Cryptography company Zama raises $73 million in Series A funding from Multicoin Capital and others

Zama, an open-source cryptography company that helps developers build privacy-preserving applications, has raised $73 million in a Series A funding round.

Multicoin Capital and Protocol Labs, the company behind the decentralized file storage network Filecoin, co-led the round, Zama said Thursday. Other investors in the round included Metaplanet, Blockchange Ventures, Vsquared Ventures and Stake Capital. Angel investors, including Filecoin founder Juan Benet, Solana co-founder Anatoly Yakovenko and Ethereum co-founder and Polkadot co-creator Gavin Wood, also joined the round.

Zama raised the mega round in two tranches during the past two years, co-founder and CEO Rand Hindi told The Block in an interview. It was an equity round and brought Zama's total funding to date to over $80 million, Hindi said, though he declined to comment on valuation.

As part of the Series A round, Filecoin's Benet and Multicoin's Kyle Samani, among others, have joined Zama's board of directors, said Hindi.

He added that this Series A funding round is one of the largest ever for a French company across all sectors, not just in crypto. Zama delayed the announcement of the funding round until its technology was ready for the production stage.

What is Zama?

Zama is a cryptography company co-founded by Hindi and Pascal Paillier in early 2020. Paillier, a renowned cryptographer, is one of the inventors of fully homomorphic encryption (FHE) technology, which lies at the heart of Zama's offerings.

FHE is considered the "holy grail" of cryptography that enables end-to-end data encryption, even during the processing stage. Hindi gave an example of ChatGPT, saying that the popular app knows everything its users are asking and everything the app is responding back because ChatGPT sends user requests to OpenAI, the maker of the chat app, OpenAI then analyzes those queries and sends back a response.

With FHE technology, that can be avoided, Hindi said, since it allows applications to compute or perform mathematical operations on the encrypted data itself and produce an encrypted response for users that only they can access. Hindi, however, acknowledged that Zama's technology today is not yet ready for a massive app like ChatGPT. "You can already build an encrypted ChatGPT with Zama if you want to, but it's just going to be too slow to be useful," he said.

For the crypto and blockchain space, however, Zama's technology in its current state is "perfect," he said. The company has built a confidential smart contract protocol called fhEVM that allows developers to build privacy-preserving applications.

fhEVM, however, currently only works for Ethereum virtual machine (EVM) blockchains. Hindi said Zama is working to also support Layer 1 blockchains such as Ethereum and Solana in the future.

Crypto projects, including modular blockchain developer Inco, Layer 2 developer Fhenix, and the Shiba Inu memecoin makers, are already utilizing Zama's FHE technology.

Zama's plans

With fresh funding in place, Zama plans to continue researching and developing its FHE tools. Since its early research days, Zama achieved 100x performance improvements, and now it aims for another 1,000x performance improvements to support huge applications, Hindi said.

Ultimately, Zama's success depends on the success of applications built using its technology, Hindi acknowledged. "We have hundreds of customers in the pipeline for this technology," he said, adding that he thinks "it is going to take off very fast."

There are currently 75 people working for Zama with experience in cryptography, machine learning and blockchain technology. Half of the team holds PhDs in their respective fields, Hindi said, adding that Zama plans to hire more people in the near future to grow its business and ecosystem.

In addition to building tools for the blockchain industry, Zama is also developing bespoke solutions in the artificial intelligence, healthcare, financial services and governmental security industries.

Hindi said Zama envisions a world where data privacy "isn't an afterthought, but rather guaranteed by design."