Crypto projects have exploded in 2021, and so have the blockchain infrastructure firms that power them. The latest example is Palo Alto-based Alchemy, which launched to the public barely a year ago and on Thursday announced a massive $250 million funding round.
Alchemy was founded by Stanford grads, Nikil Viswanathan and Joe Lau, who worked at Facebook and Pinterest before leveraging their Silicon Valley pedigree to build a fast-growing crypto company. The pair like to describe Alchemy as the “AWS of blockchain”—comparing their company to Amazon’s ubiquitous cloud computing platform.
While Alchemy has an obvious interest in promoting the AWS comparison, the analogy is not inaccurate. Many of the biggest names in crypto—including OpenSea, DapperLabs and Axie Infinity—rely on its software tools and, like AWS, Alchemy is very profitable.
What is Alchemy?
What Alchemy’s software tools do is provide an off-the-shelf kit to scale crypto applications, primarily on the Ethereum blockchain. This allows crypto firms large and small to fast-track complicated and expensive tasks like debugging and writing to nodes.
While the company made its name as a service for Ethereum users, Alchemy has stated it intends to expand to other blockchains, and is already working with Flow, a chain developed by the NFT company Dapper Labs.
Alchemy’s Series C funding round was led by Andreessen Horowitz, and is one of the crypto-focused venture capital firm’s biggest investments to date in Web 3—a term that describes the still-emerging world of decentralized computer services powered by blockchain technology.
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“Alchemy is growing at a staggering pace because it offers developers a platform for building web3 applications that is reliable, scalable, and easy to use,” said Ali Yahya, a general partner at the firm in a statement.
The $250 million investment comes after Alchemy raised previous rounds of $15 million and $80 million, and values the firm at $3.5 billion—a more than six-fold increase from earlier this year. The venture firms Lightspeed and Redpoint joined the Series C round as new investors, following earlier backers that include celebrities like Will Smith and Jay-Z.
According to Alchemy, the company has been making enough money that it hasn’t had to touch any of the $80 million it raised in a Series B round earlier this year.
The company’s big profits come in part from the outsize growth it’s enjoyed, including a 15-fold jump in revenue in the last six months. And in August, Alchemy laid the groundwork for further growth through a tie-up with another infrastructure provider, Polygon, that is focused on building DeFi applications.
All of this suggests that the stars have aligned in a remarkable way for Alchemy, and that the company is poised to dominate the niche of blockchain infrastructure. It’s too soon to say if this will come to pass—Silicon Valley has seen more than a few “can’t miss” startups implode—but, for now, Alchemy appears to be on a glide path to Web 3 era success.