Double a valuation of several billion in four months? Unheard of…unless you are into crypto.
Here is the last example. In November, Ethereum infrastructure developer ConsenSys raised $200 million in funding at a valuation of $3.2 billion. Today, the company is worth $7 billion after a $450 million Series D funding round, led by ParaFi Capital, also a Series C investor alongside Third Point, Marshall Wace and True Capital Management, between others. New investors include Temasek, SoftBank Vision Fund 2, Microsoft, Anthos Capital, Sound Ventures and C Ventures.
While the majority of funds in the round will be converted from fiat to Ether (ETH), the native cryptocurrency of Ethereum, according to ConsenSys Chief Strategy Officer Simon Morris, the company hopes to conduct its next fundraiser under the name “Series ETH”. This would involve investors contributing multi-token ConsenSys cash (size and breakdown undisclosed at this time) directly into ether.
“We are interested in taking our crypto positions and using them in a way that is both positive for the business in terms of return, but also in a strategic way for the business in trying to express our opinion on useful information and directions for driving greater decentralization in space,” Morris said. [ConsenSys has been actively using its own DeFi products, such as MetaMask Institutional and Codefi Staking, to put their ETH to work in anticipation of Ethereum’s transition to proof of stake this summer].
Founded in 2014 by Ethereum co-founder Joseph “Joe” Lubin, the New York-based hub had long struggled to find its footing with a string of unprofitable ventures and an annual burn rate of $100 million. In 2020, the company underwent a restructuring, which separated its core software business from its investment business arm aka ConsenSys Mesh.
Morris acknowledged, “ConsenSys, as a company, has always been difficult to understand. The best way to think about it today, he explained, is to think of it as a “very Infura and MetaMask-centric company”, referring to ConsenSys’ two flagship offerings – the Ethereum development platform. and a hugely popular autocustodian wallet, which in January reported over 30 million monthly active users.
The latest capital injection will largely support their future development. According to the firm, MetaMask is on track for a major overhaul (to be released later this year) as well as integration with other blockchain networks. Additionally, ConsenSys plans to increase its staff from 700 to 1,000 by the end of the year, with a focus on expanding teams working on Infura.
Meanwhile, a group of 35 former employees and shareholders is call for a multi-billion dollar audit to investigate what it calls an illegal transfer of core intellectual property and subsidiaries of ConsenSys AG (CAG) to a new entity, ConsenSys Software Incorporated (CSI) in exchange for 10% ownership of the latter and compensation for a $39 million loan from founder Joseph Lubin. The group alleges that the transaction, which took place in August 2020, allowed JPMorgan Chase to acquire an influential stake in MetaMask and Infura, the company’s two flagship products, at the expense of CAG’s minority shareholders and the benefit of Joseph Lubin personally.
Talk to Forbes Prior to today’s announcement, Morris responded to the claim, “JPMorgan has absolutely no control over the company. There is essentially no decision and certainly no product decision in which JPMorgan has any controlling interest,” he said. “Their ownership of the business is less than 10% today after the last round.”
More recently, ConsenSys came under fire when Venezuelan users of Infura and MetaMask found themselves cut off from Ethereum following Infura’s self-admitted error
in geoblocking configurations, which were intended for two breakaway regions in eastern Ukraine, Donetsk and Luhansk, in accordance with new sanctions guidelines imposed by the United States on both regions.
When asked if ConsenSys is considering any other access-related measures in this area, Morris replied, “As a company, we try to stay out of the politics of the situation. That said, we will comply with all legal requirements imposed on us as a US-based company.