Author: Claude, Deep Tide TechFlow
Deep Tide Introduction: Privacy AI platform Venice has completed its first external funding round of $65 million, reaching a $1 billion valuation and becoming a unicorn. The round was led by Dragonfly, with participation from Coinbase Ventures. For $VVV holders, the real story isn't the money, but this round's equity+token hybrid structure: Founder Erik Voorhees emphasized that the team has not sold a single token and will continue buyback-and-burns while reducing token issuance; however, investors hold warrants to purchase 5 million $VVV tokens over 8 years, exercisable starting one year from now, bringing approximately 6,000 new tokens into the market daily. $VVV rose on the news, with the market interpreting it as a positive catalyst.
Erik Voorhees's Venice has secured its first external capital.
According to The Block, the privacy AI platform built by ShapeShift founder Voorhees, has closed a $65 million Series A funding round at a $1 billion valuation. The round was led by crypto venture firm Dragonfly, with participation from Coinbase Ventures, North Island Ventures, F-Prime, Archetype, Liquid2 Ventures, Morgan Creek, and others. This is Venice's first external capital raise since its launch two years ago. Previously, it had neither conducted a VC private sale nor monetized $VVV tokens from its treasury.
Equity+Token Two-Tier Structure: Investors Get Nearly 9% Equity Plus Two Batches of $VVV
In a lengthy X post, Voorhees disclosed the full consideration for this round. The $65 million buys three things: 8.98% equity in Venice the company, vesting rights to 1.5 million $VVV tokens, and warrants giving the right to purchase an additional 5 million $VVV tokens over the next 8 years at an agreed price.
A warrant is a right to purchase tokens at a predetermined price at a future date. According to Voorhees's calculations, if investors fully exercise these 5 million warrants, they would pay approximately another $66.5 million to Venice, bringing the total potential raise from this round to roughly $131.5 million. Both the token vesting and the warrants have a one-year lock-up period, after which they unlock linearly over the following three years.
What investors receive now is equity plus an option to "buy tokens later at a set price," not immediately liquid tokens. This structure, bundling equity, token vesting, and token warrants together, is not common in crypto financing. Most projects opt for either pure equity or directly sell tokens to VCs.
Founder's Approach: "Build Product and Token First, Then Bring in VC," Reversing Industry Norms
Voorhees emphasized that Venice chose to sell equity rather than finance by selling tokens from its treasury. He stated that Venice remains the largest holder of $VVV, owning over 30 million of the current total supply exceeding 80 million tokens. Neither the company nor the team has sold a single $VVV token to date, despite the token rising over 700% this year.
Venice's funding cadence is the reverse of common industry practice. Most projects presell tokens to VCs under non-public terms first, promising to build the product and find users later. Venice launched its product and token first, generated users and revenue, and then brought in external investors.
This approach is backed by business metrics. According to company disclosures, Venice reached 3 million users in April, was profitable in Q1, and multiple media outlets cited Voorhees stating its annualized run-rate revenue already exceeds $70 million. It is unusual for an AI startup at the Series A stage to be profitable before raising funds.
Warrants Represent Future $VVV Selling Pressure, But Founder Calculates the Pace as "Negligible"
For token holders, those 5 million warrants are an unavoidable issue. They represent potential future issuance; once exercised, they become new circulating supply – selling pressure.
According to Voorhees's calculations, if investors fully exercise their warrants starting about a year from now, approximately 6,000 $VVV tokens would enter the market daily, equivalent to about 0.2% of current daily trading volume. This magnitude is relatively small compared to market depth. The portion of warrants not exercised corresponds to tokens that remain on Venice's balance sheet and do not enter circulation.
On the token strategy side, Venice states it remains unchanged: continuing to use a portion of revenue to buy back and burn $VVV while gradually reducing token issuance. Burns reduce the existing supply, while warrants increase potential supply—two forces moving in opposite directions. The direction of $VVV's net supply depends on whether the buyback-and-burn intensity can outweigh the warrant unlock and regular issuance. This is the core variable token holders need to watch next, more important than the funding news itself.
It's worth noting here that the figures "6,000 tokens daily, 0.2% of daily volume" come from Voorhees's own calculations, representing the funding party's self-reported numbers. Deep Tide currently lacks independent data for cross-verification; readers should treat this as a reference, not a definitive conclusion.
Capital to Be Used for In-House Compute, Targeting GPUs and First Data Center
According to the founder, this funding round will be used to build in-house compute infrastructure, including Venice's first data center, to reduce reliance on leased GPUs.
His stated logic is that owning compute capacity locks in production capability during the "impending resource crunch" and improves gross margins, thereby making "larger-scale $VVV burns possible."
In other words, owning compute lowers costs and increases profits, and profits are then used to buy back and burn $VVV. Besides compute, Venice also plans to use the funds to enter new markets, acquire "synergistic" businesses, hire, and expand its customer base.
On the product side, Venice positions itself as a privacy-focused, censorship-resistant alternative to ChatGPT, claiming not to store user prompts on its own systems, with requests encrypted and forwarded through external proxies, and paid subscriptions offering end-to-end encryption. The platform claims access to over 200 AI models, including both self-hosted open-source models and closed-source models like OpenAI and Anthropic accessed via anonymous API calls. Beyond $VVV, Venice has another token, DIEM: users stake $VVV to get sVVV, then lock a portion of sVVV to mint DIEM, with each DIEM token corresponding to $1 worth of non-expiring API credits on the platform.
