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Element, a messaging app built on the decentralized Matrix protocol, raises $30M

·5 min read

After Element acquired Gitter last year to bring in more users and features into its own decentralized, Matrix-based messaging app, the startup is announcing some funding to invest in its growth.

Element has picked up $30 million in a Series B round of funding. Some of the funding will be used to expand its technology to continue catering to use cases among the large organizations already using it. They include the French government covering some 5.5 million civil servants; Dataport (which is incorporating it into Germany's education and public administration systems); and BWI, which supplies the communications system used by the German armed forces -- in all, some 10 government engagements, the company said.

Matthew Hodgson, Element's CEO and the technical co-founder of the open source, nonprofit Matrix protocol, also said that some will be used to continue investing in the company's peer-to-peer architecture to eliminate any need for servers. And a third area of investment will be building out the company's decentralized voice and videoconferencing services.

"It will be transformational in terms of security," he said in an interview.

Element today is available as an on-premise system or a cloud-based platform. Most public sector customers choose the former, and private sector ones opt for the latter, the startup said. Cloud revenues grew 300% in the last 12 months, and although the company didn't disclose how much that is in actual money, it's a sign that Element is growing (another reason for taking funding now, even though as co-founder Amandine Le Pape noted, it didn't need it).

This round includes investments from Protocol Labs (the open-source R&D lab behind libp2p, IPFS and Filecoin) and Metaplanet (a fund set up by Jaan Tallinn, co-founder of Skype). WordPress parent Automattic and Notion -- both past investors -- are also participating. No valuation is being disclosed. Element has raised $48 million to date.

Matrix, the not-for-profit protocol on which Element is based, was built to shake up how the internet worked by creating a place where multiple, siloed communications environments could be integrated and engaged with in a cohesive, single platform, and those communications in turn can be "owned" by the entity organizing it. The idea here is that by bringing it all together, it's easier to manage those conversations from the perspectives of security and practical use.

Matrix has been growing in its own right, with usage up 190% in the last 12 months, now up to 75,000 deployments with over 35 million "addressable" users. Those deployments can be on something as small as a Raspberry Pi or a giant server run by a government. But to be clear, "active" is a significantly smaller number than addressable users. While Matrix, much less Element, cannot "see" how others are using Matrix (that is one of the security advantages that governments like), Hodgson notes that on its own servers there are 1.2 million active users.

Element -- which originally had been called Riot -- was set out as a kind of Slack/Discord rival that was a native messaging platform on top of Matrix, there to capture an audience already doing something else with the protocol to give them a clean and secure alternative at a time when only a handful of platforms control the majority of the world's messaging data.

"We’ve been building messaging technology for more than 15 years," Le Pape said. "It just felt crazy that you have a few players [dominating] and keeping everyone's data hostage. This is to open anyone’s communication. That is what we are trying to fix, data sovereignty."

In this regard, Element (and Matrix) sit at the heart of a much bigger trend in technology, where some of the brightest minds in the field are reckoning with the defaults of how it all works, have decided that an alternative, a less centralized approach, must be a part of the bigger equation as data becomes more valuable and communications channels only become increasingly essential.

“Internet communication protocols have become fundamental for humanity. Today, most messaging happens over fickle proprietary centralized walled gardens who hold us hostage to their short-term business outlook," said Juan Benet, CEO of Protocol Labs, in a statement. "Matrix is a beacon of hope: an open network for secure, decentralised communication, built with sound internet infrastructure principles. Element -- both product and company -- empowers organizations with control, ownership, and a great user experience for all their conversations.”

While there are a number of other encrypted messaging platforms on the market that are seeing mass adoption -- they include Telegram, Signal and even to some extent Facebook's WhatsApp -- Element (and Matrix's) early adopters have been large organizations. However, with Matrix, the engine underpinning Element, also doing early work with the likes of Twitter on its Blue Sky decentralized platform efforts, that could potentially give Element another boost of users, beyond those early adopters.

But just as clouds have silver linings, so too do sunny outlooks cast shadows … As with other decentralized communications platforms like Telegram and Rocket.chat, end-to-end encryption can cut both ways: it can help keep communications from being hacked, but it might also be used to evade detection when planning something malicious. Matrix (and by default Element) has been exploring alternatives to backdoors into encrypted systems, which is one route that governments are considering to fix this, the argument being that mandating one will simply move the bad actors to another.

Ultimately, the investment here, and the usage of Element, is a vote in the direction of sticking with decentralization despite those misgivings and existing issues.

“When communication is centralised it becomes a very appealing target for abuse; whether that’s through propaganda, surveillance, censorship or worse," said Metaplanet's Tallinn. "Consumers need rescuing from surveillance capitalism, and organisations need a secure neutral way to communicate. Matrix is the most advanced platform to provide that missing communication layer.”