Fabric Cryptography, a hardware startup founded by husband-and-wife MIT and Stanford dropouts Michael Gao and Tina Zhu, wants to democratize modern encryption techniques like zero-knowledge proofs (which allow you to prove what you know without revealing exactly what you know) and fully homomorphic encryption (which allows you to manipulate encrypted data without decrypting it). The co-founders argue that their work can ease the fundamental tension between trust and privacy at a time when companies are collecting increasingly more data on consumers but are less able to protect it.
To prove this, the team developed a custom RISC-V-based chip optimized to run the algorithms needed to establish zero-knowledge proofs and enable fully homomorphic encryption, which Fabric calls a “verifiable processing unit” (VPU). The team says that existing hardware is too slow to make things like fully homomorphic encryption widespread, so a custom chip is needed to make this happen.
Now, a number of venture capital firms are backing the idea, with Blockchain Capital and 1kx leading the company's $33 million Series A round, with participation from Offchain Labs, Polygon and Matter Labs. This follows a $6 million seed round led by Metaplanet with participation from Inflection, Liquid2 Ventures and others.
Image credit: Fabric
It's no coincidence that there are several crypto investors here who are also investing in crypto tech: “We couldn't be more excited to collaborate with Fabric on their mission to accelerate all crypto operations with the world's first VPU and enable a world where privacy and verifiability are non-negotiable elements of all digital systems,” said Yuan Han Li, an investor at Blockchain Capital.
While Fabric is targeting the enterprise, the market where its solutions are most urgently needed is the blockchain space, which is why its first generation of chips will focus on zero-knowledge proofs.
“Zero-knowledge proofs and fully homomorphic encryption are driving a surge in computing demand that is becoming like AI in the 2010s,” Gao told me. “Not everyone understands it, but it's already becoming pervasive in cryptography. And we think this will go beyond crypto and lead to pervasive encryption in the enterprise. And we realized that this is really the mainstream moment, and that hardware could be the final catalyst to push it even further and make the cryptographer's dream come true. That's why Tina and I teamed up to start this company.”
Fabric says it has already received “tens of millions of dollars in pre-orders.”
Businesses also don't want to deal with “a toxic sludge of user data,” Ju noted, because in most cases it's a liability. So if they can keep data encrypted even while it's in use, or don't need to retrieve it, but instead exchange only what they need through zero-knowledge proofs, that's a big win for them.
Gao is no stranger to ambitious hardware startups. He previously co-founded photonic AI startup Luminous Computing. He then co-founded bitcoin mining chip startup Katana in 2021, becoming CEO in 2022. Katana rebranded as Fabric Systems. Fabric Systems is now defunct, but some of its DNA appears to live on in Fabric Cryptography.
But the couple's experience with Luminus may have been something of a wake-up call: “While I was personally excited about large-scale language models, and AI in general has great potential, we both became disillusioned that the most practical market opening for photonic computing seemed to be giant AI machines for targeted advertising on social media, a use case that did little to get us out of bed in the morning,” Gao says.
Fabric is on the verge of tape-out of its first chips and plans to use the new funding to develop its next generation of chips and to scale its software and encryption teams. In the long term, Fabric hopes to deploy its chips in enterprise data centers and sell to hyperscale clouds.