From AI to crypto: The comeback journey of Lighter's genius founder

Author: Ben Weiss

Translation: Tim, PANews

Since the emergence of ChatGPT in 2022, “shifting from crypto to artificial intelligence” has become a popular trend in Silicon Valley. Opportunists are rushing from the declining hype market into newer, more glamorous tech sectors. However, Vladimir Novakovski is going against the trend; he chose to pivot from artificial intelligence to the crypto industry, attracting support from many well-known investors for his startup Lighter, which has now become one of the fastest-growing companies in the crypto space.

Lighter is both a decentralized exchange and a blockchain. Lighter supports users trading perpetual contracts (a type of derivative that allows traders to speculate on the future price of tokens). Novakovski stated that Lighter will soon launch a spot market supporting cryptocurrencies like Bitcoin.

On Tuesday, Lighter announced it raised $68 million in a new funding round. The 40-year-old founder and CEO, Novakovski, revealed that this round was led jointly by Peter Thiel’s Founders Fund and Ribbit Capital, with other investors including Haun Ventures and Robinhood, a rare online broker that seldom invests in risk capital.

According to two sources familiar with the deal, Lighter was valued at approximately $1.5 billion in this funding round. Due to non-public negotiations, these sources requested anonymity. Novakovski declined to comment on Lighter’s valuation but said the deal included equity and token allocation rights, meaning the unissued tokens’ distribution quota.

In an interview, Novakovski said, “Our goal is to become the infrastructure layer of financial markets, ensuring all trading operations are fair, accurate, and transparent.”

From trading to AI, then back to trading

Lighter’s funding comes at a time when on-chain perpetual contracts are sparking market discussions. These derivatives, popular in the crypto market, allow traders to hold futures contracts without an expiration date, as long as they meet the necessary margin requirements.

Perpetual contracts have existed for years, but the recent rise of decentralized exchange Hyperliquid has shaken up the market. Hyperliquid co-founder Jeff Yan, with only 11 employees, successfully challenged the dominance of crypto giants like Binance. Binance has begun to focus on supporting its own competitor, Aster, to counter Hyperliquid.

Lighter is entering a highly competitive market, but Novakovski has the intellectual capital to compete. Joey Krug, partner at Founders Fund, told Forbes, “The main reason we invested is Novakovski and his team, which accounts for 85% to 90% of our decision.”

Novakovski immigrated from Russia to the U.S. as a child and was later selected for the U.S. national team, participating in international informatics and physics Olympiads. He entered Harvard University at 16, graduated early, and then joined Castle Investment Group, a hedge fund, at age 18. Novakovski said that Ken Griffin, CEO of Castle Investment Group, personally hired him.

Before starting his own ventures, Novakovski worked as an engineer and trader at several companies for nearly 15 years. In 2017, he co-founded Lunchclub, an AI social platform, with Scott Wu, who had previously worked at investment firm Addepar.

They raised about $30 million during the early stages of the COVID-19 pandemic. Lunchclub attracted many users seeking social connections. However, by 2022, user growth stagnated. Novakovski stated, “We faced three options: first, maintain a small operation to turn a profit; second, try to transform the product into something like TikTok or Snapchat (though this seemed unlikely); third, pivot to a new direction we are truly passionate about.”

After Wu left Lunchclub, he founded AI programming startup Cognition, which is now valued at $10.2 billion, while Novakovski decided to return to trading.

He transformed Lunchclub into Lighter, retained 80% of the staff, and successfully raised new funds: a $21 million undisclosed round led by Haun Ventures and Craft Ventures in 2024. Other participants included Dragonfly and Robot Ventures. With this recent funding, Lighter’s total raised amount approaches $90 million.

After two years of development and testing, Lighter officially launched in January this year. Unlike Hyperliquid, which is built on a proprietary layer-1 blockchain, Lighter is a layer-2 network built on Ethereum. Novakovski believes this is the key difference between the two competing products.

According to data from crypto analytics site L2BEAT, Lighter’s total value locked (TVL), the amount of funds locked on-chain, has quickly become one of the top layer-2 networks on Ethereum. Novakovski revealed that the business is already profitable. When asked about the comparison between Lighter and Hyperliquid, he said, “We are quite satisfied with our current market position, but we are still working hard to grow.”