Amid conversations about a crypto market decline, capital continues to be raised as demand for scalable blockchain infrastructure grows.
The most recent example of that fact is StarkWare Industries, which just raised $100 million at a valuation of $8 billion, the company shared Wednesday. The new capital came just six months after the unicorn closed a $50 million Series C, quadrupling its valuation from $2 billion to $8 billion.
StarkWare’s Series D closed amid recent crypto market turmoil, “literally after LUNA crashed,” Eli Ben-Sasson, co-founder and president of StarkWare, told Marketingwithanoy. As mega rounds become less prevalent in the crypto space (and other sectors) than in previous quarters, this $100 million funding event underscores investors’ belief in the need for improvements to blockchain infrastructure.
“To a large extent, this valuation is a boat of trust from this larger ecosystem,” Ben-Sasson said. “We are part of this greater [layer-2] ecosystem alongside Arbitrum, Optimism, Solana, Polygon and a bunch of others who are doing a great job that we are really excited about.”
Layer-2 blockchains are secondary blockchains built on the technology that Layer 1 blockchains like Bitcoin, Ethereum or Avalanche have.
The round was led by Greenoaks Capital and Coatue. Tiger Global participated, as well as other new and existing investors who were not disclosed. There is also a secondary transaction for the Series D, where employees sell some shares of stock, according to a company release. To date, StarkWare has raised about $260 million, Ben-Sasson said.
“From day one, we’ve consistently engaged investors who have shared our vision for the future,” Uri Kolodny, co-founder and CEO of StarkWare, told Marketingwithanoy. “We build for the long term.”
After raising $50 million in November 2021, Kolodny said at the time that the company “didn’t need the money” from the Series C, but the funds helped it grow its business faster. It was not shared whether the capital has since been deployed.
Founded in 2017, the startup aims to provide scaling and security solutions for Ethereum-based products through its “STARK” mathematical systems, which aim to use blockchain more efficiently. In the past year, it has expanded its workforce from about 50 to 85 people, Kolodny said.
“Developers, the ecosystem and the community understand that blockchain has a bottleneck and the technology we have invented and produced is one of a small list of things that can alleviate this,” said Ben-Sasson.
STARK lowers costs by reducing the amount of information sent to the Ethereum blockchain and speeds transactions by minimizing blockchain congestion, Ben-Sasson said. To date, approximately half a trillion dollars have been traded on StarkEx, the platform that compresses transactions through STARK before adding them to the Ethereum blockchain network.
“Our technology assures the blockchain of the integrity of the computation,” said Ben-Sasson. “Integrity is very important… we use mathematics, the most elegant and purest form of truth and integrity. To bring integrity on large chunks of computing power outside the chain and show it to the blockchain.”