- PIP Labs just unveiled one of the biggest crypto raises this summer.
- Co-founder Seung Yoon Lee thinks the Story blockchain may help creators get more from AI companies.
- This is the third fundraise a16z has led for the main developer behind Story.
When Seung Yoon Lee first came to Silicon Valley 10 years ago to pitch his first startup, a serialised fiction app, venture capital titan Andreessen Horowitz passed on investing in it multiple times, he told DL News.
Lee, who goes by S.Y., eventually sold the startup, Radish, for $440 million in 2021, and quickly co-founded a new project: a blockchain to store and track the use of intellectual property.
Now, Lee has finally caught Andreessen Horowitz’s eye. The VC’s blockchain-focused arm, a16z crypto, has led three rounds of investment in Lee’s company, PIP Labs, including an $80 million round Lee announced on Wednesday.
“They’re tripling down, which is pretty rare from what I know,” the PIP Labs CEO and co-founder said.
‘Economic covenant’
PIP Labs is the main developer of the Story blockchain, which is a rebrand of an earlier name, Story Protocol.
Like many crypto projects, there will also be a corresponding nonprofit called Story Foundation, Lee said.
Other investors in the Series B raise include Polychain Capital, the well-known crypto VC; Scott Trowbridge, senior vice president and board member at Stability AI; and Cozomo de’ Medici, the NFT collector.
Lee declined to disclose his company’s most recent valuation or how much a16z committed in the fundraise. He added that $80 million was for equity in PIP Labs, not future tokens.
“The economic covenant underlying the internet — content creators providing supply and content distributors providing demand — is being upended by the proliferation of AI,” Chris Dixon, founder and managing partner at a16z crypto, said in a statement. “PIP Labs is building the necessary infrastructure for a new covenant.”
The $80 million round is the second raise in less than a year for PIP Labs and one of the summer’s biggest deals in crypto, per Crunchbase’s Web3 tracker.
The fundraise comes amid a recent deceleration in the number of crypto venture deals. The second quarter saw an almost 13% decrease in deal count from the first, according to a recent report from Pitchbook.
$140 million
Story is one of a number of projects to use blockchains to store, document, and transfer intellectual property rights.
Even the European Union has explored how distributed ledgers can help businesses protect their IP.
In September, PIP Labs announced that it had raised more than $54 million in a round led by a16z with participation from angel investor Balaji Srinivasan, Paris Hilton’s venture firm 11:11 media, and former Microsoft executive Charlie Songhurst.
Lee said that September’s announcement combined $30 million in seed funding and $24 million from a Series A raise.
He said that, after the announcement, there was additional funding of $6 million, which brings the total PIP Labs raised over its three rounds to $140 million.
Since September, co-founder Jason Zhao has said that his startup will launch its blockchain later this year.
The forthcoming chain is compatible with code written for Ethereum, one of the most popular blockchains for crypto developers.
Data-devouring cows
Lee envisions Story to be a potential solution to the rise of generative artificial intelligence.
For tech giants like OpenAI, the success of their language models depends on terabytes and terabytes of data.
However, there’s only so much quality text, photos, and videos floating around on the internet.
“They’re already running out of great data,” Lee said. “They’re really running out of great IP.”
A recent study from the research group Epoch AI claimed that tech giants will exhaust the supply of publicly available text for AI language models somewhere between 2026 and 2032.
A pitch deck for PIP Labs that Lee sent to DL News likened the state of play to a herd of cows that progressively deplete grasslands until those lands become barren.
“Who will have an incentive to create content if the data feeding the cows has no sustainable business model supporting its production?” read the deck.
That’s where Story comes in, Lee said. The blockchain will incentivize creators to register their IP on the decentralised database, since they can control what royalties they receive and track who remixes their data.
“It’s going to take time,” he said, “but I think it’s a very long-term vision that we want to build out.”
Ben Weiss is a Dubai Correspondent at DL News. Got a tip? Email him at bweiss@dlnews.com.