Jul 9, 2024 10 min read Web3 + AI Investment News

The Web3 and AI Funding Bulletin | June-July

Image generated using OpenAI's DALL-E 3

Hello and welcome!

This is the Web3 and AI Funding Bulletin, covering the latest investments in companies converging blockchain and artificial intelligence. My prediction was proven right as the Crypto x AI Summer is in full swing! Within a matter of 96 hours, $207M were invested in blockchain startups, over half of which involve AI! Some people believe that the space's pace of evolution is so rapid that in a few years' time, even the distinction between AI and Crypto will sound dated.

Thank you for being here! Let's dive in!

Sentient Closes Record-Breaking $85M Seed Round

Ethereum's ZK rollup Polygon and its co-founder Sandeep Nailwal dive into AI with Sentient, a development platform seeking to build a truly open-source artificial intelligence.

Their efforts are apparently highly appreciated, since the startup managed to close a huge seed funding amounting to $85M. The round was led by Peter Thiel's Founders Fund, Pantera Capital, and Framework Ventures.

The startup is an AI research organization that wants to enable AI developers to monetize their open-source models and data, similar to other ecosystems such as the Super Intelligence Alliance.

“Currently, anyone is able to just copy models without paying for them and Sentient aims to solve this incentive problem which disincentivizes open source AI,” said Joey Krug, partner at Founders Fund.

Like many other Web3 + AI projects, Sentient's mission is to ensure that the benefits of AI, and potentially AGI, will be distributed equitably and available to humanity at large, and not concentrated in the hands of Google and Microsoft.

We are in an era reminiscent of the 1995 closed-source software landscape. At present, the dominance of closed-source AI has centralized immense power with a few organizations. Although open-source AI development exists, it lacks sufficient incentives for developers and does not enable them to be equal stakeholders.

The money round also welcomed participation by Robot Ventures, Delphi Digital, Primitive Ventures, Hack VC, Arrington Capital, Folius Ventures, Foresight Ventures, HashKey Capital, Spartan Group, Casey Caruso, and others.

This project is extremely ambitious and with model loyalty, it is trying to solve a problem that has never been approached from this direction. With this fundraise, Sentient already has some of the world's best AI minds joining it, and the AI team is getting pretty stacked with senior people from Google, Deepmind, and other top AI companies in the world engaged.

If successful, Sentient could potentially change the course of humanity's relationship with AI.

Sentient will enter the testnet phase this quarter, using the funds from this seed round to develop its platform and attract talent from AI research and blockchain engineering to its team.

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ORA Raises $20M to Bring Decentralized AI to Ethereum

Ora Protocol, the creator of the opML (optimistic Machine Learning) verification mechanism, has received a $20M investment by Polychain, HF0, HashKey Capital, and SevenX Ventures.

Through optimistic systems and zero-knowledge technology, [Ora's opML] will provide secure and efficient on-chain machine learning with privacy-preserving features.

Ora also offers what it calls "initial model offering," or IMO, where ownership of open-source AI models can be tokenized.

Ora intends to use the funding to continue developing its infrastructure to enable tokenizing AI models and decentralized AI oracles.

Crypto and AI have always been destined to converge. Until recently, however, there was no practical way to integrate one with the other, despite many developers wanting to do so.

ORA offers a solution to overcome smart contract limitations. The tech enables the team the capability to deliver accountable and sustainable products that allow smart contracts to interact with AI natively.

The Computation DePIN Prodia Gets $15M

Prodia, a distributed cloud computing network, has closed a $15M seed round led by Dragonfly Capital, and supported by HashKey Capital, Index Ventures, OKX Ventures, Folius Ventures, Balaji Srinivasan, and Sandeep Nailwal.

Prodia builds a distributed network of graphics processing units (GPUs) to provide more efficient cloud computing services at a lower cost using web3 infrastructure. The firm will use its seed financing to grow the company, add support for generative video and large language models (LLMs) and expand the types of GPU hardware in its roster.

Pi Squared to Boost Verified Computing with $12.5M

The Zero-Knowledge-powered verifiable computing network Pi Squared has accumulated $12.5M from Polychain, ABCDE, Robot Ventures, and Samsung Next. Angel investors Justin Drake, Sreeram Kannan, and Lucian Mincu also backed the round.

Pi Squared’s first product is its “Universal Settlement Layer,” which settles blockchain transactions – or as they call them, “claims” – in any programming language, Grigore Rosu, CEO of Pi Squared, said in an interview with CoinDesk. Rosu is a professor in computer science at the University of Illinois Urbana-Champaign, and the idea for Pi Squared came out of his career in academia.

The company is also building a “Universal ZK Circuit,” which uses zero-knowledge technology to enable “trustless remote computing, AI and interoperable smart contract for any blockchain or dApp”.

Sovereign Data Blockchain for AI, OpenLedger, Raises $8M

OpenLedger, a company building the infrastructure to deliver verifiable, permissionless, and censorship-free data for AI, has attracted $8M of funding by Polychain and Borderless. The angel investors and builders Sreeram Kannan, Balaji Srinivasan, and Sandeep Nailwal have backed this venture too.

It's quite known that AI has three major pillars - viz. Computation power, data, and algorithms! Computuation is handled by companies like @rendernetwork, and algorithms are handled by @ritualnet & @sentient_agi! Among the three pillars, data is currently bottlenecked, and it will be handled by us OpenLedger!

Since the best data can alone create the best AI models, verifiable, permissionless, diverse and secure data is crucial to the success & relevance of AI!

Mamori Gets $5M to Solve Blockchain Value Extraction via ML

Mamori, the company that employs Machine Learning as pathfinder for blockchain extractable value, has closed a $5M seed round led by Blockchain Capital, Velocity Capital, and Web3.com Ventures. A number of angels participated in the capital round as well, including Pi Squared's Grigore Rosu, who is also an adviser to the Mamori team.

Mamori's technology can be applied to Zero-Day Economic exploits, MEV Searching and Intent Solving.

Covalent Attracts $5M in Strategic Funding

The modular data infrastructure for AI, Covalent, has received a strategic investment of $5M from RockTree Capital, and others.

Covalent develops infrastructure to let users access historical blockchain data in the “Ethereum Wayback Machine,” akin to the web2 version that stores online webpages. The firm said it will use its financing to expand into Asia and bolster the adoption of long-term data availability in countries such as China and Singapore.

Decentralized AI Network Allora Closes $3M Strategic Round

The self-improving decentralized AI network, Allora has closed a strategic money round of $3M, bringing its total funding so far to $35M. The round was led by Delphi Digital, CMS Holdings, Archetype, and DCF God.

Allora Network is a decentralized AI network built as a Layer 1 blockchain on the Cosmos stack. [CEO Nick] Emmons said it aims to solve a fundamental problem in AI today, known as “siloed machine intelligence.”

Today, machine learning models operate in isolation and can't easily learn from each other, Emmons said, adding that Allora aims to create an environment where models can collaborate to optimize shared goals, enhancing their performance and accuracy. “This significantly improves the quality of AI and the rate at which it can improve,” he said.

Compute Labs to Use $3M Pre-Seed in AI Financialization

The Solana-based GPU tokenization and restaking protocol Compute Labs has closed a $3M pre-seed funding. The investment was led by Protocol Labs, and supported by MH Ventures, OKX Ventures, CMS Holdings, HashKey Capital, Amber Group, and P2 Ventures (formerly Polygon Ventures).

Compute Labs is building a real-world asset (RWA) tokenization protocol focused on compute as its underlying asset. (...) Most regular investors today can't invest in enterprise-grade GPUs. (...) Compute Labs will make it “possible for everyone to invest in compute.”

Web3 + ML Platform onaji Closes $2.5M Pre-Seed

Stratos led the $2.5M pre-seed investment into onaji, a Machine Learning development platform for decentralized applications. Maven11, IOSG Ventures, and others also participated.

In April, the company released the onaji Ethereum Machine Learning Platform [ETH-MLP], designed for building, testing, deploying and monitoring ML models that use Ethereum data. The platform combines high-frequency data, a simulation playground, model management, and on-chain execution infrastructure to make it as easy as possible to build end-to-end ML pipelines and agents on Ethereum.

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Bitcoin Miners Switching to AI. Is BTC in Danger?

Over the last few months, especially after the latest Bitcoin halving took place in April, news pieces about BTC miners shifting their operations to AI are more and more prolific. I have already covered several AI deals involving mining companies, including Core Scientific and Qtum. Today, I am bringing up this topic again, prompted by yet another significant investment.

Crypto miner Hut 8 was awarded $150M to build AI-related infrastructures. The investor is Coatue Management, which is also backing CoreWeave, a cloud-computing firm that is looking to acquire Hut 8 rival Core Scientific.

AI and HPC firms are increasingly looking to the bitcoin mining industry to secure their need for computing power. The miners often already have the computing capacity and the deals with power suppliers that AI and HPC hanker after. In fact, JPMorgan said that the demand for power by large-scale data centers and AI firms could start a new era of mergers and acquisitions for bitcoin miners with attractive power contracts.

JPMorgan [also] calculated that the AI computing opportunity has already added a cumulative total of $4B in value to the 14 Bitcoin miners the company tracks.

What's even more worrisome is that Bitcoin miners that haven't embraced the AI opportunity, like Riot Platforms, have been experiencing a particularly hard first half of 2024 and are not favored by investors.

It is obvious that the thirst for AI computation infrastructure is enormous. Taking that growing demand into account, as well as the halved and highly cyclical profits from BTC mining, it is totally understandable that businesses will turn to the most profitable operations.

The partnership between the AI and bitcoin mining industries is a logical one, given the needs from both sides. AI companies need the space, access to cheap energy, and infrastructure that bitcoin miners already have. And bitcoin miners seek the stability of AI compute revenue, and the enormous potential profits flowing from the current AI hype cycle.

However, what is going to happen to Bitcoin? Core Scientific’s CEO Adam Sullivan has commented that the deals with CoreWeave aren’t indications that it will abandon Bitcoin anytime soon. But, for how long?

Disclaimer: None of this should or could be considered financial advice. You should not take my words for granted, rather, do your own research (DYOR) and share your thoughts to create a fruitful discussion.