Announcing Lockchain’s Series A: Conversation with Andrew Howard, CEO of Lockchain, and Andrea Hippeau, Partner at Lerer Hippeau
We first invested in Lockchain in 2023, and in the spring of 2024, the company emerged from stealth. Co-founders Aidan Kehoe and Andrew Howard were motivated by a simple mission in starting the business: to bring easy-to-use, effective security solutions to businesses that leverage blockchain technology. The timing was perfect. While there had been plenty of hand wringing over the collapse of FTX, few companies had actually stood up to address the massive gaps in security and transparency in crypto.
Today, Lockchain is announcing a $5 million Series A, and we are excited to double down on our initial investment.
When we wrote our first check, we believed that the complex interconnections and volatility inherent to crypto, combined with the uncertain regulatory landscape, underscored the critical need for effective risk mitigation strategies for blockchain. We argued that Lockchain’s AI-powered risk management platform was capable of transforming the unique challenges facing traders, investors, and fund managers in the blockchain ecosystem into straightforward and actionable insights. In the year since, our thesis has proven out. Lockchain has garnered strong traction with major firms like Broadridge and GSR, and now provides risk management recommendations to portfolios with an aggregate value of more than $2 billion.
Lockchain is the first SaaS platform of its kind to leverage advanced AI to bring speed, scalability, transparency, and security to the rapidly evolving digital asset management industry, helping investors and fund managers avoid or navigate future black swan events. As information flows accelerate and more and more investors turn to crypto assets, we think Lockchain’s solution is more necessary now than ever.
I recently had the chance to talk to Andrew Howard about Lockchain’s Series A, the present state of the company, and what they have planned for 2025 and beyond.
Andrea Hippeau, Partner at Lerer Hippeau: Let’s start at the beginning. What made you and Aidan decide to build Lockchain? What was the “aha” moment?
Andrew Howard, CEO of Lockchain: Aidan and I were both exiting out of cybersecurity businesses and thinking about starting a security business in crypto. A common friend introduced us and we joined forces to mitigate some of the major risks around blockchain.
AH: What has the past year been like, since you emerged from stealth? How has your team evolved?
AH: It has been a whirlwind. We have been fortunate to partner with some great customers and really expand the capabilities of our platform. In particular, while Lockchain was initially imagined as a monitoring platform, we’ve worked with a number of big brands to expand its capabilities to include everything from wallet monitoring and due diligence to disclosure generation.
As far as the team, we have purposely remained small with only 10 employees. Both Aidan and I have run large businesses with huge teams and know that with the help of AI, we can do more, better, and with less. We are very focused on building an automation-first business and avoiding a managed service-like solution.
AH: What kinds of obstacles or setbacks has your team encountered? Any inflection points that altered your course?
AH: Our initial hypothesis was that we should target DeFi developers and create security and risk management tooling for them. We found that although most developers care about security generally, our more holistic approach to security (technical and non-technical) was more aligned with the needs and market gaps facing institutional investors.
AH: Can you talk about how you secured your first customers? How did you develop the strong traction you now have with some of the leading digital asset managers?
AH: Our first customer was an emerging stablecoin platform. That first engagement gave us amazing insights into the compliance and regulatory environment. From there, we were fortunate to meet a series of large financial institutions with similar challenges.
AH: Let’s zoom in a bit more. How does Lockchain’s platform empower digital currency investors? Day-to-day, how do they use Lockchain?
AH: The Lockchain platform provides investors with a full and ongoing picture of the risk profile of digital assets, including tokens, DeFi protocols and other counterparties that they care about. Traditionally this has been a human-intensive process that wasn’t scalable and resulted in quickly outdated snapshots of just part of the risk picture. Our platform provides an ongoing view that shows how risk changes (in good and bad ways) on a recurring basis. Depending on the risk metric we’re looking at, we can examine it daily or more frequently. All of this is visualized and consumable through our portal, but we also push info to clients in near-real time through their existing platforms like Slack, which give them up-to-the-minute situational awareness of what’s happening with the digital assets they care about, as well as the broader market and ecosystem.
AH: AI is central to how you approach risk management. How do you leverage AI?
AH: Yes, it definitely is. We’re using AI to create a digital army of analysts that can keep an eye on these hundreds and thousands of digital assets in our platform. By continually pouring over hundreds of thousands of data points, AI allows us to zoom in on the finer details of a risk while also achieving cost efficiencies that just aren’t possible with human analysts. Instead, we use humans to curate and guide the AI so that it can understand the lingo and other idiosyncrasies of digital assets. While risk is dynamic, the lens to view that needs to remain deterministic so that relative change can be measured. We also invest a lot of time ensuring that AI produces output in a consistent and repeatable way.
AH: Since the collapse of FTX, the crypto market has evolved significantly. What were some of the issues you saw in the market?
AH: FTX’s collapse has certainly ushered in significant changes, and several key issues have come to light that highlight the risks and vulnerabilities present in the sector, especially for financial institutions. Here are some of the main challenges we observed:
- Lack of Regulatory Oversight
- Operational Risks and Governance Failures
- Volatility
- Counterparty Risk
- Transparency and Custody Issues
- Reputational Risks
AH: What changes have you observed in the way your customers approach risk?
AH: Everyone is looking for better and faster insights into risk. The days of 60 to 90 due diligence processes cannot continue and our platform has suited many customers well with high quality yet fast analysis. As a cybersecurity executive, this is the first time in my career that I have had customers tell me that our security or risk platform is helping them improve revenue by allowing for faster risk decision making. In the past, security was just a cost.
AH: Where do you see the crypto industry going? What do the next, say, five years look like?
AH: Crypto is here to stay. Over the next five years, we anticipate the crypto industry will continue its evolution towards greater maturity, driven by continued regulatory clarity, institutional adoption, and technological advancements. Regulation will play a pivotal role, with governments and financial regulators around the world developing clearer frameworks to ensure investor protection and market stability. We expect to see more traditional financial institutions integrating blockchain and crypto solutions into their offerings, with digital assets becoming more mainstream.
AH: This Series A is a big milestone. Why did you decide to raise now?
AH: We knew it was time to raise when we felt we were close to product market fit. As a startup founder, when you start having the same problem-solution conversation with lots of customers like Groundhog Day, it is often time to double down.
AH: How did you decide who to partner with for the raise? What sorts of considerations did you make?
AH: We are strong believers in the “dance with the one who brought you” approach. We were fortunate to partner with several strong investors, such as Lerer Hippeau, Arrington Capital, and White Star Capital, among others, during our pre-seed phase and they were keen to re-invest in this round — which we love.
AH: What’s next for Lockchain?
AH: We envision Lockchain as the de facto platform of risk management in crypto. We play an important role in the crypto risk ecosystem and will look to continue to help customers peer around corners before bad things happen. You can expect to see more and more advanced warning capability from us as customers look to shift left in their risk management decision making.
