- PIP Labs just announced one of the biggest crypto raises this summer.
- Co-founder Seung Yoon Lee believes the Story blockchain could help developers get more out of AI companies.
- This is the third fundraiser a16z has led for the lead developer behind Story.
When Seung Yoon Lee first came to Silicon Valley 10 years ago to pitch his first startup, a serial novel app, venture capitalist Andreessen Horowitz repeatedly declined to invest in the company, he said. DL News.
Lee, who goes by the name SY, eventually sold the startup Radish for $440 million in 2021 and quickly co-founded a new project: a blockchain for storing and tracking the use of intellectual property.
Now Lee has finally caught the eye of Andreessen Horowitz. The venture capital firm’s blockchain-focused arm, a16z crypto, has led three investment rounds in Lee’s company, PIP Labs, including an $80 million round that Lee announced on Wednesday.
“They triple, which is pretty rare as far as I know,” said the CEO and co-founder of PIP Labs.
“Economic Pact”
PIP Labs is the lead developer of the Story blockchain, which is a rebranding of its previous name, Story Protocol.
As with many crypto projects, there will be a corresponding nonprofit organization called the Story Foundation, Lee said.
Other Series B investors include Polychain Capital, the well-known crypto VC, Scott Trowbridge, senior vice president and board member at Stability AI, and Cozomo de’ Medici, the NFT collector.
Lee declined to disclose his company’s latest valuation or how much a16z contributed to the capital raise, adding that $80 million was for shares in PIP Labs, not future tokens.
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“The economic compact underlying the internet – content creators provide supply and content distributors provide demand – is being upended by the proliferation of AI,” said Chris Dixon, founder and managing partner of a16z crypto, in a statement. “PIP Labs is building the necessary infrastructure for a new compact.”
The $80 million round is PIP Labs’ second round of capital raising in less than a year and one of the biggest crypto deals of the summer, according to Crunchbase’s Web3 tracker.
The fundraising comes amid a recent slowdown in the number of crypto venture deals. According to a recent report from Pitchbook, the second quarter saw a nearly 13% decline in the number of deals compared to the first quarter.
140 million US dollars
Story is one of numerous projects that use blockchains to store, document and transfer intellectual property rights.
Even the European Union has studied how distributed ledgers can help companies protect their intellectual property.
In September, PIP Labs announced that it had raised more than $54 million in a round led by a16z with participation from angel investor Balaji Srinivasan, Paris Hilton’s venture capital firm 11:11 media and former Microsoft executive Charlie Songhurst.
Lee said the September announcement combined $30 million in seed funding and $24 million from Series A funding.
He said an additional $6 million in funding became available following the announcement, bringing the total amount PIP Labs has raised in its three rounds to $140 million.
Since September, co-founder Jason Zhao has stated that his startup will launch its blockchain later this year.
The upcoming chain is compatible with code written for Ethereum, one of the most popular blockchains for crypto developers.
Data-eating cows
Lee sees Story as a possible solution to the rise of generative artificial intelligence.
For technology giants like OpenAI, the success of their language models depends on vast amounts of data.
However, the amount of high-quality texts, photos and videos on the Internet is limited.
“They’re already running out of great data,” Lee said. “They’re actually running out of great intellectual property.”
According to a recent study by the research group Epoch AI, the tech giants will exhaust the supply of publicly available texts for AI language models sometime between 2026 and 2032.
A pitch deck for PIP Labs that Lee sent to DL News compared the situation to a herd of cows that gradually decimate the grassland until it becomes barren.
“Who will have an incentive to create content if there is no sustainable business model for the data that is fed to the cows that supports their production?” the deck states.
That’s where Story comes in, Lee said. The blockchain will encourage creators to register their intellectual property in the decentralized database because they can control what royalties they receive and track who remixes their data.
“It will take some time,” he said, “but I think it’s a very long-term vision that we want to implement.”
Ben Weiss is Dubai correspondent for DL News. Do you have a tip? Send him an email to [email protected].
