EV3 Ventures — Investor Letter (Q3’24)

Crypto ended the quarter flat at ~$2.4T market cap despite three >10% drawdowns and recoveries. Token issuance remained brisk—nearly as many tokens launched in Q3 as in the first half of 2024. DePIN closed the quarter around $90B and re-rated from 9% to 15% of alts; long-term, we expect >25% as category growth outpaces broader crypto.

Private market optimism for DePIN is approaching exuberance. We observed pre-seed valuations shift from $6–8m to $12–15m, with a few late-stage networks raising at >$500m pre-token-launch. Our Fund I companies used favorable conditions to strengthen cash positions; five raised follow-ons at 2–3× our entry, extending runway to 24–36 months. We made Q3 our second-most active quarter ever, largely concentrating capital into our top performers.

Both Bittensor and Helium materially outperformed in Q3 (+120% each), supported by real signs of network effects. Helium added ~20k Mobile subscribers and launched telco offload that serves hundreds of thousands of users daily; the HNT burn from subscriber and offload traffic compressed onchain revenue multiples over the past year. On Bittensor, subnets shipped products pacing toward parity—and eventually superiority—vs closed-source AI, catalyzed by high daily incentives to AI developers and infrastructure providers.

EV3 Labs & DePIN Summit

We hosted our second-annual DePIN Summit in August with 400+ founders, investors and researchers. The goal: unite serious builders and capital behind a shared vision for an open infrastructure revolution. With DePIN now mainstream within crypto circles, our next frontier is legitimizing it in broader capital markets and the public sphere—expect EV3 content to appear in publications such as Harvard Business Review and the Wall Street Journal alongside crypto-native outlets.

A core adjacent thesis is zkTLS, which breaks open web2 walled gardens by enabling privacy-preserving attestations from incumbent platforms. Our portfolio company Opacity provides zkTLS infrastructure already powering five (soon six) EV3 portfolio companies across social, gig economy, fintech and more. Fund I is invested across the zkTLS stack—both infra and applications—representing roughly a third of private investments.

Private Markets

Follow-ons. We doubled-down on four existing portfolio companies, increasing blended ownership while maintaining disciplined entry valuations.

DAWN. A decentralized fixed wireless network using autonomous rooftop antennas to create a mesh of “mini-towers,” turning backhaul into a variable cost for ISPs and unlocking new revenue for property managers. DAWN’s validator testnet surpassed 100k contributors in the first week and 500k in the first month; production launches with 5+ partners are planned across NYC, Philadelphia, Los Angeles and more.

Daisy. A multiplayer influencer marketing network where creators boost one another’s sponsored content in exchange for revenue share—reducing CAC for brands by 25–50%. Daisy reached seven‑figure annualized gross revenue within six months; fast stablecoin payouts and reinvestment loops are creating defensibility.

Opacity (fka Sovrn). zkTLS middleware enabling developers to extract verifiable user reputation from web2 silos without leaking private data. Early integrations include Nosh, Daisy, MintStars, Daylight and Heale—bootstrapping networks with reputation as a third asset alongside capital and labor.

Free Market. “Zapier for web3,” automating multi‑step onchain workflows for DeFi/DePIN protocols; early ARR from sticky clients with an enterprise path.

New Seeds

• Axal — Infrastructure for verifiable autonomous agents (backed alongside CMT Digital, Trident Digital, Maven 11).
• MeshMap — Global 3D mapping substrate for AR developers (founder previously sold JUMP to Uber for $200m; investors include a16z CSX, Colosseum, Lattice, GSR).
• Chakra — Decentralized data warehouse & community‑owned data marketplace (alongside Castle Island, Modular, Race, Hash3).

Glow (mining/validation). Early exposure via financing one of the first 25 solar farms on Glow—a token‑incentivized market for additionality‑proven solar carbon credits—led by David Vorick (Sia).

Liquid Markets

Helium (HNT) and Bittensor (TAO) ranked among the top performers in the top‑200 assets as attention and capital consolidated behind category leaders. Our theses from late 2023 continued to play out, with treasuries for future mining incentives increasing by >$1.5B in Q3. We expect Helium to reach 500k–1m subscribers and $1–2m annualized offload revenue over the next 18 months, while several Bittensor subnet apps approach performance parity with closed AI.

Even as growth accelerates, we anticipate ambiguous unit economics into 2026—Helium Mobile’s gross margin breakeven at ~500k subs given off‑network fees; early Bittensor subnets likely free to drive adoption. We’re mapping paths to sustainable profitability ahead of the market’s focus shift to returns on invested capital in 2026–2027.

Closing

With macro tailwinds and the listing window reopening, we anticipate wide dispersion in Q4 returns as capital and talent continue concentrating into high‑quality networks. As always, thank you for your continued support.

Disclaimers

This letter is for informational purposes, reflects EV3’s views as of its date, may change without notice, and is not an offer or solicitation. Certain statements may be forward‑looking and involve risks and uncertainties.

— Your partners,
Sal & Mahesh