If you haven’t heard, crypto is back. Bitcoin topped $100,000, President-elect Donald Trump named podcast host and occasional VC David Sacks as crypto and AI czar, and Hawk Tuah girl launched a meme coin that promptly rug-pulled its somehow credulous buyers. And perhaps most telling of all: Generalist venture funds are returning to blockchain.
Lava, a New York-based Bitcoin lending platform, has raised $10 million for its Series A from Khosla Ventures and Founders Fund, Term Sheet can exclusively report. While Founders Fund has been cautiously active in the crypto space through its partner Joey Krug, who joined from the blockchain fund Pantera in 2023, Khosla Ventures has mostly stayed away after helping plow $100 million into Sam Altman’s eyeball-scanning Worldcoin in 2022.
I asked Keith Rabois, who returned to Khosla Ventures from Founders Fund early this year, whether the latest bet means he’s leaping back into crypto. He demurred. “This is a very specific opportunity and a specific entrepreneur,” Rabois told me.
So what does Lava do? Imagine you’re sitting on a pile of Bitcoin, but you also want to buy a new seafront property in Miami. Real estate brokers won’t exactly accept crypto as payment, but you also don’t want to part ways with your Bitcoin as prices rip. That’s where Lava comes in, allowing users to borrow cash against their holdings. “Our tagline is save in Bitcoin, spend in dollars,” Lava’s founder and CEO Shehzan Maredia told me.
Crypto lending has a fraught history, to put it lightly. Similar services such as Genesis, BlockFi, and Celsius all went bankrupt in 2022 and early 2023, contributing to the sector’s collapse and the demise of FTX. One of the issues was rehypothecation—in short, the practice of taking one client’s collateral and doling it out to other ones—and new crypto businesses have popped up that pledge not to engage in the risky behavior, including Arch, which raised $5 million earlier this year.
But Maredia and Rabois argue that crypto lenders should go a step further and allow their users to “self-custody” their assets, meaning the lender never holds the Bitcoin on its clients’ behalf. It’s a concept core to the Bitcoin ethos—not allowing intermediaries, from banks to exchanges, to control your coins—but is rarely practiced. Rabois described Lava’s ability to lend while allowing users to self-custody securely as a “technical breakthrough.”
The service is still pricey, with Lava making its money off an origination fee as well as an interest rate of around 7.5%, but Maredia argued that his approach is more “anti-fragile” than his competitors. “Users are very aware of the risks of what went down the last cycle and want something better,” he told me. Lava plans to build out other services, including payments and the ability to buy Bitcoin. And unlike many other crypto startups, he doesn’t plan to launch a token (the Series A is an all-equity round).
While crypto boosters have argued the regulatory onslaught against the industry pushed entrepreneurs out of the country, New York still has a thriving blockchain scene, from unicorns like Uniswap to digital asset-focused VCs like Department of XYZ. (That’s not to mention the Bitcoin-themed bar in the Village that Trump stopped by on the campaign trail.)
Rabois told me that he expects more development in the space because of the “perception of a chilling effect” under Gary Gensler’s tenure at the Securities and Exchange Commission. “There’s probably some suppression of talented people going into crypto, and I think that will be unlocked and changed rather rapidly,” he said.
Still—unlike some of the VCs in his orbit who are cozying up to Trump at Mar-a-Lago, and soon Washington—Rabois said he just plans to keep posting his policy recommendations on X. “I have a day job,” he told me.
As for whether Khosla Ventures will make more crypto investments? “I haven’t seen a pitch that really resonates with me, but that doesn’t mean it doesn’t exist,” Rabois said. “But if any founder has one, I’d love to hear about it.”
ICYMI…Elon Musk’s xAI wrapped up a $6 billion funding round, bringing its total haul this year to a staggering $12 billion.
Here’s your December cartoon, by Ian Foley:
Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
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VENTURE DEALS
- Zopa, a London-based digital bank, raised £68 million ($86.6 million) in funding. A.P. Moller Holding led the round and was joined by existing investors.
- Oxford Flow, an Oxford, England-based valve technologies manufacturer, raised $25 million in Series C funding. bp Ventures and Energy Impact Partners led the round and were joined by others.
- BRM, a San Francisco-based AI-powered vendor management and procurement platform, raised $15 million in Series A funding. Caffeinated Capital led the round and was joined by existing investors Base10 and Definition Capital.
- Spexi, a Vancouver-based drone imagery network, raised $11.5 million in Series A funding. Blockchange Ventures led the round and was joined by Moonshots Capital and existing investor Protocol Labs.
- Ethyca, a New York City-based data privacy compliance firm, raised $10 million in funding. Aspenwood Ventures and AVP led the round and were joined by Des Traynor, Guillermo Rauch, Abstract Ventures, and IA Ventures.
- Netacea, a Manchester, England-based bot protection provider, raised £4 million ($5.1 million) in funding from Mercia Asset Management.
OTHER
- Carta Healthcare acquired Realyze Intelligence, a Pittsburgh-based AI-powered patient and clinical trial matching solution, from UPMC Enterprises. Financial terms were not disclosed.
IPOS
- Flowco Holdings, a Houston-based production optimizer for the oil and natural gas industries, filed to go public on the NYSE. Jonathan B. Fairbanks, White Deer Management, and Genesis Park back the company.
FUNDS + FUNDS OF FUNDS
- Centana Growth Partners, a New York City-based growth equity firm, raised $600 million for its third fund focused on financial services.
- Dimension, a New York City-based venture capital firm, raised $500 million for its second fund focused on technology and life sciences.
- Fly Ventures, a Berlin-based venture capital firm, raised €80 million ($84.6 million) for its third fund focused on inception-stage deep tech companies.
