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Beacon VC 2023 H1 Update

Posted on by [email protected]

2023 has been keeping Beacon VC very busy with exciting and motivating challenges. In this mid-year update, Beacon VC wishes to bring you our observations on the VC landscape, an update to our fund thesis, as well as news about our latest transactions, research publications, and up-coming events.

H1 2023 in review

Valuation adjustments have been and will still be in motion

The global recession was triggered by slowdowns in large economies, increased geo-political risks, staggering inflation, and shrinking consumer spending, which has resulted in sluggish performance from startups. The overall market has witnessed a decline in startup valuations, driven by a rise in downrounds and flat rounds (by up to 18% and 9%, respectively, in recent fundraising). Conversely, the proportion of startups raising at increased valuations relative to their past rounds decreased to 71% in Q1 20231. Notably, late-stage startups have significantly contributed to this decline. Investors and analysts alike have noted that the high valuations that the market experienced in Y2021 are unlikely to be seen again soon.

Beacon VC believes that the correction will persist through the next few quarters, especially within emerging markets. 

Beacon VC has also noticed increased usage of public multiples by other fund managers in their valuation approach, with the belief that most private companies will eventually be subjected to public multiples, and the growth of the startups under this difficult economic period may not justify private premiums.

Global CVC putting brakes on investment, except in Asian and some EU market

Global corporate venture capital (CVC) funding has slowed down and is facing challenges due to geopolitical tension, inflation, and economic instability2. In Q1 2023, funding declined 12% QoQ, reaching a five-year low. This drop is in line with the broader decline in global venture funding, which fell by 13% QoQ.  Funding experienced a decline across various sectors, including fintech, retail tech, and digital health. The most significant drop was in fintech, decreasing by 48% QoQ to $7.8B (lowest level since 2017). CVC-backed retail tech funding also dropped below $1B for the first time since Q4 2017, falling from $1.3B in Q1 2023 to $0.9B in Q2 2023.

However, there have been some positive signals in Q2 2023 that the venture market has started to rebound.  Venture funding increased by 4% QoQ for the first time since Q3 2021, reaching $14.6 billion. In Asia, where 40% of the transactions were carried out, deal count also increased for the first time since Q1’22. Germany followed a similar trend, seeing a remarkable quadruple increase in CVC-backed funding compared to Q1 2023, resulting in a record-breaking high of 36 deals.  Positive signals can also be seen in the increase in  CVC-backed mega-rounds (rounds larger than $100M).

Thai CVCs and ecosystem players have worked hard to keep Thai ecosystem ablaze 

The VC landscape in Thailand has long been dominated by CVCs. Thai CVCs have closed more deals than other institutional VCs by twofold3.  The investment focus of the CVCs tends to be later stage companies that are ready to collaborate with the business units, as most CVCs look for strategic investments. Given this focus, little capital from CVCs is flowing to pre-seed to seed stage startups. Coupled with a lack of early stage institutional investors in Thailand, this has resulted in a funding gap for early-stage startups in the Thai market.

In order to mitigate the funding gap, government agencies such as NIA and DEPA have launched several initiatives for Thai startups. These programs include demo days for startups to present themselves to potential investors (e.g. Growth 4 by NIA Demo Day), as well as grants or direct investments into startups (e.g. dVenture and Digital Startup Fund). Government agencies are partnering with a variety of private sector players to stimulate interest and activity in the Thai ecosystem. 

Corporate interest in AI/ML technology and impact-driven companies is also becoming more prevalent4. AI/ML technology has the potential to disrupt several industries and is expected to have a profound impact on productivity and daily life.. Additionally, as the world becomes more and more concerned about sustainability, impact investment becomes integral to increasing funding to companies who can generate positive and measurable impact (both social and environmental) in addition to achieving financial return.   

Funds getting more sophisticated in looking at ESG/ incorporating ESG metric

The idea of profitability as the only guiding principle of investment is giving way to an increased focus on integrating ESG (Environmental, Social, and Governance) performance into every step of the investment-making processes, from selection, due diligence, and valuation, all the way to deal execution. According to EY, 26% of investors decided not to invest with a manager in 2022 because of inadequate ESG policies. More specifically, 53% of hedge funds/PEs have incorporated ESG philosophies into their investment process and 20% of VCs currently take ESG into account when making investment5

Consequently, startups looking for venture capital funding will have to follow suit and integrate good ESG practices into their strategies and operations. While this may sound like an additional burden, there are long-run benefits, as ESG regulations are getting implemented more strictly and public markets are focusing more on sustainability.

ESG due diligence can extend beyond just the startup itself. Investors may also review ESG compliance of the companies’ suppliers and customers to determine the holistic ESG risk of the investment6. ESG risks are increasingly embedded into the financial valuation of the company because of potential harm from regulatory penalties or reputational damage affecting sales. Apart from valuation considerations, startups might also be asked to sign representations and warranties regarding ESG compliance. 


Beacon VC’s Growing Investment Mandate

This January, Beacon VC expanded our investment mandate to include impact investment. Beacon VC currently has three mandates: the Synergistic Fund, the Opportunistic Fund, and the Beacon Impact Fund.

  • Synergistic Fund: Invest in growth stage startup companies to promote synergistic relationship between the startup and KBank. These companies must demonstrate strong strategic fit with KBank, in addition to operational and technical excellence.
  • Opportunistic Fund: Invest in emerging startup companies that are on path to become game changers for the financial services industry. These companies must be enabled by a scalable business model and robust technology, including but not limited to cloud computing, blockchain, or AI/ML.
  • [New] Beacon Impact Fund: Invest in emerging startup companies that have strong intentions to solve the world’s most pressing ESG problems. These companies must demonstrate that the intended impact is core to its financially feasible business model.

To give more color to the impact fund, Beacon VC believes that if we give people the tools to make good decisions and reward businesses for making good decisions, thereby encouraging businesses to explicitly internalize the cost of externalities, we can create positive impact because everyone will make decisions that create a better world.

Through our investments within the Beacon Impact Fund, Beacon VC hopes to achieve tangible impact in the following areas:

  • Environment: Slow the rate of climate change and move towards a more sustainable economy to reduce waste and unsustainable business practices (such as over-production and reliance on non-decomposable materials) by encouraging the mass adoption of green technology/sustainable practices by both consumers and businesses 
  • Social: Improve the quality of life for all people by breaking the poverty cycle, promoting equitable economic growth at all societal levels, and ensuring equal access to necessities under the human rights framework
  • Governance: Promote fairness, ethical practices, protection of vulnerable stakeholders, and transparency for any business activities, and empower consumers and other stakeholders with sufficient information to make informed decisions. 


Beacon VC transactions within H1 2023

Approved deals

The first half of 2023 has been a busy yet exciting time for Beacon VC. At the moment, Beacon VC has gotten approval for six new investments. Out of the six, four investments have already completed closing, while the other two investments are still in the closing process.

Completed Deals

  • [Direct] Algbra: A Shariah-compliant neobank. Algbra aims to improve financial inclusion to Islamic communities across the globe, starting in the UK, which is its home country. Algbra’s Shariah-compliant core-banking-as-a-service is poised to help Islamic Banks worldwide digitize.
  • [Fund] Wavemaker Impact: Wavemaker Impact has the ambition to decarbonize the globe by incubating startups that can reduce 10% of global carbon emissions. Wavemaker has extensive experience in startup investments and hopes to bring their expertise to solve one of the world’s most imminent problems.
  • [Fund] Quona Opportunity Fund: Quona is a global leader in the financial inclusion space. The fund covers all emerging markets from Asia, Africa, to Latin America.
  • [Fund] Siam Capital: This female-founded fund, run by Sita Chantramonkrasri, is making investments to create new consumption infrastructure, thereby helping consumers make more responsible choices for the society and the planet, starting in North America, one of the world’s largest consumer markets.

Deals in Closing Process

  • [Direct] Solar rooftop solution provider: This Thailand-grown company provides comprehensive solutions for businesses to plan, install, and monitor their solar power usage. The company has strong ties with dominant real estate and residential developers in Thailand.
  • [Direct] Bond fractionalization investment platform: This Singaporean company wants to make bond investment more accessible to retail investors. It leverages the blockchain technology to fractionalize corporate bonds and make initial ticket size up to 90% smaller.


Approved exit within H1 2023

Photo credit: LINEMAN Wongnai

Beacon VC also made the fourth exit in our portfolio – a strategic acquisition of FoodStory by Lineman Wongnai. This exit is in line with the bigger exit trend within the Thai market, whereby the majority of exit opportunities for Thai startups would be strategic acquisition.


Published researches in H1 2023

This year we have been busy familiarizing ourselves with the inner workings of the ESG and Impact Investing landscape. As part of this journey, Beacon VC published three articles in this area that might interest or benefit our readers: Digital Inequality, Economy Post- Carbon Tax, and Intersection of ESG and Blockchain. More articles to be published this year will focus on themes of Sustainable Finance, and roles of startup in ESG transition.


Things to look forward to in H2 2023

The second half of 2023 is full of exciting community building events hosted or sponsored by Beacon VC. Below are some of the events that we want to highlight:

Coinfest Bali Side-Event Sponsorship with APAC DAO

Coinfest Asia is Asia’s immersive web3 festival. Coinfest Asia 2023 converges Web2 and Web3 industries to explore real-world insights and valuable connections through an immersive festival experience.

Held at a casual cliff top venue in Bali, the event will give all participants a platform to engage and network in a unique and casual setting. Coinfest Asia 2023 is hosted by Coinvestasi, Indonesia’s #1 crypto media (an Indonesia Crypto Network company).

KATALYST Startup Launchpad 2023

The KATALYST Startup Launchpad is an incubation program in partnership with Stanford University since 2019. It aims to empower Thai startups through a nine-week intensive program focused on tech industries such as FinTech, ESG, AI, HealthTech, and enterprise solutions. The primary goal of the program is to help startups improve their business operations and achieve sustainable growth.

The Launchpad program provides valuable knowledge on building a startup, covering various aspects such as forming effective work teams, establishing a solid business foundation, and implementing strategies for business expansion. Additionally, it offers the opportunity for collaborations with leading partners, including Microsoft Thailand, AWS, True Digital Park, and others.

By supporting and nurturing these startups, KATALYST reinforces KBank’s commitment to strengthening the Thai entrepreneurial ecosystem and fostering a sustainable economy. For more information, visit the official website at:

Author: Woraphot Kingkawkantong (Ping)

Contributors: Warittha Chalanonniwat (Paeng)Wanwares Boonkong (Pin), Supamas Bunmee (Jae), Benjamas Tusakul (Air)

Editor: Krongkamol Deleon (Joy)



Making sense of the Crypto M&A wild west world

Posted on by [email protected]

“It is a wild wild west out there right now; there’s no framework” – Vanessa Grellet, Managing Partner of Aglaé Ventures at Permissionless 2022


The M&A scene in the crypto market is relatively young. Nevertheless, the industry has witnessed an ever-growing number of deals over the past few quarters. While the crypto M&A industry is still evolving, analysis of the current state of the industry can give readers a basic framework and thought-starters to comprehend this nascent phenomenon.

Market conditions favor a Crypto M&A boom

In the past several months, the entire crypto market has weathered storm after storm, which, although not necessarily started by Luna’s collapse, was definitely exacerbated by said collapse. Nevertheless, many seasoned Crypto Believers remain hopeful, as true innovations are born in crypto winters, learning from the past and paving the way for the next crypto summer.

As the market retreats from the high-yield gold rush, innovators must develop sustainable innovations with real use cases, such as decentralized identity solutions or blockchain security and protocol audits, making the crypto market, or the general Web3 industry as a whole, more appealing to institutional investors.

Institutional investor’s appetite for engagement in crypto manifests in many forms, including building a dedicated team to develop solutions in the crypto space (for example, KBank’s Kubix), investing in crypto tokens (an emerging area still under consideration by some regulators), investment into crypto native VC funds (such as Pantera Capital), and conducting Merger & Acquisition transactions (“M&A”).

Despite being a staple in the TradFi industry, M&A in the crypto market is a relatively new but robust phenomenon. According to Blockworks, M&A activity in 2021 tripled to 180 deals from 59 deals in 2020, and the industry already has seen over 92 deals in the first half of 2022. Many industry experts believe that industry participants will witness even faster growth of M&A activity over the next year as crypto winters present an opportunity to shop for companies or projects at a very low valuation.

Crypto M&A helps accelerate innovation within the industry

At its core, decentralization promises the elimination of intermediaries, and Crypto Believers see this as a very important evolutionary step in our civilization. With the industry being in its early days, full decentralization requires a massive attempt to build necessary infrastructures, develop appealing products and services, recruit communities, and unite ecosystems. For these to happen, innovation within the Crypto industry must occur not only for Crypto Believer’s hedonism or altruism but also for economic and financial reasons.

As many people believe that innovation is a way out of this crypto winter, M&A can accelerate the rate of innovation within the Crypto space expanding the possibility for innovators to get incentivized for their endeavors, which is especially important during this turbulent time. More M&A activities in the space create a positive feedback loop for more innovation. In addition, having M&A as one of the exit goals, innovators are required to think about the monetization, economics, and risks of their projects early on, giving the innovation landscape the ability to withstand shocks in the long run.

What types of M&A can the industry expect?

Traditional reasons for M&A typically fall into four categories, corresponding to that industry’s life cycle: capability acquisition, market access & customer acquisition, promoting economies of scale, and market consolidation.

M&A objectives by industry life stage

Source: Beacon VC internal analysis

Despite the shrinking market capitalization during crypto winter, many Crypto Believers think the market is still in the early or growth stage, meaning that most upcoming M&A activities within the crypto space will be for capability acquisition or market access.

Strategic Motives behind M&A in the Crypto Market

Strategic motives seen in crypto M&A transactions can broadly be categorized by who and whom the acquirer and target are (Enterprise vs. Protocol). To clarify, Enterprise refers to companies with a conventional equity structure (either TradFi or CeFi), managing the organization using a centralized top-down approach, while Protocol refers to Decentralized Applications (D’Apps) or decentralized autonomous organizations (DAOs) with governance tokens representing ownership in a decentralized protocol.

The list of strategic motives below is a sampling of what the market has seen, and is by no means meant to be totally conclusive.

Overview of Crypto M&A transaction motives

Source: Beacon VC internal analysis


Given regulatory uncertainties, especially for DeFi, not all enterprises are ready to offer on-chain DeFi products or services, but many see the opportunity to capture the value created in the crypto space. Enterprises looking for a less risky way to engage with the crypto market are eying infrastructure provider/ enabler play, which is achievable through acquiring existing infrastructure, blockchain enablers, or CeFi companies. The types of services that will be provided by enterprises for the crypto industry include wallet and custodian services, auditing services, or blockchain-as-a-service, similar to what AWS does for Web2. Paypal’s acquisition of Curv is a great example of this strategy.

CeFi companies can also be acquirers, especially large CeFi exchanges looking to enter new jurisdictions. The target would likely be existing CeFi exchanges with local licenses and hopefully good relationships with regulators. FTX’s acquisition of Liquid Group, then rebranding it to FTX Japan, reflects this strategy.

Innovation Leapfrogging

Innovation happens fast, often faster than blockchain-native CeFi companies can keep up. Acquiring frontier protocols allows companies to leapfrog their competition. In fact, many industry experts expect that CeFi exchanges to be the most active acquirers. Coinbase, for instance, has made more than 20 acquisitions since its inception, accounting for over $800 million in acquisitions.

Traditional enterprises are also developing a clearer picture of their long-term strategy and crashing the protocol acquisition party to accelerate innovation. For example, eBay recently acquired NFT marketplace KnowOrigin as a part of its ‘reimagine eBay strategy’.

Real-world Capability Cultivation

Successful decentralized protocols rely heavily on their communities to push out innovations and build infrastructure. As these projects tend to scale rapidly, many lack sufficient resources to handle the ecosystem. 

Many successful protocols that are cash-rich may take crypto winter as an opportunity to develop internal capabilities for the next crypto summer, by acquiring traditional companies to develop real-world capabilities. The acquisition target for these protocols would likely be an existing vendor or supplier to that protocol, as the community already has buy-in for the value that the target is able to generate. Sandbox’s recent acquisition of Uruguayan tech firm Caulit is a great demonstration of the attempt.

Synergy Building

As previously discussed, successful projects place high importance on their communities and the platform’s ability to maintain the community. During crypto summer, investor goodwill is high, and funding is easy to come by. When investor money is tight, however, projects and their communities turn to each other in the hope of sharing resources and growing their footprint in a more cost-efficient manner.

The acquisition motive for synergy can take many forms. One can be product-driven similar to Uniswap’s acquisition of Genie, an NFT marketplace aggregator, to complement its existing NFT liquidity pool – Unisocks. Another could be efficiency-driven similar to the Rari-Fei protocol merger to create a mega $2B liquidity pool.

Possible Structures of Crypto M&A

There is still very limited disclosed information on the deal structure, therefore the structures described below are solely based on market observations and internal analysis. In addition, there are still several challenges in executing a crypto M&A, and there is no standard playbook. In general, however, the Equity/ Token Direct Acquisition is the default method of M&A for its relative simplicity for all types of M&A motives, while Token Swap and Token Merge happen exclusively within Protocol-Protocol acquisition.

Level of control associated with transaction structures

Source: Beacon VC internal analysis

Equity/ Token Direct Acquisition

The direct acquisition method involves purchasing a controlling stake of the target’s equity or governance token, usually aiming to acquire total operational and directional control of the target. The process is executed similarly to traditional M&As, where both parties agree on the transaction price, draft legal documents, execute the agreements, and transfer the securities (or tokens). 

Unlike traditional M&As, there are still several challenges in crypto M&A such as token valuation, legal recognition of governance tokens as an acquirable asset, governing jurisdiction, and the absence of a legal entity for many crypto protocols. With these complexities, it is not surprising that the deal structure for direct acquisition will vary greatly, depending on the specific challenges of the deal.

Token Merge

Token merge happens when the acquirer and acquiree merge to form a new entity and issue a new token. Under this structure, both parties have approximately similar bargaining power, knowing that each party cannot succeed without the other party’s strength. The aforementioned Fei-Rari Merger is a great example for this case. Token holders of Fei and Rari would exchange their respective tokens for a new TRIBE token, under the project name FeiRari. 

Some other remarkable token mergers include the WRAP-PLENTY token merge into PLY to provide a more comprehensive all-in-one DeFi experience on the Tezos blockchain. More details on the merge mechanics are available here.

Token Swap

Token swap usually happens when the acquirer has a larger market capitalization compared to the target, and is looking to acquire smaller projects to complement or help complete its current product or service suite. Unlike total acquisition, the acquirer wants to allow the target company autonomy to operate and innovate. To put it in simpler terms, as Cointelegraph has put it, token swaps can be viewed as a crypto partnership on steroids, to drive the stickiness of the main ecosystem. TNC’s, a blockchain network company, announcement of 4 token swap transactions is an example of this pursuit.

Executing token swap transactions requires multiple smart contracts to manage both parties’ tokens staking into each other’s platforms, or through a shared wallet. The swap itself is a smart contract design problem, but the real challenge happens pre-transaction, similar to the token merge structure, as successful conclusion of the deal involves an extensive community buy-in program for both parties’ stakeholders, not only to align at the financial level, but also to align on project directions. 

Some Areas with Still More Questions than Answers

There are still many questions in the crypto M&A space that need to be answered. Most remaining questions are related to the execution of transactions, since there is still limited understanding of blockchain economics, and an unclear regulatory framework surrounding the space. Below are some of the biggest questions by stage of transaction that deal practitioners are trying to answer.


Valuation: How to value the project as a basis for acquisition? 

At the moment, there is no definitive approach to value crypto-based companies for general investment or M&A, creating tremendous difficulties at the negotiation table. 

Some of the methodologies being used to uncover ‘fair value’ of the project include:

  1. Market Approach – use comparable tokens and respective market price/ capitalization ratios;
  2. Cost Approach – approximation of input cost to create that specific token or project as a lower bound of valuation range;
  3. Income Approach – discount the future economic benefit or utility of such protocol at an ‘appropriate’ discount rate; and
  4. TQM or Quantity Theory of Money approach – approximation of equilibrium market capitalization value in the future, discounted to estimate the present value of the project.

These approaches are inherently subjective by nature, and the characteristic of tokens in each project also brings tremendous complexity.  For a deep dive into crypto valuation, follow the link to EY’s report on the valuation of crypto-asset or’s guide to crypto valuation.


Utilization of on-chain transparency: How to best leverage the abundance of on-chain data for deal-making?

On-chain data promises to help investors make smarter and more well-informed decisions. However, only a handful of investors really understand how to mine insights from the blockchain. Most investors lack the right tools to conduct on-chain due diligence, and further development of the market requires investors to explore how best to leverage on-chain data.

During-transaction/ Deal-making

Agreement drafting and enforceability: How to ensure that the transaction is legally enforceable and minimizes counterparty risk?

The difficulty of enforceability arises from the discrepancies in how different jurisdictions recognize digital assets or DAO entities, or the lack of recognition in several jurisdictions. Cambridge Judge School of Business provides a deeper analysis of the legal and regulatory framework of different nations. In addition, many institutions are subject to anti-money laundering regulations, requiring that any transactions or activities be free of potential money laundering activities. As decentralized blockchain transactions are anonymous in nature, such institutions may be unable to participate in these transactions. 

Legal practitioners and deal makers have been trying to popularize provisions, which protect both parties, including adverse materials, definitions of digital assets, and agreement termination clauses. Bloomberg Law has published a great analysis piece on crypto drafting trends. 


Means of payment and volatility hedging: How to shield parties from the volatility of digital currency as means of payment?

While there is strong demand to use digital currency as means of settlement for crypto M&A (either for tax, transaction speed, or any other reasons), the high volatility within the market prompts both acquirer and target to question how to best shield their position. At the current stage of the market, there aren’t many cost-effective hedging options available, even for institutional investors.


Integration of technologies and communities: How to ensure successful post-merger community and technology integration?

Many M&A transactions ultimately fail due to a lack of compatibility between entities. Integrating two blockchain projects and work processes is a major problem, as currently there is no standardization between projects. Another problem is how to best handle the two communities, whose interests and passion for the projects may not fully align.

Closing thoughts – the beginning of beginnings

With the industry learning more about crypto M&A, we hope that industry participants are working to close the industry’s understanding gap in good faith and for the sake of innovation, and not in an exploitative mindset. 

While many people hope that decentralization would become one of the most prominent turning points of mankind, there are several pieces of evidence suggesting that M&A activities can adversely affect the rate of innovation in a monopolistic or oligopolistic market environment. Acquirers must strive to remember that these transactions must be done for the sake of value creation for all stakeholders, and in pursuit of the betterment of society. Only with the joint hands of institutions and innovators to lay the groundwork and create meaningful solutions, the pursuit of decentralization dreamworks can be realized.

Author: Woraphot Kingkawkantong (Ping)
Editors: Krongkamol Deleon (Joy), Wanwares Boonkong (Pin)