Alchemy Raises Cash to Value the Blockchain Startup at $3.5 Billion
After last raising money just half a year ago, Alchemy is back at it, this time soaring to valuation 7 times what the blockchain startup garnered in April
Investors led by Andreesen Horowitz provided $250 million in new capital six months after last fundraising round
San Francisco-based Alchemy’s valuation has soared 7-fold since April
There’s arguably no hotter area in the cryptocurrency world right now than the market for non-fungible tokens, or NFTs, which grew 8-fold in the third quarter to bring in $10.7 billion in revenue.
It’s also proving to be a bonanza for the companies building the underlying infrastructure for NFTs. The latest proof came today with the announcement by Alchemy that the blockchain developer platform raised $250 million from investors led by Andreesen Horowitz. The company, which has been accessible to the public for just over a year and last raised money in April, is now valued at $3.5 billion. That’s a 7-fold increase from earlier this year when investors judged it to be worth $505 million.
Co-founders Nikil Viswanathan and Joe Lau built the firm to provide the necessary architecture and coding to support the growing NFT space. Like providing the picks and shovels or Levi’s jeans to gold miners, the approach has seen them capture the vast majority of digitally scarce projects with over $45 billion in transactions taking place atop Alchemy’s technology. The startup most recently signed a deal with Adobe that allows its users to display NFTs in Adobe’s Behance platform.
The latest investment will be used to invest in the wider blockchain ecosystem, Lau said in an interview.
“We’re successful when the industry is successful,” he said. The company plans to boost crypto education, lower its fees for some users, and expand the level of free services for developers who are just entering the business, he said.
Developer focus
Alchemy is helping to create a business model called decentralized finance, or DeFi, as opposed to having a centralized entity that controls operations. The Ethereum blockchain makes that possible by allowing computer programs known as smart contracts to operate within that distributed network. Alchemy has also begun offering its services on other blockchains such as Flow and on so-called layer 2 applications Arbitrum and Optimism.
“Our focus is whatever developers are using,” Viswanathan said in an interview.
In a sign of how much investor money is flowing into blockchain projects this year, Lau said Alchemy hadn’t spent any of the $80 million it raised in April. Alchemy is also profitable, leading to more money in the bank to fund education efforts and developer assistance, he said.
How three eras in computing advancements divide between protocol, platform and application layers Source: Alchemy
Alchemy’s growth has mirrored the surge in blockchain users, according to a recent report by DappRadar. The number of unique users grew 25 percent in the third quarter compared with the previous three-month period and shot up 509 percent year over year. About 1.5 million unique users were active on a daily basis in the third quarter, according to DappRadar. NFTs are mainly minted on the Ethereum blockchain, accounting for 78 percent of the NFTs created in the quarter, according to the report.
“One of the most pervasive misconceptions about blockchain technologies is that they’re limited to currencies or financial use cases,” Ali Yahya, a general partner at Andreessen Horowitz, said in an emailed statement. “The rise of NFTs is demonstrating that many more possibilities arise when people can truly own their digital goods, and the creators of those goods can benefit in new ways as well. We’re seeing seismic changes in music, gaming, art, and many more industries taking shape as NFTs become more prominent.”
Andreesen Horowitz was joined as a new Alchemy investor by Lightspeed and Redpoint, according to an emailed statement. Existing investors Coatue, Addition, DFJ, and Pantera also joined the series C fundraising. The round was intensely competitive with Andreesen, also known as a16z, providing the majority of new money in one of its largest blockchain investments to date, according to two people familiar with the matter.