Blockchain Company Alchemy Triples Valuation In Just Three Months To $10.2 Billion As Web3 Fever Rages

In August 2020, Nikil Viswanathan and Joe Lau made a big bet. The cofounders of Down to Lunch had found fast success in their meetup app that rocketed to the number 1 in the Apple App Store, but they had a hunch that building tech tools to help startups build blockchain would be an even better business. Less than two years after the launch, the hunch is worth $10.2 billion.

Today Alchemy, whose developer suite powers the hottest Web3 companies (decentralized, blockchain-based computing) from OpenSea to Adobe and thousands of others, announced that it raised a $200 million equity round led by existing investor Lightspeed and new investor Silver Lake. Previous investors–including Coatue, Andreessen Horowitz and Pantera–wrote checks in the round, too.

The mega raise comes less than four months after Alchemy closed a $250 million series C that valued the company at $3.5 billion in October. Even in the frothy world of crypto, a company tripling valuation without substantive change or update in the business is enough to give the biggest crypto bull pause. Nonetheless, some of the biggest names in venture capital see no need to hit the brakes. 

“This is one of the fastest growing companies that we’ve ever seen. Period,” says Ali Yahya, a general partner at Andreessen Horowitz, which is raising a $4.5 billion fund for crypto investments. “Whenever you have this kind of breakout success, it makes sense to continue to support the company and invest.” 

Alchemy is building the decentralized superhighway, accelerating the speed of the countless blockchain, NFT and crypto projects–ultimately sparking Web3’s wildfire growth. “Our whole focus as a company is to support developers and help them bring Web3 to the world.” says Alchemy cofounder and CEO Nikil Viswanathan. As crypto assets and coins boom and bust, Alchemy is blockchain’s relatively steady utility, collecting a river of fees by providing SaaS tools, hosting and crypto payment infrastructure. Just as Amazon Web Services made it cheap and easy for anyone to start a digital company, Alchemy lets technical entrepreneurs quickly do business on the blockchain. It’s a foundational tech play much-loved by venture investors.  

“One way to bet on crypto is to invest in tokens like Ethereum or Bitcoin, but that is not a traditional investment vehicle for these types of investors,” says D.A. Davidson technology analyst Gil Luria. “These are all investors that are looking for companies that take the traditional route; companies that generate revenues and profits and, therefore, will eventually generate cash flow in crypto.”

As for Alchemy’s frothy valuation which tripled to $10.2 billion in the last few months, like NFT and crypto coins, the price is based largely on supply. “Few companies are building the base software to create these tools,” says Luria. “There’s a scarcity of opportunities to invest in crypto tools, and that scarcity is how you get high valuations that grow very quickly.”

Here’s how Alchemy works: Say you run a bespoke bucket hat company and want to sell unique digital versions (NFTs) of your hats. For free, you can develop your site with Alchemy’s blockchain tools–building your NFTs with an Alchemy template and adding blockchain-enabled security. Now if you want fans to pay for the NFTs in Ethereum or get personalized developer support, you need to start paying Alchemy, which will run you upwards of $50 per month. Paid or free, developers create and deploy code on Alchemy, implementing the company’s decentralized technology, avoiding the energy- and time-sucking process of building blockchains from scratch. 

Royal founder and Alchemy investor Justin Blau (also known as EDM musician 3LAU) uses Alchemy to power his entire coin-based company. On Royal, fans buy tokens from their favorite musicians, directly investing in their projects and success–and the operation is built with Alchemy. “It’s basically Amazon Web Services of the blockchain,” says Blau. “Alchemy is for any developer that wants to leverage blockchain, but doesn’t have their own code installed.”

With the fresh funding, Alchemy plans to expand its Web3 investment arm Alchemy Ventures, launch a “Web3 University” to educate consumers on blockchain let people more easily buy and sell NFTs on their sites–all of which creates potential customers to boost Alchemy’s revenue. “We’re seeing normal people get benefits from the technology,” says Viswanathan.  “Whether it’s a college student or someone leaving Facebook to start their own company, we’re seeing a massive flood of incoming Web3 companies.”