Alchemy Raises $250M, Valuation Soars to $3.5B

Alchemy Secures $250 Million in Series C Funding, Reaching a $3.5 Billion Valuation

Just six months after a successful $80 million raise at a $505 million valuation, Alchemy, a blockchain and Web3 development SaaS startup, has secured $250 million in a Series C funding round.

Competitive Financing Led by Andreessen Horowitz

Andreessen Horowitz (a16z) spearheaded the financing, which garnered significant interest from numerous large venture capital firms eager to invest in the company. Sources indicate intense competition to both back and lead this investment.

Rapid Valuation Growth and Key Investment Highlights

The funding round is particularly noteworthy due to Alchemy’s remarkable valuation increase – a 7x jump in just six months, equating to over $500 million in value gained monthly. This also represents one of a16z’s largest investments to date within the Web3/blockchain sector.

In June, the firm unveiled a $2.2 billion crypto fund, demonstrating a strong commitment to this evolving technological landscape. Web3 encompasses a collection of blockchain-led protocols aiming to redefine the foundational structure of the Internet.

Profitability Sets Alchemy Apart

Alchemy has achieved a feat uncommon among startups: profitability. According to CEO and co-founder Nikil Viswanathan, the company has been “very profitable” in recent months.

This profitability emerged as demand for its services surged, resulting in a 15x revenue increase since the April funding round. Notably, the company hasn’t yet utilized the previously raised $80 million from its Series B round, as stated by Alchemy CTO and co-founder Joe Lau.

“The funds remain untouched,” Lau explained. “While we didn’t require additional capital, we recognized the value of partnering with firms like Andreessen Horowitz, possessing exceptional technical expertise in the blockchain domain.”

Positioning as the AWS of Blockchain

Alchemy aspires to replicate the success of Amazon Web Services (AWS), but within the blockchain and Web3 ecosystems. The company aims to be the primary platform for developers seeking to build products on blockchain technology or mainstream blockchain applications.

Its developer tools are designed to simplify infrastructure development and enhance application performance through essential tools. The platform was initially launched in August 2020.

Broad Adoption Across Industries

Currently, Alchemy facilitates transactions across diverse blockchain verticals, serving financial institutions, exchanges, decentralized finance projects, and organizations like UNICEF.

The platform has become integral to major NFT marketplaces, including MakersPlace, OpenSea, Nifty Gateway, SuperRare, and CryptoPunks. Additional clients include Dapper Labs, Axie Infinity, Adobe, PricewaterhouseCoopers, and a significant portion of the DeFi landscape.

Transaction Volume and Blockchain Expansion

Alchemy currently processes over $45 billion in transaction volume globally, an increase from $30 billion at the time of its April funding. The company has also broadened its support to include additional blockchains.

“Initially focused on Ethereum, we’ve responded to substantial demand by expanding to encompass Polygon, Arbitrum, Optimism, and Flow,” Lau stated.

Growth in Developer Base

Viswanathan highlighted a significant increase in the number of developers utilizing the platform.

“We’ve seen a rise in both the number of teams and companies joining Alchemy, and an increase in the number of developers per team utilizing our services,” he added. “Growth is occurring across all fronts.”

Lean Team and Future Investment

Despite its rapid expansion, Alchemy maintains a relatively small team of 27 employees, operating from offices in San Francisco and New York, with remote employees worldwide.

The newly acquired capital will primarily be allocated to fostering a thriving community around blockchain technology. The company’s founding occurred in 2017, a period when the market was nascent and the potential of blockchain was still being questioned.

“Our ultimate objective is to realize the full potential of blockchain,” Lau explained. “We aim to achieve this by providing developers with more resources to enter the space and build blockchain products more efficiently.”

A Crucial Role in Blockchain’s Popularity

Viswanathan believes Alchemy is instrumental in the recent growth and increasing popularity of blockchain technology.

“As blockchain has matured, Alchemy has grown alongside it, and we’ve actively contributed to the ecosystem’s expansion,” he explained to TechCrunch. “This creates a positive feedback loop – improved tooling leads to easier product development, attracting more users, which in turn drives further tooling improvements.”

Industry Recognition and Future Outlook

Ali Yahya, general partner at Andreessen Horowitz (16z), described Alchemy as “a key driver” of blockchain and Web3 growth, positioning the startup as the “de facto developer platform” for Web3.

“Similar to how Microsoft and AWS built platforms that powered the computer and internet industries, Alchemy’s platform empowers developers to create blockchain products used by millions globally,” Yahya stated. He also noted the company’s “staggering” growth across all key metrics.

John L. Hennessy, chairman of Google and former Stanford University President, echoed these sentiments, drawing a parallel to the early days of Amazon Web Services and Google.

“Alchemy is fueling the growth of the blockchain industry in the same way Amazon Web Services did for the cloud,” he wrote. “The enthusiasm surrounding their technology is reminiscent of Google’s initial stages.”

Investment Details and Backers

The Series C financing included participation from new investors Lightspeed Venture Partners and Redpoint. Existing investors Coatue, Addition, DFJ, and Pantera Capital increased their investments, bringing Alchemy’s total funding to approximately $345 million since its inception in 2017.

Previous investors also include the Chainsmokers’ Mantis, Jared Leto, the Glazer family, Jerry Yang, Coinbase, SignalFire, Samsung, Stanford University, Charles Schwab, Reid Hoffman, and others.