Ethereum application and infrastructure builder ConsenSys has closed a $450 million funding round that values the New York City-based blockchain company at $7 billion.
The hefty Series D round, led by ParaFi Capital, more than doubles ConsenSys’ valuation based on its previous $200 million fundraise in November 2021. Existing investors, including Third Point and Marshall Wace, were joined by a new clutch of backers that included Singapore’s Temasek, SoftBank Vision Fund 2 and Microsoft. (There were also a slew of celebrity investors involved, including rappers 21 Savage and Young Thug.)
The firm’s new valuation coincides with its flagship Ethereum wallet and browser extension, MetaMask, reaching over 30 million monthly active users, while Infura, a widely used infrastructure tool created by ConsenSys, now boasts some 430,000 developers, according to a press release on Tuesday.
Physical expansion plans for ConsenSys, voiced around the time of the last funding round, will see the firm’s headcount increase from 700 to over 1,000 employees by the end of 2022. (The firm had about 1,200 employees in 2018 before a series of contractions.) The funding will also support the expansion of MetaMask with a major redesign scheduled for release later this year.
Stepping back, a valuation of this size is not uncommon for established crypto companies, which have bagged billions in recent months. Competing infrastructure provider Alchemy was valued at over $10 billion in a $200 million funding round just last month.
However, ConsenSys seems to be plowing its own furrow with the firm’s stated intention to convert much of its treasury into Ethereum’s native cryptocurrency, ether (ETH), some of which will be sunk into decentralized finance (DeFi) yield and governance operations, ConsenSys said. The lion’s share will be staked in anticipation of Ethereum’s upcoming merge to proof-of-stake.
“We view ourselves as powering what’s going on, rather than trying to compete with what’s going on,” ConsenSys Chief Strategy Officer Simon Morris told CoinDesk in an interview. “We are really in pursuit of an agenda around decentralization, and how do we take the core pieces that we’ve got and then start to progressively decentralize them, so that they’re not just in our hands; they’re actually in a combination of our hands and our partners and our end users.”
For example, an airdrop of MetaMask governance tokens has long been rumored.
An agenda that’s all about injecting positive momentum into the entire crypto ecosystem, and the novel idea that the balance sheet of a firm like ConsenSys is a “sort of lens into the future of companies,” as Morris puts it, is great.
But it’s not all kumbaya around the ConsenSys campfire. The high valuation and rapid growth will likely infuriate those former ConsenSys employees and shareholders who believe they are due a slice of the company’s recent good fortune.
A specific point of contention, which is driving the latest legal challenge, concerns the transfer of assets – including MetaMask and Infura – from the original Switzerland-based company ConsenSys AG to a U.S.-based company, ConsenSys Software Inc. (CSI), which was spun out in early 2020 around the time the COVID-19 pandemic was hitting.
The value of assets transferred to CSI was determined and vetted by external experts and relevant local authorities, according to documents circulated to ConsenSys shareholders and former staffers last year. JPMorgan also stepped in and took a 10% share in CSI, and contributed its enterprise Ethereum client, Quorum, to the new software company.
Morris said the threatened legal action in Switzerland relates to a specific point in time when crypto was still toughing it out of a dark and prolonged winter, and the price of ETH had dipped to three-digit woes.
“People want to pretend that we knew what was happening with MetaMask before things like the DeFi space and NFTs took off,” Morris said. “We were hopeful of course. But before we had any revenue, we honestly had no idea that we’d be this successful. So I think people are being a little opportunistic. The law is the law, and they are welcome to take a swing at that.”
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.