Homomorphic encryption is a complex technique that uses cryptographic algorithms to keep data secure as it travels around networks and to third parties. However, its mass-market scalability and adoption remain limited due to its current complexity, which makes it slow and hard to use widely.
Despite these challenges, in a world filled with data leaks and malicious hacking, the potential of homomorphic encryption for ensuring long-term data security is significant. Investors are continuing to support startups focused on making this concept a reality.
In a recent development, a Paris-based startup called Zama has secured $73 million in a Series A funding round co-led by Multicoin Capital and Protocol Labs, with a valuation close to $400 million. Notable investors in this round include Metaplanet, an investor that has backed numerous successful companies.
Zama plans to invest in research and development, as well as expand its engineering team to capitalize on two market opportunities related to blockchain transactions and data exchange for AI training. The company has already released four libraries on GitHub that are being used by 3,000 developers.
While Zama and other deep tech efforts are working to enhance the use of homomorphic encryption, the startup is also focused on commercializing its technology. It has already signed contracts worth over $50 million, primarily with clients from the blockchain sector.
Co-founder and CEO Rand Hindi believes that the future growth lies in machine learning applications, but for now, the company is serving clients in various sectors, charging based on the type of blockchain technology being used.
Zama previously raised $8 million in pre-seed and seed rounds, bringing the total funding to $81 million. The company’s valuation is estimated to be between $300-400 million following the latest funding round.
Zama’s technology is considered crucial for privacy-preserving applications in the computing landscape. The founding team, led by Rand Hindi and Pascal Paillier, has a strong background in computer science and cryptography, with notable achievements in their respective fields.
The breakthrough for Zama came in 2019 when they developed algorithms that significantly accelerated calculations, laying the foundation for a viable business model. While homomorphic encryption speeds may not yet be optimal for worldwide transactions, Zama’s solutions offer value to crypto developers working with blockchain technology.
Zama’s ongoing efforts focus on improving homomorphic encryption algorithms and techniques to make them more efficient on existing infrastructure. The company’s work includes FHE libraries for machine learning, a compiler for Python programs, and a library for interacting with Ethereum using homomorphic encryption.
While there are other startups in the homomorphic encryption space, Zama and its peers are collaborating to grow the market collectively, recognizing the potential for future competition. The primary goal is to advance the technology and expand its applications in various industries.
