The biggest crypto wallet you've never heard of is flourishing. San Francisco-based Magic announced on Wednesday that it's raised $52 million in a round led by PayPal Ventures that values the firm at just under $500 million.
While there are plenty of options when it comes to crypto wallets—including one offered by PayPal—Magic has made a name for itself by building a white label version that lets corporate clients provide wallets en masse to customers, many of whom are unfamiliar with seed phrases, private keys, and other elements of Web3.
Magic clients include Mattel, which uses wallet tools to let customers store Hot Wheels NFT collectibles, and Macy's, which uses Magic wallets as part of its digital Thanksgiving Day parade activities.
In an interview with Fortune, Magic founder and CEO Sean Li said the company's goal has been to offer Web3 tools that can be accessed via Web2-style interfaces customers already know.
"One of the biggest barriers to entry in Web is onboarding. Writing down a seed phrase on a piece of paper is backwards, like burying pirate treasure," said Li, adding that Magic wallets remain non-custodial, meaning only users can access them.
On a practical level, Magic's business entails providing software development kits, or SDKs, to corporate clients, which can then tailor the wallets to their specific needs. Li likens Magic's SDK-based wallet-as-a-service model to that of payment processor Stripe or Twilio, which provides software for businesses to send automated text messages.
Li, a Canadian engineer who sold his first startup to the enterprise software company Docker, declined to disclose revenue or other financial data for Magic, but did say the firm has 70 employees and has created more than 20 million wallets in partnership with its corporate clients.
He says he's unfazed by the prolonged Crypto Winter and expressed relief that the "tourists are gone."
"I got into Web3 because of the interesting non-speculative cases," Li said. "Now that enterprises are committed to Web3 use cases, there's a lot more signal than during the previous bear market. To me, it’s like, 'What bear market?'"
Magic is not the only firm betting on the wallet-as-a-service model that lets anyone plug crypto tools into their operation. Coinbase, for instance, announced earlier this year a WaaS initiative to help companies build bespoke on-chain wallets for customers.
According to Li, Magic's long-term mission is to eventually give every Internet user a digital wallet.
"Mass adoption of Web3 is a hot topic, and Magic is facilitating this with a safe and simple solution," PayPal Ventures said in a statement. "Wallet creation service allows companies to reach millions of users on their apps and onboard customers who are new to Web3."
The other investors in Magic's latest round, which the company described as "strategic" and which brings its total capital raise to more than $80 million, are Cherubic, Synchrony, KX, Northzone, and Volt Capital.
