Ethereum Software Company ConsenSys Doubles Valuation To $7 Billion In Four Months Amid Market Turbulence

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Doubling a multi-billion valuation in four months? Unheard of…except if you are in crypto.

Here’s the latest example. In November, Ethereum infrastructure developer ConsenSys raised a $200 million round of funding at a $3.2 billion valuation. Today, the company is worth $7 billion after a $450 million Series D financing round, led by ParaFi Capital, also a Series C investor alongside Third Point, Marshall Wace, and True Capital Management, among others. New investors include Temasek, SoftBank Vision Fund 2, Microsoft, Anthos Capital, Sound Ventures, and C Ventures.

While the majority of the funds in the round will be converted from fiat into ether (ETH), Ethereum’s native cryptocurrency, according to ConsenSys’ chief strategy officer Simon Morris, the company is hoping to conduct its next fundraise as “Series ETH”. It would entail investors contributing to ConsenSys’ multi-token treasury (size and breakdown undisclosed at this time) directly in ether.

“We’re interested in taking our crypto positions and using them in a way that is both positive for the company in terms of driving yield, but also in a way that is strategic for the company in terms of trying to express our opinion on useful directions to drive further decentralization in the space,” said Morris [ConsenSys has been actively using its own DeFi products such as MetaMask Institutional and Codefi Staking to put their ETH to work in anticipation of Ethereum’s transition to proof of stake this summer].

Founded in 2014 by Ethereum cofounder Joseph “Joe” Lubin, the New York-based hub had long struggled to find its stride with a series of unprofitable ventures and a reported $100 million annual burn rate. In 2020, the firm underwent a restructuring, which separated its core software business from its investment activities arm a.k.a ConsenSys Mesh.

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Morris acknowledged, “ConsenSys, as a company, historically has been hard to understand.” The best way to think about it today, he explained, is to think of it as a “very much Infura and MetaMask-centric company,” referring to ConsenSys’ two flagship offerings—Ethereum development platform and a wildly popular self-custodial wallet, which in January reported more than 30 million monthly active users.

The latest capital injection will largely support their further development. According to the firm, MetaMask is on track for a major redesign (to be released later this year) as well as an integration with other blockchain networks. In addition, ConsenSys plans to increase its 700-member staff to 1,000 people by year’s end, with a focus on expanding teams working on Infura.

All the while a group of 35 former employees and shareholders is calling for a multi-billion dollar audit to investigate, what it calls, an illegal transfer of fundamental intellectual property and subsidiaries from ConsenSys AG (CAG) to a new entity, ConsenSys Software Incorporated (CSI), in exchange for 10% ownership of the latter and an offset of a $39 million loan by founder Joseph Lubin. The group alleges the transaction, held in August 2020, resulted in JPMorgan Chase acquiring an influential stake in MetaMask and Infura, the firm’s two core products, to the detriment of the minority shareholders of CAG and to the benefit of Joseph Lubin personally.

Speaking to Junyuan ahead of today’s announcement, Morris addressed the claim. ”JPMorgan absolutely does not control the company. There are essentially no decisions and, certainly, no product decisions that JPMorgan has any type of controlling interest in,” he said. “Their ownership of the company is less than 10% today after the latest round.”

More recently, ConsenSys came under fire when Venezuela-based users of Infura and MetaMask found themselves cut off from Ethereum as a result of Infura’s self-admitted mistake in geoblock configurations, which were meant for two separatist regions in eastern Ukraine, Donetsk and Luhansk, in accordance with new sanction directives imposed by the U.S. on the two regions.

Asked if ConsenSys is considering further access-related measures in this realm, Morris replied, “as a company, we try to stay away from the politics of the situation. With that said, we will comply with whatever legal requirements are put upon us as a U.S.-based company.”

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