Paris-based startup Zama has raised an impressive $73 million in a Series A funding round co-led by Multicoin Capital and Protocol Labs, with a valuation nearing $400 million.
This marks the largest funding round to date for a homomorphic encryption company globally, showcasing sustained investor interest in advancing data security through innovative cryptographic solutions.
Homomorphic encryption, a sophisticated technique leveraging cryptographic algorithms to secure data in transit and at rest, has faced challenges in mass-market scalability and adoption. The complexity that enhances its effectiveness has hindered widespread usage due to slow processing speeds. Despite these challenges, investors continue to support startups dedicated to refining and realizing the potential of homomorphic encryption.
Funding Details
Zama’s Series A funding round, co-led by Multicoin Capital and Protocol Labs, raised $73 million, making it a landmark event not only in Europe but possibly globally within the homomorphic encryption space. The funding underscores the resilience of deep tech investments in the region, even amid a global funding crunch.
They plan to allocate the funds to Research and Development (R&D) efforts and expand its engineering team, currently comprising 75 professionals.
The startup identifies two key market opportunities for its technology: addressing blockchain transactions and facilitating data exchange in artificial intelligence (AI) training and usage. Zama has already posted four libraries on GitHub to aid developers in these domains. Earlier this week, quantum startup Multiverse Computing also picked up $27 million.
While Zama’s CEO, Rand Hindi, envisions machine learning as the larger business in the long term, the initial customer base has predominantly originated from the blockchain community.
Zama’s Technology Breakthrough
The breakthrough for Zama occurred in 2019 when algorithms were developed, accelerating calculations by 100 times. This advancement paved the way for transforming their technology into a viable business model.
Zama’s approach is focused on building multiplayer, privacy-preserving applications, capitalizing on the growing importance of Fully Homomorphic Encryption (FHE) in the next decade of computing.
Several incredible projects have already integrated the fhEVM:
- Fhenix is an FHE Layer 2 rollup which uses the fhEVM to enable confidential transactions in the Ethereum ecosystem, addressing the critical need for privacy in scaling solutions.
- Shiba Inu, one of the largest tokens by market cap, is using the fhEVM to build an entire network state for their community, powering everything from their decentralized financial infrastructure to their metaverse.
- Inco is a modular blockchain using the fhEVM to offer Confidentiality-as-a-Service to various Layer 1 networks, thereby enhancing the privacy of existing blockchains.
Zama’s founding team comprises Rand Hindi, a polymath with a background in computer science and a Ph.D. in bioinformatics, and Pascal Paillier, the company’s CTO, recognized as a cryptography expert with numerous patents to his credit. Hindi’s previous startup, Snips, an AI voice platform, was acquired by Sonos.
The homomorphic encryption market is still relatively small, and Zama acknowledges the collaborative nature of the industry. Hindi emphasizes a “coopetition” approach, where companies in the space collaborate to build the market before potential competition arises.
The focus is on collectively growing the market and establishing homomorphic encryption as a foundational cryptographic primitive for privacy-first applications.
Zama’s successful funding round not only positions the company as a leader in homomorphic encryption but also highlights the continued interest and investment in cutting-edge technologies addressing data security challenges.
As Zama advances its R&D and expands its team, the startup is poised to play a significant role in shaping the future of privacy-preserving applications and contributing to the broader evolution of secure computing.