Foundation raises $7 million to return ‘sovereignty’ to chaotic crypto world ExamPaper

Hot on the on the heels of Ledger announcing it’s teaming up with iPod maker Tony Fadell to create its latest hardware wallet, rival hardware wallet startup Foundation Devices has announced it’s raised a $7 million seed round to launch its “sovereign computing platform”, which it says allows its users to “reclaim their digital sovereignty”.

The company’s flagship product, Passport, costs $260 and looks like a mid-2000s luxury Vertu phone, but is actually a hardware crypto wallet built with security in mind and a mobile-first experience. -approach.

“The entire cryptocurrency space is built on a foundation of open source. It only works because it’s open. Our strong belief is that open source software should run on open source hardware.” Zach Herbert, CEO, Devices Foundation

The company is taking a new approach to hardware wallets by making both the hardware and software open source for every device it releases. Yes, that means that if you’re so inclined, you can go to GitHub and look at every line of code, every part, every mechanical design, and the full bill of materials – every aspect of the design of any of its products. The company says open source is a core part of its mission and vision.

The Foundation’s $7 million seed round was led by Polychain Capital (which seems to be flying the flag of crypto winter right now, in that the fund, despite reportedly having more than $600 million under management , seems to have spent about $9 on the design of his website ).

Other participants in the round include new investors Greenfield Capital and Lightning Ventures, as well as a number of follow-on investments from existing investors, including Third Prime, Warburg Serres, Unpopular Ventures and Bolt. The investment was made on a SAFE bill with a valuation limit of $35 million. (Disclosure: Haje worked in a non-investment role as a portfolio director at Bolt, an early investor in Foundation Devices. Bolt’s investment in Foundation was made after Haje left the VC firm.)

The company claims it has sold “thousands” of original passports and launched the second version of its flagship product in March this year. ExamPaper spoke with the company’s founder and CEO, Zach Herbert, at the Baukunst Creative Technologist conference earlier this year, where he gave a refreshing look at the future of crypto. (A recording of the “Not Your Computer, Not Your Keys” speech is available on YouTube.)

“[The implosion of FTX] is a wake-up call around the importance of self-preservation. It is now more than clear that it is extremely risky to store your coins on an exchange. I also think it’s a wake-up call in terms of corruption and the fact that regulators don’t really protect you. And then it’s a wake-up call with regard to the media. The mainstream media coverage of FTX is appalling,” Herbert said in an interview with Baukunst’s Tyler Mincey, who is also a Foundation board member. “There are accounts on Twitter that do an excellent job of reporting the obvious premeditated fraud, but The New York Times, The Washington Post, these highly respected media outlets, I don’t know how you can read their coverage. You can find much better, much less biased coverage on Twitter. And that wakes people up. But the unfortunate thing is that many people have lost their savings.”

Founded in April 2020, Foundation focuses on building open source hardware and software products that provide users with a “seamless, end-to-end sovereignty experience”. The company’s focus is safety above all else, which entailed a number of critical choices, including manufacturing its products in the US. The founder of the company has very little patience or confidence in overseas production.

“There is a geopolitical imperative and a safety imperative to produce in the United States. I think we’re moving towards a multipolar world and it’s only going to get crazier. Personally, I would never trust a device to store my bitcoin that was made in China,” Herbert said. “And I want to be on the ground at the factory myself. We manufacture in New England and I live in the Boston area. I am at the factory at least every few weeks.”

One thing is for sure, the company’s devices certainly look very different from many hardware crypto wallets out there. That was not by accident.

“We name what we strive for digital decor, inspired by the visual language of Art Deco. We embrace color and graceful designs. The cryptocurrency industry has focused on dark colors for some reason,” explains Herbert. “I think that’s completely wrong for our industry. I think it should be about futuristic optimism. Bitcoin should be a counterweight to the dystopian future, and our design should reflect that.”

And the company is taking an aggressive battle with crypto exchanges: “We aim to play a big role in enabling users to move their bitcoin off exchanges and achieve digital sovereignty,” Herbert told ExamPaper.

ExamPaper interviewed Herbert to dig deeper into the company and its hopes, dreams and aspirations. We talk about the funding round, the need for open source, why self-custody is difficult but necessary for crypto and much more. The interview has been edited for length and clarity.

Zach Herbert, CEO at Foundation

Zach Herbert, CEO at Foundation. Image credits: Foundation

What makes you the perfect person to run this business?

I am a mechanical engineer by training and I have been obsessed with computers since childhood. I learned about bitcoin in 2013 and it quickly grew into an all-consuming passion. Initially, I was interested in the investment potential, arguing that bitcoin represents an ideal form of money – that its limited supply means that as demand increases, so does bitcoin’s price. The culture of Bitcoin has changed my views. As I consumed infinite amounts of bitcoin related content, I came to understand the importance of sound money, of sovereignty, of privacy, of the need to separate money and state.

In 2017, I dropped out of Harvard Business School’s MBA program to join a Boston-based crypto company, first as chief of operations and eventually as COO. We have built hardware and software, including ASIC cryptocurrency mining hardware. I couldn’t stop thinking about the stagnation in self-custody tools, especially hardware wallets. So me and some fellow teammates launched Foundation Devices in April 2020.

Personally, I feel like I have two conflicting identities. The first is as a technology executive, startup founder, tech alum, and near-MBA. That’s my old professional identity. But more and more my real identity is that of a Bitcoiner, a sovereign individual. These conflicting identities are probably why the Foundation has been successful so far, why we’ve been able to raise venture capital for ideas that were historically seen as afterthoughts, and why I’m confident we’ll continue to grow and put great sovereign computing products on the market. market.

How does this fundraiser unlock the next steps for the company?

Self-preservation is just too hard for most people these days; that’s why so many people have been hurt this year by the collapse of FTX, BlockFi, Celsius and more. In particular, we think that self-preservation alone is not enough – true sovereignty requires privacy. So we differentiate ourselves by building expert-level privacy features into our products and making them accessible to everyday users. For example, Envoy connects to the Tor network by default, so we can’t see users’ IP addresses or know anything about their balances or identities.

Leave a Comment