of-Creativity Protocol consists of various smart contracts, including "modules" for handling IP licensing, royalties, and disputes. The Proof-of-Creativity Protocol is natively deployed on the Story Network, allowing creators to register their IP as "IP Assets". Each IPA consists of an on-chain NFT and an associated IP account. The IP account is implemented based on ERC-6551 (token-bound account).
In addition, Programmable IP License (PIL) aims to establish a mapping between on-chain contracts and real legal terms, allowing creators to migrate tokenized IP to the off-chain legal system and write specific terms, such as how creators can remix, monetize and create derivatives of their IP.
As many industry insiders have pointed out, Story's technology stack is not complex and does not propose any new concepts. So, what exactly did Story rely on to raise such a huge amount of money? Through the investment article written by a16z partner Chris Dixon, we may be able to find some potential factors.
Investing is investing in people
First of all, the background of Story's team. According to Chris Dixon, the founding team of Story "has deep expertise in both technology and creativity." The a16z team was impressed by its "vision and world-class tactical execution" when it first met CEO and co-founder Seung Yoon Lee "three years ago." According to information collected by the Berggruen Institute, Seung Yoon Lee graduated from Oxford University and was elected the first Asian chairman of the Oxford University Union. In addition, its mobile fiction app Radish Fiction was supported by SoftBank, UTA and Bertelsmann, and was acquired by South Korean technology giant Kakao for $440 million in 2021. Lee also served as Kakao's global strategy officer, responsible for global investment and M&A activities. In addition, Lee is a venture partner of Hashed, South Korea's largest blockchain fund, and a researcher at the Asian 21st Century Youth Leader and the Trilateral Commission. Lee was also selected as a member of the inaugural class of Forbes Asia Under 30 in 2016 and was subsequently named an All-Star Alumni.
In addition, according to @jason_chen998, Seung Yoon Lee has worked in the South Korean Congress and the U.S. House of Representatives, and has also worked for two newspapers, "holding the three cards of government + media + capital at the same time."
As for Jason Zhao, the other co-founder who is currently leading Story's technical development, his resume is not as impressive as Seung Yoon Lee's, but it is still impressive. Jason Zhao graduated from Stanford University with a major in computer science and later worked at DeepMind.
This is probably what is meant by "investing is investing in people". Of course, in addition to the excellent background of the founding team, a16z's investment philosophy behind choosing to invest in Story is also worth considering.
Story values ownership, which is also what a16z values
As the leader of the Web3 narrative, a16z has published many profound insights about Web3. From Chris Dixon's description of Web3's "readable, writable and ownable" characteristics, it is not difficult to see that he attaches great importance to the concept of ownership. Chris Dixon pointed out in his investment article that "for decades, the Internet has reached an implicit economic contract between creators and platforms, that is, creators bring supply, and platforms provide demand." However, "the development of generative artificial intelligence is likely to break this agreement," greatly damaging the interests of creators. Story, which aims to protect creators' ownership, may have hit Chris Dixon's heart for this reason. As Jason Zhao explained when explaining why Story was built as L1, "the next generation of blockchain infrastructure needs to be "built for a specific purpose." A16z values Story's concept rather than technology.
Other possible factors
In addition to the factors of technology stack, founding team and investment philosophy, some investors mentioned other possibilities. @akiaeki pointed out that the Story team probably has strong Korean entertainment resources. Considering the influence of "Korean Wave" around the world (dog head, Chinese Wave is the most diao), if Story can bring various KPOP IPs into the cryptocurrency industry, its influence cannot be underestimated.
In addition, as @jason_chen998 imagined when Story completed its Series A financing, the Korean cryptocurrency speculators, who have always been crazy, are likely to establish a new king after Do Kwon "enters".
The power of IP
As a common phenomenon in the cryptocurrency industry, it is impossible to verify whether Story's $140 million financing is "watered down". But considering the huge industry of IP, if Story succeeds, a valuation of $2.25 billion may be normal, after all, "one Iron Man can save the entire Marvel." According to statistics from Wiki&Mili, among the 50 most profitable IPs in the world in 2023, the "Pokemon" IP brought in as much as $88 billion in revenue for the Pokemon Company and Nintendo.
However, Jason Zhao told Fortune that Story is unlikely to attract IP giants like Disney. The platform was built to attract "secondary IP" creators. "This generation of creators using AI tools is like the previous Internet celebrities, who are not valued by traditional brands," Zhao said. "Similar to YouTube, YouTube did not rely on big directors like Spielberg, but on YouTubers who uploaded videos on their mobile phones. 15 years later, YouTube became 'MrBeast'."
It remains to be seen whether Story can become the "YouTube" in Jason's words. It is worth noting that after the news of the financing was announced, the floor price of the NFT released by Story to commemorate ETHDenver 2024 was hyped up several times. Jason Zhao introduced in an interview with The Block that the Story mainnet is expected to be launched later this year. When asked whether the token will be launched at the same time as the mainnet is launched, Jason Zhao declined to comment.
This article is authorized to be reproduced from "Story has raised $140 million in financing. Why has it become the darling of a16z?", author: Yangz
