Interstellar: Visa, Citi-Backed Chain Acquired By Stellar Startup
A long-rumored acquisition that finds two of the crypto industry’s leading entrepreneurs teaming to back the world’s sixth-largest blockchain has been confirmed.
Announced Monday, Chain, which raised more than $40 million from financial institutions including Visa and Nasdaq, in the process helping define the narrative for business interest in the technology through its partnerships and stage appearances, has been acquired in an undisclosed deal by Lightyear.io, a startup building on the Stellar protocol.
Closed last Thursday, the deal will find both brands combining to form a new entity called Interstellar to be helmed by former RRE Ventures partner Adam Ludwin, who will serve as CEO, and Jed McCaleb, the creator of the XRP and Stellar protocols, who will be CTO.
The combined company will retain “100 percent” of Chain’s employees, according to Ludwin, including co-founder Devon Gundry, who will remain on as chief product officer. All told, about 60 employees are now employed by Interstellar, Ludwin said.
While terms of the deal were not disclosed, Ludwin affirmed in interview that shareholders were bought out and that it was “a good deal for investors.” Early estimates had pegged the deal as valued at nearly $200 million, which if true, would make it one of the year’s largest.
However, while interest will likely remain high on the deal’s lingering details, Ludwin and McCaleb were keen in interviews and statements to place their emphasis on the future.
In fact, Ludwin went so far as to suggest that the acquisition by Lightyear shouldn’t be viewed as a change in direction, even though Chain’s work focused on private blockchains.
Ludwin told CoinDesk:
“If you look at our work with Visa, Citi, in every case, we made huge progress, but we would also find ourselves at an impasse when it was the partners who had to instantiate a blockchain. We needed a chain that anyone could access.”
In Ludwin’s words, Chain got “Stellar envy,” when it realized the open-source project was succeeding on its goal of creating a platform for asset issuance, albeit largely with startups.
At the time, McCaleb, Ludwin said, encountered a reciprocal problem. Created in 2015 and gaining a network of users through its non-profit, its developers and entrepreneurs were looking for a link to institutions and issuers who could help commercialize the work.
That said, also notable is that Ludwin said Interstellar does not intend to play an active role in the market for the Stellar cryptocurrency, XLM, saying that Interstellar is a “software” play.
“it’s about the platform layer to make the network as powerful and useful as possible for those organizations that want to leverage stellar,” he continued.
A long courtship
Still, for those involved, today’s represents the conclusion of a process that began as far back as early 2018, when McCaleb first approached Ludwin for a meeting.
Ludwin said that while the two have been acquainted since 2014, they “didn’t know each other super well” prior to discussing how they might solve mutual problems. In this way, Ludwin said that early meetings were mostly about establishing relations.
“I have a certain public reputation, he has a certain public reputation. As usual, what you think about someone based on their public persona and who they actually are are drastically different, and we decided that after four to five weeks, let’s do this together,” Ludwin said.
At the time, details about a potential sale began to emerge, with CoinDesk first learning that Chain was in discussions to be acquired by a company affiliated with Stellar in May (though details remained unclear as to the mechanics of the deal).
Ludwin confirmed that the two companies examined multiple ways to structure the deal, which added to the length of the acquisition talks, as did efforts to retain existing employees.