Title: Stripe's Blockchain Bet: Smart Money, or Just More Hype?
Stripe, the payments behemoth, is making waves in the blockchain space. Its project, Tempo, just led a $25 million funding round for Commonware, a crypto infrastructure firm. Paradigm, the crypto VC, is also involved, according to a blog post by their general partner and CTO, Georgios Konstantopoulos. So, what's the real story here? Is this a strategic move, or just another case of throwing money at the latest shiny object?
The Numbers Game
Commonware, founded in 2024, has a mere seven employees (including its founder, Patrick O’Grady) and four customers. However, O'Grady claims the company is already profitable, with each customer generating over $1 million in annual revenue. That's $4 million in revenue divided by seven employees. Let's be generous and assume fully loaded employee costs of $300k per head; that's $2.1 million in expenses. Leaves $1.9 million profit. Not bad for a startup, but hardly earth-shattering.
The valuation, while undisclosed, is supposedly a "significant increase" over the $63 million seed round valuation. Significant is doing a lot of work there. Even if we assume a modest 2x increase, that puts Commonware at a valuation of around $126 million. For a company with $4 million in revenue. The multiple is...ambitious.
Tempo, for its part, has raised $500 million at a $5 billion valuation. Backed by names like Thrive Capital, Greenoaks, Sequoia, and Ribbit Capital, it certainly has the pedigree. It also acquired the crypto startup Ithaca and hired Dankrad Feist, a high-profile researcher who worked on Ethereum. All this in the span of a few months.
The "Strategic" Partnership
O'Grady stated that "usage and distribution is way more important than money as a startup." He sees Tempo as a way to "short circuit that process" through a "deep, multi-year relationship." This is where the narrative gets interesting. Commonware builds open-source code that allows others to launch their own blockchains. Tempo, backed by Stripe, wants to process blockchain payments faster. The synergy is obvious: Commonware provides the infrastructure, and Tempo provides the payment rails.
But here's the part of the analysis that I find genuinely puzzling. Why not just build the infrastructure in-house? Stripe certainly has the resources (over $100 billion valuation, remember?) and the talent. Is Commonware’s technology truly that revolutionary? Or is this a case of outsourcing innovation to a smaller, more nimble player? (It's often cheaper to buy a company than to build something from scratch.) Stripe-backed blockchain startup Tempo leads $25 million raise for crypto infrastructure firm Commonware
The acquisition of Ithaca and the hiring of Feist further complicate the picture. Are these moves designed to bolster Tempo's internal capabilities, or are they simply talent acquisitions to prevent competitors from gaining an edge? Details on the specific technologies involved remain scarce, but the moves suggest Tempo is aiming for a comprehensive approach to blockchain payments, not just relying on Commonware.
It's also worth noting that Tempo's design partners include OpenAI, Anthropic, and Shopify. These aren't just any companies; they're leaders in AI and e-commerce. The partnership suggests that Tempo is aiming to integrate blockchain payments into a wide range of applications, from AI-powered services to online retail.
Questionable Fundamentals, Promising Trajectory
This is all happening so fast. It’s rare for a startup to make an acquisition, a big hire, and a significant investment so early. But Tempo isn't your average startup. It has the backing of Stripe and Paradigm, and a hefty war chest to play with. O’Grady seems confident, stating that Tempo will do a better job showing off what Commonware can do than Commonware itself.
But what if the technology is not actually up to par? What if the market for blockchain payments doesn't materialize as quickly as anticipated? What if regulatory hurdles stifle innovation? These are all risks that Tempo and Commonware face.
