StarkWare Reaches $8B Valuation Following Latest $100M Funding Round

The blockchain scaling solution last raised funds in November at a $2 billion valuation.

AccessTimeIconMay 25, 2022 at 1:30 p.m. UTC
Updated May 25, 2022 at 1:45 p.m. UTC

Brandy covers crypto-related venture capital deals for CoinDesk.

StarkWare Industries, which provides solutions to make blockchain technology more scalable, has raised $100 million in a Series D funding round at an $8 billion valuation, up from the $2 billion valuation at its last fundraise in November.

The round was led by investment firms Greenoaks Capital and Coatue with Tiger Global among the other participants, according to a press release provided to CoinDesk. The capital, which also included an undisclosed amount of employee stock sold in a secondary transaction, will be used for product and business development, engineering and growing the surrounding ecosystem, StarkWare CEO Uri Kolodnytold told CoinDesk in an interview.

Significantly, the nine-figure deal closed during a crypto bear market. According to Kolodny, StarkWare and its backers are less focused on the current prices of tech stocks or cryptocurrencies and more focused on “building for the long haul.”

What StarkWare does

StarkWare technology addresses the scalability issues of the Ethereum blockchain, which cause slow throughput and raise gas, or transaction, fees. The company has two platforms. The StarkEx scaling engine, which the company said handles more transactions per month than the Bitcoin network, powers the likes of non-fungible token (NFT) platform Immutable X and decentralized exchange dYdX. The second platform, StarkNet, launched in February and puts blockchain scaling technologies in the hands of developers building decentralized applications.

“High transaction fees and limited bandwidth on blockchains are inhibiting the mass adoption of crypto today,” said Coatue general partner Luca Schmid in the press release. “StarkWare is solving this with Validity Rollups that we believe will allow blockchain apps to serve millions of customers seamlessly.”

StarkNet rollups

Rollup technologies bundle hundreds of transactions off the main Ethereum blockchain to reduce the computational stress. Optimistic rollups use a network of validators to check that the data in the bundle is legitimate, which means the transactions can be challenged and temporarily delayed from hitting Ethereum. Zero knowledge (zk) rollups, also called validity rollups, use cryptography to mathematically validate the transaction bundle before it hits Ethereum.

StarkNet, zkSync and Aztec offer zk rollup solutions. StarkWare’s offering uses a cryptographic method called STARKs, which was developed by company co-founder and president Eli Ben-Sasson alongside other computer scientists.

“What our technology delivers – and it does so through math – is integrity at scale. And C.S. Lewis beautifully defined integrity as ‘doing the right thing even when no one is watching,” Ben-Sasson told ConDesk. “What our technology does is it uses math in order to assert to the blockchain that a huge amount of transactions was computed off-chain with integrity.”

Near-term plans for StarkWare include decentralizing StarkNet. Kolodny declined to comment on whether the process would involve a token.

“We hope to be very, very advanced on our way to full decentralization, if not already there, within the coming year,” he said.

StarkWare’s newest fundraise is the latest signal that venture capitalists are betting big on rollup technologies. Last fall, investment giant Andreessen Horowitz (a16z) led a $50 million funding round for zkSync creator Matter Labs. And in March, a16z participated in the $150 million fundraise for rollup provider Optimism at a $1.65 billion valuation.

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Brandy covers crypto-related venture capital deals for CoinDesk.

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Brandy covers crypto-related venture capital deals for CoinDesk.

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