Polygon has raised $450 million in a new venture financing round as the firm, with a market cap of about $13 billion, aggressively expands its portfolio of Ethereum scaling solutions and works to attract the larger developer ecosystem.

Sequoia Capital India led Polygon’s first major financing round. Tiger Global and SoftBank as well as Galaxy Digital, Republic Capital, Makers Fund, Alameda Research, Alan Howard, Dune Ventures, Alexis Ohanian’s Seven Seven Six, Steadview Capital, Unacademy, Elevation Capital, Animoca Brands, Spartan Fund, Dragonfly Capital, Variant Fund, Sino Global Capital and Kevin O’Leary also participated in the private token purchase.

This is the first time many of these investors are making a bet on an Ethereum scaling solution, or broadly on the blockchain infrastructure play, according to Web3 Signals, a website that tracks venture investments in the crypto space.

Monday’s announcement confirms an early December TechCrunch report that outlined some of the early details of the deal.

Ethereum has attracted the largest developer ecosystem for any blockchain, but it’s plagued by slow speeds and high transaction costs (also known as gas fees).

Polygon is among a handful of so-called Layer-2 or side-chain firms that are attempting to help Ethereum’s network solve its growing pains by employing techniques to move a wide range of transaction information off the blockchain.

Moving a lot of details off the Ethereum blockchain allows Polygon to pack more transaction details on an Ethereum block and significantly scale the number of transactions it can process.

For the first few years, Polygon focused on a technique called Plasma to move information off the Ethereum blockchain, but the firm has in recent years expanded its focus on multiple technologies, including zero knowledge rollups, optimistic rollups and validium, to tackle this challenge.

Polygon has spent nearly $1 billion in recent quarters to acquire firms to broaden its offerings, said Sandeep Nailwal, co-founder of Polygon, in an interview with TechCrunch.

“Previously at MATIC Network [the former name of Polygon], we were building Plasma solutions,” he said. “Although 10 to 15 teams raised money on the Plasma hype, we were the only team that shipped a proper product with Plasma capabilities.”

“Then the overall community reached the consensus that there are certain limitations to this approach. So they moved to the optimistic rollup. Then they moved to zk rollup. Then validium. We have realized that we don’t want to play these hype cycles. We want to build a platform that stays there for decades to come.”

In the past two years, there has been a gold rush in the emergence of layer 1 and Ethereum scaling solutions and venture investors and hedge funds making early bold bets on what they think will become the mainstream blockchain and their companion in the coming years.

Nailwal drew parallels with this race to the desktop operating system wars we saw for more than a decade. “We don’t want to become approach-specific or technology-specific. Our goal is to provide internet-level scale to decentralized computation that blockchains are providing,” he said.

I asked Nailwal what kind of confidence Polygon has on the zero knowledge scaling approach. Polygon has acquired two zk rollup startups in the past two quarters. Nailwal said he believes zero knowledge will be the end game for blockchain scaling. (Ethereum co-founder Vitalik Buterin has shared his thoughts on Polygon.)

Polygon, which counts Mark Cuban among its backers, has emerged as one of the clear leaders among the Layer-2 or side-chain projects attempting to help Ethereum scale. As of January 20, the platform had processed more than 23 million blocks and 1.3 billion transactions. The rise in its popularity comes thanks to a fast adoption in the past year. Over 7,000 decentralized applications — including DeFi platforms Aave, Curve, Sushiswap, Pool, Uniswap and giant NFT marketplace OpenSea, and metaverse projects Decentraland and Sandbox — have deployed on Polygon.

(I asked Nailwal if he anticipates more apps to deploy on Polygon. “I anticipate all of them will move to Layer-2 chain,” he said. He said most people don’t realize just how far inroads Polygon has made.)

“The platform of choice to build on the blockchain today is Polygon. Thousands of developers across a range of applications are choosing Polygon and their complete set of scaling solutions for the Ethereum ecosystem,” said Shailesh Lakhani, managing director at Sequoia India, in a statement.

“This is an ambitious and aggressive team, one that values innovation at its core. Sequoia Capital India is thrilled to lead this significant financing round.”

The massive funding is a turnaround story for Polygon, which in its early years struggled to attract VCs. Many founders in the web3 space said they believe that Polygon — despite its technology prowess and speed of execution — was discounted earlier by others because the team was largely based in India.

“We are not new. We have been working very hard since 2017. We were written off until last year,” said Jaynti Kanani, co-founder of Polygon, which had raised just $750,000 in VC funding prior to the new round. He recalled conversations when the startup was struggling to raise money at less than $30 million valuation.

“The brown face has become golden face,” Nailwal laughingly quipped.

“Only in the last year, the community started to notice us after we brought so many applications and many of them went viral. Unlike Silicon Valley projects, we had to do bottom-up grind, full Indian style. I think that’s also sustainable in long-term,” he added.

He said bringing institutional investors will help Polygon with brand building and in striking partnerships.

“We have a very liquid token in the market and a decent treasury. We did not have to go to the market to raise funds. As the global market begins to look into the crypto world, we realized that even as by organic metrics — daily active users, transactions volume — we are 5 to 10 times bigger than Solana and 20 times bigger than Avalanche, we don’t have as much visibility as we should. The projects I mentioned have been able to do a lot of institutions-led marketing,” he said.

The funding will also help Polygon build larger developer ecosystems in several markets, he said.

“We wanted to have at least three to five years of well-cushioned runway for them.” The startup, which maintains a $100 million ecosystem fund, will also use the fresh capital to support and broaden such efforts with more accelerators, hackathons and grants, he said.

In the immediate future, another bet that Polygon is planning to make is on the identity space, Nailwal said. “The goal of Polygon is to become the AWS of Web3. AWS of Web3 will need an identity segment. So we will making some efforts on this space,” he said.

Having institutional investors will also help Polygon hire big names, said Kanani, pointing to the recent hire of Ryan Wyatt, who headed YouTube Gaming, as an example.