Alchemy, the start-up powering Adobe’s NFT effort, sees valuation skyrocket as digital collectibles go mainstream

Alchemy co-founders Nikil Viswanathan (left) and Joe Lau.

Source: Alchemy

Start-up Alchemy is benefiting as more companies try to future-proof their businesses by adapting their technologies to blockchain and through digital collectibles.

The San Francisco-based company announced a $250 million funding round on Thursday, boosting its valuation to $3.5 billion. The Series C financing, led by Andreessen Horowitz, marks a sevenfold increase in Alchemy’s valuation from April.

Alchemy acts as a middleman between blockchain, the technology made famous by bitcoin, and apps that consumers might use on their phones. Its platform lets developers build applications on top of blockchains such as Ethereum.

Those behind-the-scenes building blocks have been used to create Dapper Labs, the maker of CryptoKitties, NBA Top Shot, video game Axie Infinity and OpenSea, the largest NFT marketplace. A record-breaking $69 million nonfungible token sold by digital artist Beeple was also powered by Alchemy.

Nonfungible tokens, also called NFTs, represent ownership of a virtual item such as a piece of digital artwork or a sports trading card. This week, Adobe, which is working with Alchemy, announced plans to let artists prepare NFTs in Photoshop. PwC also has a partnership with the start-up.

“The big driver for tech companies is trying to future-proof their products, and making sure that they’re up to date on emerging technologies,” Joe Lau, Alchemy’s co-founder and chief technology officer, told CNBC. “They’re young enough that they remember what it was like to see a new technology come up — they want to make sure they’re on top of it.”

Its investors liken Alchemy to Amazon Web Services, which sits between the internet and companies like Netflix and Uber that use AWS to host their websites. Alchemy is also being used to build applications like video games and social networks in what some describe as “web 3.0.”

“The biggest misconception about blockchains is that they are just about money, cryptocurrencies, or finance,” said Ali Yahya, a general partner at Andreessen Horowitz who led the funding round. “The truth is that they’re actually much more powerful and allow for a much broader set of applications.”

Alchemy has seen 15 times revenue growth since April, and as of late October is profitable, according to its founders. The start-up has been around for four years, but just made its public launch last August. Former Yahoo CEO Jerry Yang, Linkedin founder Reid Hoffman, Jay-Z and Charles Schwab (the founder, not the brokerage firm), are among its early investors. The former CEO of the New York Stock Exchange, Coinbase and PayPal founder Peter Thiel are also backers, and so is the chairman of Alphabet, John Hennessy.

Celebrities, musicians and professional athletes have brought more attention to the NFT space this year. The frenzy smacks of what marked a top for cryptocurrency markets around 2018, with the rise of the initial coin offering, or ICO.

Alchemy co-founder and CEO Nikil Viswanathan compared it to the early days of the internet. “A lot of companies died but that didn’t mean that the internet wasn’t valuable,” he said.

“Similarly, we think NFTs are here to stay,” Viswanathan told CNBC. “Blockchain has matured to a place where major companies like Adobe, that are driving the tech ecosystem today, are finding value in it.”

Alchemy announced a $250 million funding round, marking a sevenfold increase in the company’s valuation since April.

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