Venice AI completes $65 million financing at $1 billion valuation, founder says "won't sell coins," $VVV ushers in a new catalyst?

By Claude, Shenchao TechFlow

Shenchao Briefing: The privacy AI platform Venice has completed its first round of external financing, raising $65 million at a valuation of $1 billion to join the unicorn club. Dragonfly led the round, with Coinbase Ventures participating. For VVV holders, the real highlight isn’t this money itself—it’s the hybrid structure combining equity and tokens in this round. Founder Erik Voorhees emphasized that the team hasn’t sold a single token and will continue to repurchase, burn, and reduce issuance. However, investors hold warrants that allow them to buy 5 million VVV over the next 8 years. Exercising begins one year from now, with roughly 6,000 new tokens entering the market each day. After the news was released, VVV rallied on the spot, and the market interpreted it as positive.

Erik Voorhees’ Venice has secured its first external funding since its founding.

According to The Block, this privacy AI platform built by ShapeShift founder Voorhees has completed a $65 million Series A round at a valuation of $1 billion. Crypto VC Dragonfly led the round, with participation from Coinbase Ventures, North Island Ventures, F-Prime, Archetype, Liquid2 Ventures, Morgan Creek, and others. This is Venice’s first time bringing in external capital since it launched two years ago; previously, it neither carried out VC private placements nor monetized the VVV tokens in its treasury.

Equity + Token Dual-Layer Structure: Investors Take Nearly 9% Equity Plus Two Batches of VVV

Voorhees disclosed the full consideration for this round in a long X post. The $65 million is exchanged for three items: 8.98% equity in the Venice company, vesting rights to 1.5 million VVV tokens, and warrants to purchase another 5 million VVV over the next 8 years at an agreed-upon price (warrants).

Warrants are rights to buy tokens at a pre-agreed price at some point in the future. Based on Voorhees’ calculations, if investors exercise all 5 million warrants, they would need to pay Venice an additional $66.5 million. As a result, the round’s actual total fundraising would be raised to about $131.5 million. Both the token vesting rights and the warrants have a one-year lockup period; afterward, they will linearly unlock over the following three years.

What investors get now is equity, plus an “option to buy tokens at a predetermined price later,” rather than tokens that are immediately tradable. This kind of structure bundling equity, token vesting, and token warrants is not common in crypto fundraising; most projects either do pure equity or sell tokens directly to VCs.

“Build the product and token first, then bring in VCs,” Going Against Industry Practice

Voorhees emphasized that Venice chose to sell equity rather than sell tokens in its treasury to raise funds. He said Venice is still the largest holder of VVV, holding more than 30 million out of the current total supply of over 80 million. So far, the company and its team have not sold a single VVV token, even though the token has risen by more than 700% this year.

Venice’s fundraising cadence is the opposite of industry norms. Most projects, with terms not disclosed, pre-sell tokens to VCs—promising that later they will build products and find users. Venice, instead, launches its product and token first, builds user traction and revenue, and then brings in external investors.

This playbook is backed by business data. According to company disclosures, Venice reached 3 million users in April, and it was profitable in the first quarter. Multiple media outlets cited Voorhees’ statements saying that its annualized revenue (run-rate) has exceeded $70 million. It’s unusual for an AI startup at the Series A stage to be profitable before fundraising.

Warrants Are Future Selling Pressure for VVV, but the Timing Is Calculated by the Founder as “Harmless”

For token holders, those 5 million warrants are a problem that can’t be avoided. They represent potential future additional issuance. Once exercised, they become new circulating supply, i.e., sell pressure.

Based on Voorhees’ estimates, if investors fully exercise, starting from about one year from now, about 6,000 VVV enter the market per day. This is roughly equivalent to 0.2% of the current daily trading volume. At this scale, it isn’t large relative to market depth. For the portion of warrants that are not exercised, the corresponding tokens continue to stay on Venice’s balance sheet and do not enter circulation.

On the token strategy side, Venice says it will keep its approach unchanged: continuing to use part of its revenue to repurchase and burn VVV, while gradually reducing token issuance. Burning reduces supply, while warrants increase potential supply—two forces moving in opposite directions. Which direction VVV’s net supply moves depends on whether the intensity of repurchase and burn can outweigh warrant unlocks and regular issuance. This is the core variable token holders will need to watch next, more worth tracking than the fundraising itself.

One more reminder: the figures of “6,000 tokens per day, representing 0.2% of daily trading volume” come from Voorhees’ own calculations. They are self-reported by the funding party. Shenchao has no independent data to cross-verify, so readers should treat them as reference points rather than definitive conclusions.

Putting the Money Toward Building Its Own Compute Power: Pointing to GPUs and the First Data Center

According to the founder, the purpose of this round of financing is to build compute power infrastructure in-house, including Venice’s first data center, to reduce reliance on rented GPUs.

His logic is that in an “impending resource crunch,” building in-house compute power can lock in capacity and improve gross margins—thereby making it possible for “larger-scale VVV burns.”

In other words, in-house compute power lowers costs and increases profits, and then profits are used to repurchase and burn VVV. Beyond compute power, Venice also plans to use this funding to enter new markets, acquire businesses with “synergistic effects,” hire people, and expand its customer base.

On the product side, Venice positions itself as a privacy- and anti-censorship alternative to ChatGPT, claiming that it does not store users’ prompts on its own systems. Requests are encrypted and then forwarded via external proxies, and paid subscriptions also offer end-to-end encryption. The platform says it has integrated more than 200 AI models, including self-hosted open-source models and closed-source models such as OpenAI and Anthropic that are called anonymously via API. In addition to VVV, Venice also has a DIEM token: users stake VVV to receive sVVV, then lock a portion of sVVV to mint DIEM. Each DIEM corresponds to a platform API quota worth $1 that never expires.

LAYOUT REFERENCE (source): total_lines=45, non_empty_lines=23, blank_lines=22