Internxt Raises $1M for Decentralized Storage

Internxt Secures Seed Funding for Decentralized Cloud Storage

Valencia-based startup Internxt is developing a comprehensive plan to broaden access to decentralized cloud storage for all internet users.

The company has recently obtained $1 million in seed funding, spearheaded by Angels Capital – a European venture capital fund owned by Juan Roig, Spain’s wealthiest grocer and second-richest billionaire – alongside Miami-based The Venture City. Prior to this, Internxt raised approximately $500,000 through a token sale to support initial development efforts.

Growth and Expansion Plans

These seed funds will be allocated to the next stage of growth, with the company experiencing a 30% month-to-month growth rate and expressing confidence in sustaining this momentum. A significant portion of the funding will be used to expand the team and accelerate product development.

Internxt has dedicated its early years to building a decentralized infrastructure that it asserts is inherently more secure and private than conventional cloud services offered by major technology companies like Google.

How Decentralization Enhances Security and Privacy

Files are encrypted in a manner that prevents Internxt from accessing user data. Furthermore, information is stored in a highly decentralized fashion, fragmented into small pieces and distributed across numerous storage locations. Users contribute storage space and are compensated with cryptocurrency for providing this capacity.

“We utilize a distributed architecture with servers globally,” explains founder and CEO Fran Villalba Segarra. “We leverage space provided by both professionals and individuals, compensating them for hosted data shards. This approach is more affordable than traditional data center rentals.”

“It mirrors the Airbnb or Uber model – we’ve democratized storage.”

Product Roadmap and Current Traction

Internxt spent three years in research and development, starting in 2017, before launching its initial cloud-based applications: Drive (file storage) a year ago, followed by Photos (a competitor to Google Photos).

The platform has already attracted around one million active users without any dedicated marketing efforts, according to Villalba Segarra.

Internxt Mail, a Gmail and ProtonMail alternative, is the next product in development. Internxt Send (file transfer) is also slated for release soon.

“We aim to create a G-Suite alternative, matching Google’s capabilities,” he adds.

Addressing the Vulnerabilities of Centralized Storage

Internxt’s architecture addresses the inherent risks of storing files in a single location, which makes them susceptible to access by unauthorized parties. This includes the storage provider itself, or hackers who compromise the provider’s security.

Ransomware attacks, which have increased in recent years, pose a significant threat. Attackers can encrypt files and demand payment for their release.

Internxt believes that storing entire files on a single server or hard drive creates a vulnerable target.

A Resilient and Secure Alternative

Their solution is a file storage infrastructure that combines zero-access encryption with decentralization. Files are fragmented, distributed, and mirrored across multiple locations, enhancing resilience against failures and attacks.

This approach mitigates privacy concerns associated with cloud service providers because Internxt itself cannot access user data.

Business Model and Pricing

Internxt operates on a tiered subscription model, offering varying data allowances. A freemium plan provides 10GB of free storage.

Competition in the Decentralized Cloud Space

Internxt is not the first to explore alternative internet architectures. Scotland’s MaidSafe has been developing a decentralized internet for over a decade, with alpha testing beginning in 2016. Storj targets enterprise users, while Filecoin and Sia are newer blockchain-based startups.

Internxt’s Differentiators

“We are the only European-based startup pursuing this, aside from MaidSafe, which is based in the U.K., not the EU,” says Villalba Segarra. He argues that the European Union’s data protection and privacy regulations provide a competitive advantage.

He also emphasizes usability, stating that competitors have been “built by developers for developers.” Internxt aims to be the “Coinbase for decentralized storage,” making the technology accessible to non-technical users.

“This technology is complex, but we see this pattern in the blockchain space – significant potential hindered by usability challenges. Coinbase simplifies cryptocurrency access, and we’re doing the same for decentralized cloud storage, offering an easy-to-use interface.”

“We are the only service in the distributed cloud space that’s actually usable – that’s our primary differentiator from Storj and others.”

Technical Details and Security Measures

Internxt’s infrastructure utilizes “zero access” encryption, similar to Proton Drive’s architecture, ensuring the service provider cannot access user data. It employs off-the-shelf AES-256 encryption, audited by Spain’s S2 Grupo, a cybersecurity firm.

Furthermore, Internxt decentralizes the encrypted data fragments, adding an extra layer of security. Even if a server is compromised, attackers would only find encrypted shards, rendering the data useless.

“If a hacker accesses a server, they’ll find encrypted data shards, which are essentially worthless – not even we can access that data.”

“This adds a significant security layer against hackers and third-party access. Combined with our user-friendly interfaces, we differentiate ourselves from Storj and others.”

Incentivizing Storage Providers

Storage space is provided by users incentivized with micropayments in cryptocurrency for hosting data shards. This can include individuals with unused laptop capacity or data centers with excess storage. Internxt has partnerships with data center companies like OVH.

“We don’t have direct contracts for storage provision. Anyone can connect to our network. We don’t pay them as much as traditional rentals, similar to Airbnb’s host-guest relationship.”

“We are the platform connecting both parties, but we don’t host any data ourselves.”

Ensuring Reliability and Network Integrity

Internxt uses a reputation system to manage storage providers, ensuring network uptime and quality of service. Blockchain “proof of work” challenges verify that node operators are actually storing the data they claim.

“The decentralized nature requires ensuring reliability. We use blockchain technology to verify data storage.”

Energy Efficiency and Sustainability

Payments to storage providers are also made via blockchain technology, enabling scalable and automated micropayments to approximately 10,000 node operators worldwide.

Regarding energy consumption, Villalba Segarra suggests that Internxt’s architecture can be more energy-efficient than traditional data centers. Data shards are likely located closer to the requesting user, reducing energy required for data retrieval.

“We mirror files globally. Accessing a file from Dropbox always involves data transfer from their data center. We can send files from locations closer to the user, saving energy and improving speed.”

“Data center energy consumption is around 2% of global energy use. Reducing data transfer saves energy and costs.”

Performance and User Experience

Is there a noticeable lag when uploading or retrieving files on Internxt compared to Google Drive?

Villalba Segarra states that storing file fragments closer to the user helps mitigate any lag. However, he acknowledges a slight speed difference compared to mainstream cloud storage services.

“We’re close to Google Drive and Dropbox in upload and download speed. These companies have optimized their services over a decade with traditional architectures and extensive resources. But we’re rapidly closing the gap.”

“We’re at the level of Proton Drive or Tresorit in usability and approaching Google Drive. An average user shouldn’t notice a significant difference, and we’re working to improve speed and features.”

Future Plans and Funding

Internxt currently operates with a team of 20 people. The new seed funding will be used to expand the team and accelerate product development.

“By the time we seek Series A funding, we aim to have around 100 employees,” says Villalba Segarra. “We’re already preparing for Series A and receiving interest from VC funds in the U.S. and London.”

“We anticipate a substantial Series A round, potentially the largest in Spain. We plan to maintain a 30% month-to-month growth rate.”

The company aims to secure a $50 million valuation during the Series A funding round.

“We were planning to pursue Series A a year from now, but the high level of VC interest may accelerate that timeline. However, valuation is our priority.”

*According to the IEA, data centers and data transmission networks each accounted for around 1% of global electricity use in 2019