Jan’26: On Exponential Growth & Startups

Gm!

Welcome to the January Deal Flow Digest, including every crypto / web3 funding round we tracked last month, as well as the ALL the deals, and the recent hackathon/demo day results (in the links).

It’s getting weird out there with the growth of everything that’s happening in AI. I wanted to touch briefly on that before jumping into the normal newsletter content below.

Exponential growth is hard for humans to truly feel. Even when we understand the math, our intuition stays stubbornly linear.

A simple way to feel exponential growth is the classic paper-folding thought experiment.

Start with a standard sheet of paper—about 0.1 millimeters thick.
Each time you fold it in half, the thickness doubles:

• 1 fold: 2 layers

• 2 folds: 4 layers

• 3 folds: 8 layers
  …and so on.

It starts slow… and then it gets weird.

• 10 folds: ~0.1 meters (about 4 inches)

• 20 folds: ~100 meters (taller than a skyscraper)

• 30 folds: ~100 kilometers (into the edge of space)

• 40 folds: ~100,000 kilometers (a quarter of the way to the Moon)

• 42 folds: ~400,000+ kilometers (past the Moon, which is ~384,400 km away)

(Yes, in real life you can’t fold paper 42 times. Usually ~7–8 is the practical limit, but this is a physics-ignored thought experiment to show the math.)

So why am I talking about folding paper in a monthly newsletter about the crypto venture market?

Because exponentials surprise you. Linear progress is easy to understand: add a little, get a little. Exponential progress is different: it looks unimpressive… right until it stops looking unimpressive all at once.

Exponential growth is happening right in front of us, in AI.

Here’s an excerpt from an essay titled “The Adolescence of Technology,” written by Dario Amodei, the CEO of Anthropic.

And that’s exactly what I felt over Christmas.

Yes, I disconnected and spent some real time with family…. But then I went head-first into learning more about AI, specifically Claude Code and “coding agents.” I signed up for my friend Sean’s vibe coding boot camp that was supposed to take five weeks.

Then one weekend I got completely absorbed… and I accidentally did the entire five-week curriculum in a weekend.

By the end of it, I went from a loose idea to a fully-functional working app - hooked up to Stripe, accepting subscriptions.

As someone who’s been an entrepreneur and worked with dev teams for years, the “who can ship” landscape is changing fast.

For a non-technical builder, this ability and unlock is insane: you can describe what you want, let the agent attempt it, debug it, retry it, and keep iterating until it works…. All on your own, without the usual friction of coordination overhead.

This isn’t to say tech teams go away. But the “technical moat” shifts. Building gets exponentially cheaper and thus stops being the bottleneck.

For me, it’s already changing how I think about the venture market in crypto. If tiny teams can get to market quickly, the edge increasingly moves to:

• Distribution - Can you efficiently acquire and retain users?

• Taste & Product Judgment - Are they building what’s worth building?

• Security + Trust - Is it safe to use?

• Data and Workflow lock-in - Do they have a wedge that compounds? What gets stickier over time?

Which brings me to the darker side of the same trend. Yes, it will create an explosion of projects, which also means an explosion of noise.

Merriam-Webster’s 2025 Word of the Year was “slop”: low-quality digital content produced at scale by AI.

If you think that was a theme in 2025… brace yourself for 2026.

Slop moves beyond fake news, cat videos, and viral tiktoks / IG into everything else. Every corner of digital media gets flooded…marketing pages, “research,” newsletters, landing pages, tools, even SaaS products. And they look good.

So, be careful out there. If anyone can launch an app quickly, not everyone is launching it securely. The credit card form might look legitimate. The onboarding flow might feel polished. But the underlying security posture may not be.

On the optimistic side (and I’m optimistic to a fault), there’s a massive upside here too: faster iteration, more experimentation, and a wave of new products that genuinely improve people’s lives…. and occasionally, a real breakout.

I just can’t stop thinking about how psychologically fascinating these coding agents are to watch. They don’t get tired. They don’t get demoralized. They’ll brute-force a problem for 30 minutes straight where a human would give up and come back tomorrow. It’s a real “feel the AGI” moment when it finally lands the solution.

We’re in a sweet spot right now. The pace of change is overwhelming for most people and the tools are powerful, but most people haven’t fully internalized what they can do.

If you haven’t spent time with coding agents yet, I’d strongly encourage you to go down the rabbit hole. Even if you never write a line of code, understanding how fast “idea > product” is compressing is going to matter for fundraising, diligence, and where investment moats come from next. It’s getting wild out there. Strap in.

Rain | Series C | Payments | $250,000,000 | 2026-01-09
Rain is a blockchain-based card issuing and stablecoin payments platform for Web3 teams and DAOs, enabling customizable payment cards for digital asset spending and expense management. The Series C was led by Iconiq Capital, with participation from Sapphire Ventures, Dragonfly Capital, Bessemer Ventures, Galaxy Digital, FirstMark Capital, Lightspeed Faction, Norwest Venture Partners, and Endeavor Catalyst.

BitGo | IPO | Custody | $212,800,000 | 2026-01-21
BitGo is a digital asset security firm providing institutional-grade crypto custody and infrastructure for banks, hedge funds, exchanges, and other large institutions. The funding is tied to BitGo’s IPO, with the round details reported via Reuters.

LMAX Group | Strategic | Trading | $150,000,000 | 2026-01-15
LMAX Group is an institutional trading and fintech firm running execution-only venues for FX, digital assets, and equities. Ripple provided $150 million in strategic financing, supporting LMAX’s regulated, low-latency crypto trading infrastructure (LMAX Digital) for banks, brokers, and asset managers.

Alpaca | Series D | Trading | $150,000,000 | 2026-01-14
Alpaca is an API-first trading platform offering commission-free trading and brokerage/market data APIs for fintechs and institutions. The Series D was led by Drive Capital, with participation from Citadel Securities, Opera Tech Ventures, MUFG Innovation Partners, Flat Capital, DRW Venture Capital, Kraken Ventures, Bank Muscat, Endeavor Catalyst, Portage Ventures, Horizons Ventures, and others.

Superstate | Series B | RWA | $82,500,000 | 2026-01-22
Superstate is an asset manager using blockchain rails to issue tokenized investment products, including an Ethereum-based open mutual fund tied to short-term U.S. government bonds filed with the SEC. The Series B was led by Bain Capital Crypto and Distributed Global, with participation from Haun Ventures, Brevan Howard Digital, Galaxy Digital, Sentinel Global, Bullish, Flowdesk, and others.

Mesh | Series C | Payments | $75,000,000 | 2026-01-27
Mesh is a global crypto payments network connecting exchanges, wallets, and financial platforms so users can pay with any crypto while merchants receive stablecoins or fiat. The Series C was led by Dragonfly Capital, with participation from Paradigm, Coinbase Ventures, Moderne Ventures, SBI Investment, and Liberty City Ventures. The round valued Mesh at $1 billion.

ICEx | (Round not specified) | Centralized Exchange | $70,000,000 | 2026-01-12
ICEx is an Indonesia-based regulated crypto exchange offering spot trading and digital asset services, including local fiat on/off-ramps. The raise was reported alongside regulatory approval positioning ICEx as the country’s second licensed crypto exchange.

Zama | Public token sale | Privacy Infrastructure | $44,000,000 | 2026-01-26
Zama is an open-source cryptography company focused on Fully Homomorphic Encryption (FHE) for blockchain and AI, enabling encrypted computation and confidential applications. The project raised $44 million via a public token sale at a reported $550 million valuation.

ZBD | Series C | Payments | $40,000,000 | 2026-01-22
ZBD is a Bitcoin Lightning Network payments provider for gaming and digital entertainment, offering APIs/SDKs for instant, low-cost payments and payouts. The Series C was backed by Blockstream Capital Partners.

StreamX (StreamEx) | IPO | RWA | $35,000,000 | 2026-01-26
StreamEx is an institutional RWA tokenization platform bringing commodities on-chain, including a gold-backed stablecoin product designed to generate yield via gold leasing. The $35 million raise came via an IPO/public offering.

Click to see all of January’s funding rounds here:

VCs are continuing to announce their new raises.

• a16z | Multi-fund close ~$15B total for 2025 fundraising | Jan 2026
  Andreessen Horowitz announced a large multi-fundraise spanning several strategies (including crypto). The update framed 2025 as a major capital-raising year for the firm.

• Solayer Fund $35M | Jan 2026
  Solayer unveils $35 million fund for real-time DeFi, AI and tokenization apps on infiniSVM

• Escape Velocity $62M | Jan 2026
  Escape Velocity disclosed a ~$62 million fundraise focused on DePIN (decentralized physical infrastructure), positioning the fund around the thesis that real-world networks (compute, connectivity, energy, sensors) will be built and owned in more crypto-native ways.

As a reminder, if you are interested in learning more about Bankless Ventures Fund II, please fill out this form and we will be in touch!

Ongoing

MoveFWD Phase II (Alkimi x Sui) | Jan 27 – Mar 29, 2026
Online. $150K prize pool focused on building on Sui across multiple tracks.

HackMoney 2026 (ETHGlobal) | Jan 30 – Feb 11, 2026
Online (async). $2,000,000+ in prizes (per ETHGlobal’s “async hackathons” framing, which includes HackMoney).

Pump.Fun Build in Public Hackathon | Ongoing
$3 million in total funding, distributed across 12 winners, with $250,000 in investment per project.

Finished

BNB Chain “Good Vibes Only” Hackathon | Jan 22–29, 2026
Winners announced here.

Upcoming

Algorand Startup Lab Demo Day | Jan 28, 2026

Tenity Programs | Open (varies by program)
Global (multiple cities listed; program availability and deadlines vary).

That’s a wrap for January! Wishing everyone a very happy new year ahead.

Thank you and good luck out there.

Ben Lakoff, CFA
https://twitter.com/benlakoff