Robert Materazzi (Lukka): "I've never seen so many companies interested in cryptocurrencies"

Lukka is one of the big players in the cryptocurrency world, yet the general public doesn't know about you. Why is that?

Because we're a data company and we only work with businesses.

We launched into a cryptocurrency tax software business aimed at individuals, but from 2017, at the time of the ICOs (Initial Coin Offering), we switched over to businesses. This was all the more interesting because traditional software companies didn't know how to manage data on the blockchain (onchain).

So we very quickly became a "Business to Business" (B2B) company. We created our own blockchain data management software, and now we're even able to sell this data to companies.

Which companies buy your services?

We started working with the big players in the sector because we didn't have the resources to develop offerings tailored to everyone. We focused on the data, its accuracy and variety, rather than the user experience. By making this choice, we clearly excluded small businesses.

Why?

Because when the user experience is not 'good', you have to support customers and only large companies like Galaxy Digital, Kraken, Tagomi (acquired by Coinbase) or Circle can afford to pay for dedicated teams.

Today, we are able to work with smaller companies, but the market is mainly driven by the big players in traditional finance. We work with State Street, BNY Mellon, S&P, Franklin Templeton, BlackRock and many banks.

You mention banks, but we still get the feeling that they're not that involved? What's the point of them using your data?

Some banks are very involved in the crypto world. They now have their teams. They have started to invest, and these active banks represent around 10% of financial players.

The others are still in the exploration phase. They're gradually moving forward on these topics, and some of them are just waiting for approval from the ETF Bitcoin Spot in the US to be able to accelerate.

BlackRock is probably the most powerful financial player that has ever existed. What do you think of their approach to cryptos?

They are very serious about the subject. BlackRock already has over 400 ETFs available, so they're not just going to create one crypto ETF, but several. When these products are launched, it's going to have an impact on the whole industry.

Do you see a lot of big groups working on crypto projects?

In seven years in business, I've never seen so many companies interested in cryptos. Things will be coming out gradually in 2024.

What products do you sell?

We have several types of product. Either you take out access to our software, which is a kind of data portal to which you connect. There is an annual subscription, the price of which varies from 10,000 dollars to over 1 million dollars. Today we have more than 600 direct institutional clients and just over 2,000 who use this service indirectly.

We have also developed products that correspond to the demand of certain companies. Take, for example, the case of a fund administrator like State Street. They manage several portfolios and need visibility over these portfolios that are invested in crypto. We provide them with the tools to do that from their own interface.

If you're a fund and you're trading on Kraken, Coinbase, Uniswap or whatever, you need access to the best data. You can use our software or you can even use your own, but with our data. We'll just be the data provider, it's very flexible.

The only thing we don't do is the transaction operation and custody. We're not a financial institution, but our aim is to provide everything that goes alongside.

What kind of data do you provide?

I don't think there's another company in the world that has as much crypto data as we do. We manage 80 nodes of our own, which gives us a very broad view of the ecosystem. In 2024, our aim is to make our pool of nodes even denser.

What do you use all these nodes for?

To have data at the source. The aim is to have all the data our customers need for their operations. In all today, we cover 1 million cryptos (fungible and non-fungible).

What is your long-term vision?

We believe that the blockchain will totally change the economy and more specifically finance. If you can exchange one asset for another without going through cash, but with cryptos, there's no reason why smart people shouldn't use it. And that's exactly what's happening.

There's going to be more and more business in the crypto universe, that's a certainty. And so the question is what business do you want to create in this new industry.

Many people will continue to go into traditional finance, which is fine, but you have to realise that it's a saturated industry. Or you can go into crypto companies, like ConsenSys, Circle, or Coinbase and we think Lukka can be the data provider for that new economy.

A lot of cryptocurrency companies have suffered in the last 18 months. How are you doing?

We're doing very well. We last raised funds exactly two years ago, in January 2022. We raised $110 million, which in particular enabled us to manage the Bear Market well.

We were also able to position ourselves to make a few acquisitions. In two years, we have made 3. We are always on the lookout for other opportunities to strengthen our position. We're looking at software companies, onchain and offchain data companies, we're also looking at companies outside cryptocurrency. The real issue is finding the right targets.

Are you finding targets at satisfactory prices?

Valuations are still high. We've seen cases where the founders are still stuck on 2021 valuations, but that's no longer the case at all, and they're going to have to understand that.

What do you see as the most dynamic areas at the moment?

There are several! I went to 25 countries in 2023 and met a lot of companies and regulators, in Hong Kong, Liechtenstein, the United States, Switzerland, Brazil.

In Paris?

Not yet, but it's on the list! We're already working with some major French banks.

The world of cryptocurrencies is evolving very quickly. Don't you fear becoming obsolete rather quickly?

We've created a company that adapts very quickly to the context. It's in our DNA.

How many people work at Lukka, and where?

We're a global company with 230 people and customers in over 50 countries. We have several offices in the United States; our headquarters are in Florida. We also have offices in Switzerland, Poland, Singapore and Dubai.

Where do you plan to expand in 2024?

We will be recruiting in Brazil, Hong Kong and Japan in particular. We're also looking at Australia. There's quite a lot going on there.

Lukka is surely one of the companies with the most insights into the industry. How do you see things?

Many people consider 2023 to have been a bad year, but things are more subtle. In reality, the sector has developed a lot, particularly with the massive arrival of large traditional companies. Before, companies, especially banks, weren't doing much. They looked at cryptocurrencies, rather from a distance, but things have accelerated. Cryptocurrencies are no longer a taboo word.

We started signing contracts with these companies in 2021, and I was waiting to see what would happen in 2022 and 2023. And guess what? Not a single one, and I mean not a single one, cancelled their contract. That means that they really believe in these subjects and that it's for the long term.

And what about the crypto-native companies?

We've lost customers, but only because they've simply closed. What's also interesting is to see big players like Microsoft and Google, Amazon joining the ecosystem. They started by taking nodes and as they go, they're weaving their web.

2023 was also the year of the lightning emergence of artificial intelligence. What has this changed for you?

Beyond the media noise, it has obviously had an impact on our business. We're not an AI company, but we use a lot of AI to take advantage of what it brings in terms of computing power and data management.

What do you think 2024 is going to look like?

I think it's going to be the year of enterprise, let alone something as big as Bitcoin halving. Most analysts are rather sceptical, but I think we have entered a Bull Market.

Why do you say that?

There are several ways of identifying a Bull Market, and one way is to see the level of sellers. But there are virtually no sellers left. They've all gone! Today, there are only buyers, and that's what's pushing prices up.