New Vector raises $8.5M to accelerate Matrix/Riot/Modular

2019-10-10 — General — Matthew Hodgson

Hi all,

Massive news for the Matrix ecosystem today: New Vector (the startup which the Matrix core team formed to fund development in 2017) has raised an additional $8.5M of funding in order to speed up Riot/Matrix development and expand Matrix hosting via Modular.im!

The new funding comes in the form of a Series-A equity investment in New Vector from three of the top venture capital funds in London. The round is led by Notion - a fund set up by the founders of MessageLabs, who many will know as one of the leaders in secure hosted email services. Notion's long history with email means they immediately clocked the potential of Matrix's mission to build a new open global communication network - after all, Matrix aims to provide a worthy replacement to email (and the phone network, for that matter!). Joining Notion in the round is First Minute - a fund set up by the founders of Lastminute.com (arguably the UK's most famous original dotcom), and Dawn - one of the largest SaaS tech specialist funds in Europe (famous for backing iZettle, Mimecast, Neo4J and many more).

The last funding round in Jan 2017 from Status was instrumental in stabilising the big 1.0 release of Matrix and exiting beta in June; creating the Matrix.org Foundation as a neutral custodian for the standard; stabilising and optimising Synapse; redesigning Riot’s user interface; bringing in a full-time professional UI/UX designer to the team; supporting the huge amount of encryption work required to turn on E2EE by default (cross-signing, key backups, device verification, e2e search, the pantalaimon e2e daemon etc); creating RiotX/Android; and launching the Modular.im hosting platform.

With today’s new funding, the priorities for Matrix will be:

  • Turning on end-to-end encryption by default for DMs

  • Much better support for grouping rooms into Communities

  • More anti-abuse/anti-spam mechanisms

  • Shrinking Synapse (and/or finishing Dendrite)

  • Canonical DMs (having one DM per user, and have them feel clearly distinct from ‘rooms’)

  • Extensible Profiles

  • Decentralised accounts

  • Threading

  • ...and furthering development on P2P Matrix, so users can have full control of their communications without having to run or trust a server.

On the New Vector side, this funding will support:

  • A whole new wave of UX improvements to Riot (particularly around onboarding and first time user experience).

  • Making Modular hosting as polished and powerful as possible.

  • Creating a whole new set of next-generation Modular integrations.

While New Vector’s contributions to the Matrix ecosystem can’t be ignored, it’s important to remember that the Matrix protocol and specification itself is governed and controlled by the independent and neutral Matrix.org Foundation and its extensive governance processes. We set up the Foundation very deliberately to enforce the protocol's neutrality, formalise the project's mission, goals and values and hold true to them no matter what - specifically to protect the project from conflicts of interest with commercial Matrix endeavours, including New Vector.

That said, New Vector would not be taking money from any investors if they did not believe their goals are aligned with Matrix's. To clarify:

  • Matrix exists to create an open secure decentralised communication network and protocol for the benefit of all.
  • New Vector exists to help grow Matrix and be one of many successful companies in the Matrix ecosystem.
  • Tech VCs exist to invest their money in growing companies in order to get a return when the company IPOs or gets bought.

It turns out that these goals are not incompatible if one understands that the potential of the Matrix ecosystem is directly linked to its openness and size (hint: funding sources who didn’t understand this self-selected out ;). By funding Matrix development and helping the open ecosystem and public network grow, New Vector can go provide more Matrix hosting via Modular.im and more Government & Enterprise deployments via Vector.im. Critically, other companies can and do build on top of Matrix too - and frankly the more players there are, the more valuable the network, and the more value to be shared for everyone (including New Vector). This model worked relatively well for the Web, and we believe it'll work for Matrix too.

Update: the best way to gauge the investment in New Vector is to hear it first hand from the investors. Jos from Notion is leading the round, and has a fascinating blog post (written with zero input from Matrix or New Vector folks) to explain where the investors are coming from.

Update 2: More excellend first-hand analysis from Dan at Dawn Capital, who does a really deep dive into how they see Matrix and New Vector. Another must read.

In this case, all of New Vector's new investors have a background as respected tech entrepreneurs, and everyone involved categorically understands that Matrix itself is a neutral open source project, and the mission is to help build up the whole network to be as successful as possible rather than sabotage it by constraining it in any way.

All in all, it’s great news for the ecosystem: Matrix is 5 years old now, and while the project is growing faster than ever (over 300% more active users in the last year!) - it's fair to say that we haven't moved as fast as our mainstream competition - for instance, Slack is only a year older, and Discord is a year younger(!) Obviously much of this is due to Matrix being a completely different proposition: we've been creating an open spec; multiple client codebases; multiple server codebases; the bridges; a fault tolerant decentralised network - not to mention the complexities of decentralised E2E encryption. Based on comparing with our endeavours prior to Matrix, we estimate building this stuff in an open and decentralised manner takes roughly 6 times longer.

But the project is now in a position where the foundations are solid: the protocol is out of beta, reference servers and clients are production ready, and it’s more than time to make all of this mainstream. We have to redouble our focus on user experience and ensure that we compare favourably to today’s established alternatives while staying true to Matrix’s principles. Making sure there are Matrix apps out there which provide a credible alternative to with the likes of Slack and WhatsApp (until they eventually join Matrix, of course) is what will make the difference between Matrix being a cliquey FOSS curiosity versus really being the natural successor to today’s instant messaging, email and phone networks.

In the end; Matrix needs full-time contributors in order to continue to grow, and keeping New Vector funded is a very good way to achieve that (New Vector is hiring!). (That said, if any philanthropic billionaires are reading this, the Matrix.org Foundation is actively soliciting donations to improve Matrix independently of New Vector's efforts - particularly around the areas of countering online abuse and disinformation).

In the meantime, huge thanks to Jos at Notion for believing in Matrix and leading this funding round in New Vector - and huge thanks to the other investors who saw the potential! And most of all, thank you to all those supporting Matrix, whether by donating to the Foundation, promoting and using the protocol, or contributing code to the ecosystem. You are the ones keeping the dream alive :)

You can read things from the NV angle over at https://blog.vector.im/8-5m-to-accelerate-matrix/. We hope you’re as excited as we are to open a whole new chapter as Matrix picks up yet more momentum :D

-- Matthew, Amandine, and the whole Matrix team