CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Will Solana become the base layer of Web3?

April 13, 2022, 3:12 PM UTC

Web3 will be the supposed new iteration of the internet. And it will be built on Solana blockchain if Anatoly Yakovenko has anything to do with it.

Yakovenko is the cofounder and CEO of Solana Labs, which created the eponymous blockchain popular among gamers and crypto Wall Street that stands to possibly challenge Ethereum—the long-standing (by crypto standards) blockchain of choice for builders in the crypto universe. That’s according to a recent profile on Yakovenko written by my finance desk colleagues Anne Sraders and Declan Harty. 

It’s not so much about the protocol as it is about the product, Yakovenko told Sraders, who last week flew out to Miami to attend one of their “Hacker House” events, the aura of which she writes was reminiscent of a hot new club. “If you have compelling applications, that’s where the users are gonna go,” Yakovenko told her.

Solana Co-Founders Anatoly Yakovenko and Raj Gokal photographed at Solana Miami on April 7, 2022.
Photograph by Alfonso Duran

Ethereum currently hosts the lion’s share of decentralized finance apps, exchanges, DAOs, and metaverse platforms. But will it remain that way? Transactions on Ethereum can be slow and expensive. It’s the reason that Ethereum is undergoing a structural transition (that and the titanic energy consumption currently required to validate transactions). And it’s a major reason why other blockchains, like Solana, have gained some traction.

Solana Labs, backed by the likes of Andreessen Horowitz, Ribbit Capital, and Lightspeed Venture Partners, claims its blockchain can manage more than 50,000 transactions per second (for now, it’s averaging only about 1,000 to 2,000 due to demand). It costs around $0.00025 per transaction, compared to Ethereum’s approximately $12. That’s partially because Solana has developed what it calls “proof of history”—where time is used as a data structure to order transactions and events on the blockchain. Like Ethereum, Solana also uses Proof of Stake to validate transactions.

The Solana network, which is still in beta, is growing as developers assemble apps and projects on its blockchain. Its token SOL has surged over 6,500% in value since January 2021. There is approximately $6.6 billion in crypto deposited in DeFi projects on Solana, per DeFiLlama—though that’s down from $15 billion in December. “Solana had a big lead in terms of hype, in terms of traction, and it has definitely lost that momentum,” Arca’s CIO Jeff Dorman told Fortune, noting that it could go back the other way.

Solana was initially called Loom, but due to an Ethereum-based project sharing the same title, Yakovenko and his cofounders renamed it after a beach in California where they surfed. Yakovenko still surfs, and cycles, crediting those hobbies to helping him think through his problems. He is also an Ironman and an underwater hockey player. “In his prime, he claims he could swim three lengths of the pool with fins on without taking a breath,” writes Sraders.

Solana Labs may have its work cut out for it. Ethereum is building out its next version, which could be ready as soon as this summer, which will phase out crypto mining and make the platform more scalable. And Solana has been suffering from outages—including a 17-hour one in September, and several others in January, according to Bloomberg.

But Yakovenko is thinking big for Solana’s future.

“He’s a man chasing a dream. And he really just wants to create something cool and awesome and maybe, change the world a little bit,” Jump Crypto president Kanav Kariya told Fortune.

You can read the full story here.

Lessons learned… Fast, the now-defunct online login and checkout solutions company, had raised $120 million from investors only to abruptly shut its doors earlier this month, costing about 450 people their jobs and investors like Index Ventures and Stripe their capital. This week, angel Brian Rumao, who joined the company’s Series A round, took to Twitter to share some valuable lessons he had learned from the debacle, which include to trust your gut, not to rely on other investor signals, and be aware that employees have more to lose than investors. You can read the full thread here.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
Submit a deal for the Term Sheet newsletter here.

Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Circle Internet Financial, a Boston-based global internet finance firm and the issuer of USD Coin, agreed to raise $400 million in funding from BlackRock, Fidelity Management and Research, Marshall Wace, and Fin Capital. The funding round is expected to close in Q2.

- Critical Start, a Plano, Texas-based managed detection and response cybersecurity solutions provider, raised more than $215 million in funding from Vista Equity Partners.

- Viral Nation, an Ontario-based digital and social media group, raised CAD $250 million ($197.7 million) in funding led by Eldridge and was joined by investors including Maverix Private Equity.

- OSF Digital, a Quebec-based commerce and digital transformation solutions provider, raised $100 million in Series C funding led by Sunstone Partners and was joined by investors including Delta-v Capital and Salesforce Ventures

- Kubit, a San Francisco-based product analytics company, raised $18 million in Series A funding led by Insight Partners and was joined by investors including Shasta Ventures and TSVC

- Grain, a San Francisco-based video meeting workspace, raised $16 million in Series A funding led by Tiger Global Management and was joined by investors including Zoom Video Communications, Inc., Slack Fund, Unusual Ventures, Freestyle VC, Acrew, Peterson Ventures, and others.

- 9am.health, a San Diego-based virtual diabetes clinic, raised $16 million in Series A funding. 7Wire Ventures and Human Capital co-led the round and were joined by investors including StartUp Health, Leaps by Bayer, Define Ventures, and Founders Fund.

- Charge Amps, a Solna, Sweden-based EV charging solutions provider, raised 150 million SEK ($15.7 million) in funding from investors including OK ekonomisk förening, Skellefteå Kraft, Swedbank Robur, Concejo AB, LMK, and Quinary Investment

- Umba, a San Francisco and Lagos, Nigeria-based digital bank for African countries, raised $15 million in Series A funding led by Costanoa Ventures and was joined by investors including Lux Capital, Palm Drive Capital, Banana Capital, Streamlined Ventures, Lachy Groom, and ACT Ventures

- Dfns, a Paris-based cybersecurity startup that provides decentralized custody as an API, raised $13.5 million in funding led by White Star Capital and was joined by investors including Hashed, Susquehanna, Semantic Ventures, Coinbase, ABN AMRO Ventures, and Bpifrance

- RentRedi, a New York-based property management software for landlords, raised $12 million in Series A funding led by K1 Investment Management and was joined by investors including TIA Ventures, Tribeca Early Stage Partners, and RiverPark Ventures

- Montonio, a Tallinn, Estonia-based finance platform for online merchants, raised €11 million ($11.9 million) in Series A funding led by Index Ventures

- Last9, a San Francisco-based software reliability platform, raised $11 million in Series A funding led by Sequoia Capital India and was joined by investors including Better Capital and other angels. 

- Scotch Porter, a Newark, N.J.-based grooming and wellness brand, raised $11 million in Series B funding led by Pendulum.

- Formations, a Bellevue, Wash.-based financial management solution for the self-employed, raised $8 million in Series A funding led by Arthur Ventures.

- Neighborschools, a Boston-based company that helps early child care workers go independent and open in-home daycares, raised $5 million in seed funding led by Accomplice and was joined by investors including Hannah Grey VC, Metrodora Ventures, and 186 Ventures.

- Reputation DAO, an Australian-based reputation service for DeFi, raised $4.75 million in seed round from investors including AirTree Ventures, Framework Ventures, Digital Asset Capital Management, and Koji Capital

- Socket Supply Co, a New York-based developer tools company for cloud computing, raised $3.5 million in seed funding led by CoinFund and Galaxy Digital and was joined by investors including Castle Island Ventures, PeerVC, and 100 Acre Ventures.

- Hookdeck, a Montreal-based webhook infrastructure startup, raised $2.4 million in seed funding led by Matrix Partners.

- Wavy, a Toronto-based culture management platform, raised CAD$2.5 million ($2 million) in seed funding led by Laconia Capital and was joined by investors including Garage Capital, Two Small Fish Ventures, Archangel, Backbone Angels, and others angels. 

- GoSolo, a London-based banking app for international founders and entrepreneurs, raised $1 million in funding led by SFC Capital, Menlo LLP, and Grammarly founders Max Lytvin and Alex Shevchenko.

PRIVATE EQUITY

- GlaxoSmithKline agreed to acquire Sierra Oncology, a San Mateo, Calif.-based drug developer, for $1.9 billion.  

- Blue Point Capital Partners and Brimar Industries acquired Crowd Control Warehouse, a Chicago-based designer and distributor of crowd-control, traffic and safety products. Financial terms were not disclosed. 

- Rand McNally, a TELEO Capital portfolio company, acquired Fleetsu, a Perth, Australia-based fleet management platform. Financial terms were not disclosed. 

- Thomas H. Lee Partners acquired a majority stake in Carpe Data, a Santa Barbara-based alternative data products provider for the insurance industry. Financial terms were not disclosed.

EXITS

- KKR agreed to acquire Barracuda Networks, a Campbell, Calif.-based cloud security solutions provider, from Thoma Bravo. Financial terms were not disclosed. 

OTHER

- Checkr agreed to acquire Inflection, parent company of GoodHire, a Redwood City, Calif.-based people screening platform for employment and identity fraud protection, for approximately $400 million. 

- Omega, a portfolio company of Pfingsten, merged with ACE IT Solutions, an Elmwood Park, N.J.-based managed IT, cloud, and security services provider. Financial terms were not disclosed. 

IPOS 

- Excelerate Energy, a Woodlands, Tex.-based regasified natural gas delivery company, raised $384 million in an offering of 16 million shares priced at $24 per share. The company posted $888.6 million in total revenue for the year ending in 2021 and reported $41.2 million in net income.

SPAC

- Hibiscus Petroleum, a Kuala Lumpur, Malaysia-based independent oil and gas explorer, is weighing going public via a SPAC merger in Singapore that could raise S$200 million ($147 million), according to Bloomberg. 

FUNDS + FUNDS OF FUNDS

- White Star Capital, a New York-based investment platform, raised $120 million for a second fund focused on crypto-networks and early-stage blockchain-enabled Web3, DeFi and Gaming companies. 

- Leadout Capital, a Portola Valley, Calif.-based venture fund, raised $57.7 million for its second fund to invest in “resilient” founders, according to Fortune. 

PEOPLE

- Genstar Capital, a San Francisco-based private equity firm, promoted Sid Ramakrishnan and Scott Niehaus to director and Dominic Martellaro to principal. 

- Turnspire Capital Partners, a New York-based private equity firm, hired Luther Gatewood as a principal. Formerly, he was with Athyrium Capital Partners.

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.