Zama Secures $73M for Homomorphic Encryption, Valued at Nearly $400M

Zama Secures $73M to Advance Homomorphic Encryption for Blockchain and AI

In a world plagued by data breaches and sophisticated hacking attempts, homomorphic encryption holds immense potential for ensuring long-term data security. However, the complexity that makes this cryptographic technique so effective also hinders its widespread adoption due to slow performance and usability challenges. Undeterred by these obstacles, investors continue to back startups dedicated to transforming homomorphic encryption into a practical reality.

Zama’s Record-Breaking Funding Round

Zama, a Parisian startup, has recently raised an impressive $73 million in a Series A round co-led by Multicoin Capital and Protocol Labs, valuing the company at nearly $400 million. Among the notable investors in this equity round is Metaplanet, an Estonian deep tech investor known for its early investment in DeepMind. This funding marks the largest round to date for a homomorphic encryption company, not only in Europe but possibly worldwide, highlighting the continued interest in deep tech despite the global funding crunch.

Focusing on R&D and Market Opportunities

With the fresh capital, Zama plans to further invest in research and development while expanding its team of engineers to capitalize on two key market opportunities: blockchain transactions and data exchange for AI training and usage. The startup has already developed and shared four libraries on GitHub, attracting a community of 3,000 developers.

Zama’s co-founder and CEO, Rand Hindi, revealed that the company began commercializing its solutions six months ago and has since signed contracts worth over $50 million. Although Hindi believes that the long-term business potential lies in machine learning, the majority of Zama’s customers currently come from the blockchain sector.

“If they have a token, we charge tokens. If it’s a bank using a private blockchain, we charge by transaction.”

The Founding Team’s Expertise

Zama’s ability to attract significant funding can be attributed to the market opportunity and the expertise of its founding team. Hindi, with a background in computer science and a PhD in bioinformatics, previously founded Snips, an AI voice platform that was acquired by Sonos. His co-founder and Zama’s CTO, Pascal Paillier, is a renowned cryptography expert with numerous patents to his name.

The Breakthrough and Market Approach

Hindi and Paillier began working on the early technology that would become Zama in 2016, with a breakthrough in 2019 when they developed algorithms that accelerated calculations by 100 times. While this speed improvement doesn’t yet meet the requirements for most real-world transactions, it presents an opportunity for Zama to offer its solutions to crypto developers, given the typically slow nature of blockchain transactions.

Collaborating to Grow the Market

Zama is not alone in its pursuit of making homomorphic encryption more accessible. Other startups in the space, such as Ravel, Duality, and Enveil, are also working towards this goal. However, given the nascent stage of the market, Hindi emphasizes the importance of collaboration over competition, aiming to collectively grow the market rather than engage in rivalries.

As Zama continues to develop its algorithms and techniques to streamline homomorphic encryption on existing infrastructure, the startup is poised to play a significant role in shaping the future of secure data transactions and privacy-preserving applications.