Foundation Devices is looking to push through this “crypto winter” with some new capital.
The Boston startup on Monday announced the close of its $7 million seed round led by Polychain Capital. Founded in April 2020, Foundation sells a Bitcoin hardware wallet known as Passport and offers a mobile app, Envoy, as a digital sovereignty toolkit and Bitcoin software wallet.
Co-founder and CEO Zach Herbert said the company wants to help users reclaim their “digital sovereignty” by managing their own cryptocurrency. He said the crypto chaos that's unfolded over the past few months as the major exchange FTX collapsed and Bitcoin hit a two-year low has only validated their mission.
“So much of the interest in the cryptocurrency space has, especially from a venture capital perspective, been with exchanges and custodial providers,” Herbert said. “We would argue that the only way that Bitcoin and a decentralized internet succeeds is if users are storing their own money and they’re running their own infrastructure and these services and use cases are actually decentralized.”
“So, when you have yet another exchange, or in this case over the last several months, many exchanges and other kinds of custodial providers blow up and lose their clients’ funds, it’s very validating to those that have been saying for a long time you should be taking self-custody of your Bitcoin, of your cryptocurrency.”
Passport resembles an old-school cell phone. The device doesn’t use USB data or the Internet, which the company says makes it secure. Passport uses a camera and QR codes for communication. The handheld device is powered by a lithium-ion battery.
Foundation began selling Passport in 2021. Earlier this year, the company rolled out an updated version of Passport and launched Envoy. The company said it has sold thousands of Passports over the last 18 months. Herbert said the company moved toward a more “futuristic optimism” design throughout its brand and products this year. The new Passport also has some different hardware features, like a longer battery life.
Passport costs $259, which is down from $299 at its launch. Herbert said as they iterated, they were able to find ways to reduce costs on production and materials.
“We’re a little different because we put ourselves on a pretty aggressive product cadence, much like how you would see from a larger company like Apple shipping a new iPhone every year, we’re really striving to ship a new hardware iteration each year,” Herbert said.
Herbert this rapid development is important in improving product quality and lowering barriers to entry for new audiences. Releasing their own software was the first step in this process.
Herbert admitted that taking self-custody of Bitcoin can be stressful, between picking a device and app and setting everything up. He hopes Passport and Envoy can simplify this and walk users through the entire set-up process.
“Owning the entire end-to-end experience, the hardware, the software and the services, just creates a seamless, unparalleled user experience that you’re not going to get if you have to jump around between a lot of different devices or software,” Herbert said.
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Herbert said they build their Passports in New England. One of the main reasons is because of security concerns. He also worries about supply chain issues like those that arose during the Covid-19 pandemic.
“If I’m buying a device that stores my money on it, I really don’t want to buy something that is made in China where I have no idea how it works. I don’t really know what software is running inside of it or how the hardware is made, for example,” Herbert said.
Foundation has 15 employees and plans to continue hiring with its new funding. The startup is especially looking to hire engineers and designers. They will also continue advancing their hardware and software. In the next several months, Herbert said the startup plans to build out some software services to diversify their revenue streams. These are expected to roll out in the first quarter of 2023.
“It’s difficult out there right now for startups and for investors. And many companies are struggling. But on the flip side, now that we’re well capitalized for at least the next few years, we can basically take advantage of that and I think there’s a specific focus for us right now on hiring because of that,” Herbert said.
