Venice $65M Series A raises questions over VVV token

Venice raised $65 million in a Series A round led by Dragonfly at a $1 billion equity valuation. The financing issued 8.98% of Venice AI’s stock to new investors and included a 1.5 million VVV token grant plus warrants to buy 5 million additional VVV over eight years. The investor group includes Dragonfly, Coinbase Ventures and North Island Ventures.

The token grants are subject to a one-year lock and three years of vesting on the grant component. The warrants can be exercised over an extended schedule stretching up to eight years, according to the terms disclosed by the company.

Venice describes VVV as a long-term deflationary capital asset. Under the platform’s mechanics, Venice uses revenue to buy and burn VVV. Staking VVV mints DIEM, a credit equal to one dollar of daily-renewing Venice compute access. The company and its treasury hold more than 30 million VVV of a reported supply near 80 million, and neither the company nor its team has sold VVV since the token’s rally earlier this year. CEO Erik Voorhees wrote on X: “VVV and Capital.”

Valuation and token metrics differ. The $1 billion equity valuation implies roughly a 14.3-times multiple of Venice’s reported $70 million annual revenue run rate. VVV trades near $13.55, placing the token’s market capitalization around $637 million and its fully diluted value near $1.54 billion, equal to about 9.1-times and 22.1-times revenue on those measures.

How much new token supply the round introduces versus how much the company can retire through buybacks depends on the portion of revenue Venice dedicates to burns, a figure the company has not disclosed. At current prices, a burn equal to 5% of annual revenue would retire roughly 258,000 VVV a year; 10% would retire about 517,000; and 20% would retire about 1.03 million. The Series A package includes about 6.5 million VVV in immediate grants and long-term warrants. Voorhees estimated fully exercised warrants would add fewer than 6,000 VVV per day to circulation once they begin unlocking, a top-end pace of roughly 2.19 million VVV a year.

Developer Dankrad Feist called the arrangement “sucks,” arguing equity holders have legal protections while token holders rely on the company to continue buybacks and burns. Venice plans to invest the equity proceeds in owned compute, including GPUs and a first data center, with the company stating that owned infrastructure should improve margins and allow larger burns as revenue grows.

The Series A places some investors in both equity and token positions, while public VVV holders retain staking access, DIEM minting rights and exposure to the buy-and-burn mechanics but do not receive equity ownership or the contractual protections that come with stock.