Chia Network, led by BitTorrent creator Bram Cohen with the aim of creating a programmable money platform, just raised another $5 million in an equity round led by Slow Ventures.
Despite the resurgence of token sales this summer, Cohen said the plan since 2018 has been to go the IPO route and rely on venture capital until the token launch. Meanwhile, the team is focused on gamifying early-stage contributions to attract a Chia-centric developer community.
“We’ve now finished that format so if you generate plots today and put the resources into building those they will still work the day mainnet goes live,” Cohen said, describing how the Chia Network uses “plots” of empty computer space instead of proof-of-work mining like bitcoin.
This latest equity round included Collab Crypto, IDEO and returning investors like Naval Ravikant. The startup has now garnered roughly $16 million in total venture capital since it launched in 2017, according to Cohen, who added the startup will use the funds to grow the team.
Gavin McDermott of IDEO said his firm has confidence in this yet-to-be launched blockchain because Chia creators are “early internet pioneers” who already “achieved significant milestones in terms of public node participation,” currently estimated at over 1,430.
Jill Carlson of Slow Ventures said she is looking forward to the mainnet launch, scheduled for later this year, even though Layer 1 blockchain projects have “largely fallen out of favor within the venture capital community,” which are now generally focused on decentralized finance (DeFi) and decentralized applications (dapps).
“There are a lot of exciting projects happening in those areas as well,” Carlson said of DeFi. “But we believe that much of the most exciting innovation is still occurring in new and soon-to-launch base protocols.”
Like many crypto startups in 2020, the Chia team is focused on DeFi applications. Cohen said Chia is poised to capture Ethereum’s market share by offering comparable DeFi functionality in 2021, while Ethereum may still struggle to scale. Chia President Gene Hoffman added, “It’s as functional as Ethereum. It might force you to do a different way than Ethereum, but there are reasons why.”
The Chia team aims to make money using traditional business-to-business offerings, even though the technology is being built through a hybrid open source model. Hoffman said the goal is to get “vertical vendors” like Paxful or banks interested in these tools and services rather than making a mass market play directly through retail.
Hoffman also said he is already exploring opportunities with several prospective clients, including government agencies, for live pilots when the network launches in several months.
“That market [government agencies] is feeling pressure from the China blockchain initiatives,” Hoffman said. “[Banks] are concerned about having to route all their transactions through Manhattan. … They too understand they want the positives of an open network that can still use types of decentralized identity.”