Authentication startup Dust Identity raises $40 million to get into sports, luxury goods

Dust Identity Inc., a startup that authenticates products by marking them with invisible diamond dust, is raising $40 million in funding to enter new markets including sports memorabilia, luxury goods and art.

The majority of Dust’s business is in the aerospace and defense sectors, where it works with government agencies and private firms to verify the authenticity of important components in their supply chains. Executives now hope to apply technology used for airplane parts to the robust resale markets for products like sports collectibles, sneakers and luxury handbags.

“What kept on being a very constant ping to our system is that there are more use cases — from automotive to luxury to the collectibles space,” co-founder and Chief Executive Officer Ophir Gaathon said in an interview. 

The round was led by Castle Island Ventures and joined by Amex Ventures, Airbus Ventures, Kleiner Perkins and 8VC. The former Massachusetts Institute of Technology startup is also backed by existing investor Lockheed Martin Corp. 

Dust’s technology links physical items to digital records by tagging them with nearly invisible and unique marks of diamond dust blended into a polymer. These can then be scanned, allowing users to identify the provenance and track the chain of custody.

In retail, goods are usually authenticated manually by resale platforms such as eBay and StockX, but counterfeiting plagues the industry. Law enforcement in South Carolina seized $15 million in fake sports memorabilia in a single raid earlier this year.

Gaathon said Dust is making a “significant investment” in the sports sector, offering its services to sort, tag and catalog game-worn items.

“If we have a way to get the baseball — or the football or the jersey — we’ll be able to connect it with the brand,” he said. 

Investment in sports memorabilia surged in recent years as fans found renewed interest in the items amid pandemic lockdowns. Last year, Collectors Holdings Inc. raised $100 million in funding at a $4.3 billion valuation for its sports collectibles trading, grading and research platforms.