Funding Wrap: AI startups score high in 2024 thus far

Crypto VCs have begun the year with a bevy of investments in startups that somehow connect crypto and AI — part of a broader belief that AI will be a transformative force in tech.

Many of the projects closing rounds are yet to have a revenue-generating product, and to some, the AI investing boom may smell like former times where simply attaching the term “blockchain” to a project could help close a deal.

 Still, the investor interest is real. AI found a prominent place in the 2024 big ideas list for behemoth VC fund a16z crypto, and AI-connected startups are leading the way in early 2024 startup funding. 

Read more: A16z’s crypto ideas list for 2024 spotlights AI, gaming

Gaming studio ArenaX Labs raised $6 million this week. The lab created AI Arena, a PVP game that intends to use gaming as a medium to teach their audience how to use AI. In the game, players acquire NFT fighters who they train through imitation learning — essentially teaching the bot to mimic what the player says to do. 

Framework Ventures led the round, which also drew participation from SevenX Ventures, Xterio, FunPlus, and Moore Strategic Ventures. 

“Most consumers still view AI as a novelty they may engage with on a surface level. The ArenaX team is flipping this narrative by creating products that encourage normal people to begin learning to train AI through the language of play,” Framework co-founder Michael Anderson said in a release accompanying the announcement. 

CharacterX raised $2.8 million this week to continue building its so-called synthetic social network. Its mobile app lets users chat with a range of AI chatbots with different backstories. 

Read more: Wynd Network raises $3.5M from Polychain, Tribe and more for decentralized AI project

Lightspeed Venture Partners, Spark Digital Capital and INCE Capital co-led the round.

Spark also participated in a $3.5 million funding round for AI marketplace Ta-da. The startup aims to sell data for AI companies to train their models, and it uses blockchain technology to keep costs down and ensure transparency with its data. 

Ta-da was incubated by Morningstar Ventures.

A Swiss city’s Web3 incubation program  

Lugano, Switzerland is launching an incubation program for regional entrepreneurs building on DFINITY’s Internet Computer network. 

DFINITY is headquartered in Zurich, and participants in the incubation program will work with DFINITY mentors at sessions in Lugano and Zurich. Cohort members can receive up to $85,000 in funding but must create a legal entity in Lugano if they wish to receive more than $25,000 of the total sum. 

Regulation and crypto-friendly banks have led some to dub Switzerland “crypto valley.” The Ethereum Foundation is based in Zug, Switzerland. 

“There is no better place to launch this Incubator Program than the City of Lugano, which has been at the forefront of blockchain adoption for several years,” Dominic Williams, founder of the DFINITY foundation, said in a statement. 

Read more: Crypto needs to be a ‘hole’ lot more Swiss

Other notable fundraises

• Pontem raised $6 million in a round co-led by Lightspeed and Faction for its studio helping developers build in Move. Move is a programming language first developed by Meta for its erstwhile Diem blockchain that is now used by layer-1s Aptos and Sui. 
• Web3 music streaming platform and music NFT marketplace Tune.FM cashed in a $20 million investment from LDA Capital. 
• Binance led a $15 million round in gaming studio SkyArk. 
• Crypto custodian and staking services provider Finoa announced a $15 million strategic round led by Maven and Balderton.

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