Polygon Lands $450M as Sequoia Capital Bets on Web3
Polygon will allocate $100 million to its ecosystem fund and save the remainder as “buffer money.”
- Polygon has raised $450 million in an investment round led by Sequoia Capital India.
- Polygon says it will use the capital for its ecosystem fund and to pay its team.
- Polygon's native token, MATIC, has surged 17% following the announcement.
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Polygon has closed a $450 million raise. Sequoia Capital, one of Silicon Valley’s oldest and most successful venture capital firms, led the round.
Polygon Raises $450M
Venture capital firms are taking notice of Polygon.
The Ethereum scaling solution announced it had closed a $450 million funding round Monday. Sequoia Capital India led the round, while other participants included SoftBank, Galaxy Digital, Tiger Global, Alameda Research, Animoca Brands, Spartan Fund, Dragonfly Capital, Variant Fund, and Kevin O’Leary.
Founded in 1972, Sequoia Capital is one of Silicon Valley’s oldest and most renowned venture capital firms, managing over $80 billion in assets. The firm has dabbled in crypto since 2015, making a handful of small bets in the space through its Scouts program. Its previous crypto-related investments include Polychain Capital, MetaStable, and Paradigm. However, its latest investment in Polygon is its biggest Web3 or crypto-infrastructure bet yet.
Commenting on the investment, Sequoia Managing Director Shailesh Lakhani said:
“The platform of choice to build on the blockchain today is Polygon. Thousands of developers across a range of applications are choosing Polygon and their complete set of scaling solutions for the Ethereum ecosystem. This is an ambitious and aggressive team, one that values innovation at its core. Sequoia Capital India is thrilled to lead this significant financing round.”
According to the statement, Polygon will allocate $100 million of the newly raised money to an ecosystem fund supporting the development and onboarding of new projects on the network. The rest will reportedly be used as “buffer money” to sustain the project’s 240-person team.
Polygon, which has a current market capitalization of around $13.3 billion, is Ethereum’s leading sidechain scaling solution. In 2021, it enjoyed a rush of interest after attracting leading Ethereum-native DeFi protocols like Aave and Curve Finance.
Polygon has also been expanding its portfolio of Ethereum scaling technologies over the last year. In December, it acquired Mir, a startup that develops zero-knowledge proofs-based scaling solutions, for $400 million. It also acquired the EVM-compatible ZK-Rollup protocol Hermez for $200 million last year.
Due to Ethereum’s ongoing scaling challenges, projects like Polygon, the Layer 2 protocols Optimism and Arbitrum, and alternative Layer 1 blockchains such as Solana and Avalanche have seen a surge in market valuations, usage, and popularity over the last two years. Accordingly, Andreessen Horowitz, Sequoia’s arch-rival in the VC world, has poured hundreds of millions of dollars into Layer 1 protocols such as NEAR, Dfinity, Celo, and Chia over the same period.
With the Polygon bet, Sequoia is now signaling that it wants a piece of the growing Web3 pie. Following the announcement, Polygon’s native token MATIC has surged 17% on the day, up from roughly $1.80 to $1.98.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.