Ex-Facebook crypto engineers raise $36 million from Andreessen Horowitz for Mysten Labs

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  • Andreessen Horowitz led the $36 million funding round of Misten Labs, a crypto and blockchain infrastructure technology start-up founded by four former Facebook engineers.
  • The Misten co-founders are the latest notable departure from Facebook’s Novi division.
  • Last week, Novi chief David Marcus announced he would be leaving after seven years.

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As Facebook’s crypto project continues to bleed talent, venture investors are paying alumni lots of money to do their jobs.

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The latest example is Misten Labs, a crypto and blockchain infrastructure technology start-up founded by four former Facebook engineers, including Evan Cheng, director of research and development at Facebook’s Novi financial products unit.

Misten CEO Cheng partnered with Sam Blackshear, Adeniyi Abiodun and George Denezis to start the company. They all worked together in Novi and left in recent months.

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Cheng told Businesshala in an interview that Misten has just raised $36 million in a funding round led by Andreessen Horowitz. Cheng said the cash investment will help the four founders build infrastructure technology to allow other crypto and blockchain-based companies to distribute the technologies.

“We’ve been dreaming of doing something together for a long time,” Cheng told Businesshala. “We’re building infrastructure that, based on our previous research, will overcome a lot of limitations.”

While the crypto market is booming with new start-ups and investors, Facebook (now called Meta) has become an exporter of engineers, developers, and leaders.

Last week, Novi chief David Marcus announced that he would be leaving the company after seven years. Marcus Novi was one of the founders of the digital wallet and Diem Cryptocurrency. Fellow founders Morgan Beller and Kevin Weil left last year.

In October, Riyaz Faizullabhoy and Naseem Eddequioq left Novi to take the top position in Andreessen’s crypto team, which is called a16z crypto,

Ariana Simpson, general partner at Andreessen Horowitz, said of Facebook, “they’ve done an amazing job recruiting top talent over the years.” “That’s why we’re excited to invest in the best founders, no matter where they come from.”

Venture firm co-founder Marc Andreessen remains on Meta’s board.

Facebook originally said that it expected to launch its own digital wallet and cryptocurrency in 2020. Novi Digital Wallet finally launched in October, powered by coinbase, The Diem cryptocurrency, now run by an independent consortium, remains unpublished to the public.

In June, Andreessen Horowitz announced a new $2.2 billion cryptocurrency-focused fund. Simpson said Misten’s technology could benefit many of the firm’s investments. The company is already working with Forehead, an Andreessen-backed company working on a global payments platform.

“They’re really seeing a lot of interest from other companies in our portfolio,” Simpson said. “What they’re doing requires so much technical expertise and really in-depth knowledge that sometimes it’s a little out of their scope even for very talented technical teams.”

Cheng added that Misten is adopting the business model that many other crypto projects are following. Instead of generating revenue from products and services, the company plans to hold tokens for the various blockchains it is working with, and expects to profit as their value increases.

“We’re not building a service where we charge other people money to use it,” Cheng said. “Our partners benefit from access to the technology, and we become co-owners in their network. We in return take back a portion of the network shares. So it is a mutually beneficial type of relationship.”

Cheng said that while he enjoyed his time at Facebook and remained bullish on the company’s efforts in the cryptocurrency, Novi and Diem were very difficult to launch “given the regulatory framework.”

Watch: Is NFT a good investment?

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