Lighting Labs, bitcoin startup backed by Jack Dorsey, closes $10 million Series A round
Two years ago, Lightning Labs cofounder and CEO Elizabeth Stark told Yahoo Finance the cryptocurrency industry narrative was returning to “bitcoin, not blockchain.”
Now her company is announcing a $10 million Series A funding round and launching the beta of Lightning Loop, a paid app for merchants to use the Lightning Network for faster transactions.
The new funding round is led by Craft Ventures alongside VC firms Ribbit Capital, RRE, M13, and Slow Ventures; Lightning Labs has also added new angel investors including David Heller, a former co-head of securities at Goldman Sachs.
The killer app?
As bitcoin trading has grown and matured over the years, the bitcoin blockchain—originally touted as facilitating faster, frictionless payments—has become slower, bogged down by delays and fees. The promise of Lightning is faster bitcoin payments.
Lightning Network is a payments protocol that verifies bitcoin and litecoin transactions off-chain between the participants in a transaction, making payments even faster and cheaper than on the bitcoin blockchain. Think of Lightning, Stark tells Yahoo Finance, as Visa for bitcoin.
Lightning Labs develops open-source, scalable Lightning software LND, now used by a slew of crypto wallets and startups (Lightning apps, or “Lapps”) that have employed Lightning Network for everything from delivering ice cream to funding the collaborative art project Satoshi’s Place to feeding chicken in Rhode Island.
Stark founded Lightning Labs in 2016 because, she writes, she saw that bitcoin “had the potential to be game-changing” but “no one had built the application layer yet.” Lightning Labs describes its work as building “layer-two bitcoin.” Some have crowned Lightning the much-ballyhooed “killer app” for the king cryptocurrency.
Loop, the new commercial product from Lightning Labs, is a paid service for merchants to take payments through, and fund their accounts on, the Lightning Network. Stark describes Loop like a prepaid debit card for Lightning.
Dorsey support
Stark’s existing angel investors from its $2.5 million seed round (not part of the Series A) included some big names in fintech: Square and Twitter CEO Jack Dorsey; Square Capital lead Jackie Reses; Robinhood cofounder Vlad Tenev; litecoin creator Charlie Lee; former Yammer CEO David Sacks; and Barry Silbert’s Digital Currency Group.
Dorsey in particular has been a major flag-waver for Lightning Labs.
Last February, he joined a Twitter game of “passing the Lightning torch” by adding to a payment using Lightning Network, then passing it on; that month, he also said on a bitcoin podcast that he aims to use Lightning for Square’s Cash App, which added bitcoin payments in 2018 at his behest. “It’s not an if, it’s more of a when,” he said. Dorsey has also repeatedly said that he believes the internet needs a native currency, and that the currency will probably be bitcoin.
Jackie Reses, a top Square exec and fellow Lightning Labs investor, told Yahoo Finance her belief in the project goes beyond bitcoin. “I invested because I believe making bets in financial infrastructure technology is additive to the global payments system,” she says. “I think Lightning Labs is making a lot of progress towards reducing the friction in the payments system. And I invested in Elizabeth and her vision. I think they have a vision for how to advance crypto payments, but they can eventually focus on a broader market.”
Meanwhile, the price of bitcoin is up 36% in 2020 so far.
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Daniel Roberts is an editor-at-large at Yahoo Finance and closely covers bitcoin and blockchain. Follow him on Twitter at @readDanwrite.
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