Which crypto investments are making A16Z hold for 10 years?
Just look at the names of well-known companies such as Skype, Facebook, Instagram, Twitter, Airbnb, Foursquare, etc. invested by this company, you will know how sharp Andreessen Horowitz is as a VC.
This June, A16Z established a $300 million cryptocurrency fund, which, as its name implies, specializes in blockchain companies. It is not early to enter the blockchain field in the middle of this year. However, A16Z has its own style and rules of playing in the VC field.
Today, SV Insight will show how A16Z’s crypto fund operates. During the bear market, will they still carry out the “Andreessen Horowitz effect” as always?
Promise: will hold all investment for more than 10 years
Bear market is here? Bear market is here!
With the continuous decline of the cryptocurrency price, the arrival of the bear market has become the consensus of many people. However, for A16Z Crypto, there is no such thing as bear or bull. Because they claim to be an “all weather fund”: “We will continue to invest over time. Even if there is another ‘winter for blockchain,’ we will continue to invest actively.”
Who is leading such an “all-weather fund”? According to A16Z’s public information, the A16Z Crypto Fund team has two General Partners: Chris Dixon and Katie Haun.
First let us introduce Chris Dixon, who is quite a legend.
Chris Dixon studied programming at an early age and founded two companies and sold them to McAfee and eBay respectively. He openly declared himself as one of the earliest believers of Satoshi, and he framed Satoshi’s paper on Bitcoin and hung it on the wall. He believes that cryptocurrencies are one of the three megatrends of the future, along with artificial intelligence and computer devices connected to the network or Internet of Things. Because these three redefine the way humans exchange information and value, without relying on a variety of trusted third parties.
Due to his faith and judgment, Chris became the first and most successful blockchain investor. As early as 2013, Dixon invested in Ripple, and his star blockchain projects include Coinbase and Mediachain.
The other partner is Katie Haun. In addition to being a cryptocurrency veteran, Katie was also the “first crypto asset coordinator” of the US Department of Justice. During her time at the US Department of Justice, she created the government’s first cryptocurrency task force and led investigations into the Mt. Gox hack and the corrupt agents on the Silk Road task force. Currently, Katie is also on the board of directors of Coinbase. It is worth mentioning that Haun is also the first female partner in A16z’s nine-year history. (By the way, Katie was one of the speakers at the first Blockchain Connect Conference!)
For the remaining six people on the team: Jesse Walden, Ali Yahya, Denis Nazarov, and Dan Boneh are responsible for the research team; Hilary Kivitz is responsible for legal affairs; Corban Bell is responsible for finance, operations and other related matters.
In an article introducing the official establishment of the A16Z crypto fund, partner Chris Dixon revealed the reasons for the operation of the fund and the direction of future investment. According to him, as early as five years ago, A16Z began investing in cryptocurrency assets and companies. The reason for creating a new fund is that it offers the greatest flexibility.
For the investment stage, A16Z Crypto will invest in all stages, from seed round to fully mature projects such as Bitcoin and Ethereum. Its investment methods are also very diverse, such as traditional stocks, convertible notes, and even new ways including tokens.
Before investing in any company, A16Z publicly promised not to make short-term investments, but to “build an investment that can hold more than 10 years”.
“We are long-term patient investors. We have been investing in cryptographic assets for more than 5 years. We have never sold any of these investments, and we do not plan to do so in the short term.”
Common traits of companies invested: cloud computing, security, finance
A company that can give A16Z such reassurance, it must have something special. Which companies have been selected by the A16Z Crypto Fund? SV Insight has sorted out the list of existing projects under incubation:
As shown in the above table, A16Z’s biggest investment was more than $100 million and its smallest investment was $10 million. First let’s take a look A16Z Crypto’s biggest investment so far, Dfinity.
Dfinity is a smart distributed cloud computing system with unbounded scale. It claims to be more efficient and secure than Amazon Cloud AWS. Before A16Z Crypto Fund was established, Dfinity already received an investment by A16Z in February 2018.
In August this year, Dfinity once again received an investment from A16Z. Chris Dixon said on the official website that Dfinity’s team is the most important factor in the fund’s investment choices. Dfinity has some of the best experts in the field of distributed systems, cryptography, game theory and programming languages.
Among the Dfinity team members are Timo Hanke, Chief Research Officer, who is the inventor of the Bitcoin mining algorithm optimization AsicBoost; Andreas Rossberg, one of the co-designers of the Accelerated Web Assembly, currently used by mainstream internet browsers; Ben Lynn, one of the three inventors of the BLS signature; Paul Liu, Intel Lab scientist. Chris said that every time he met with the Dfinity team, he would find that the team had recruited another industry elite.
What other investment considerations are there besides team strength? For example, MakerDao, a blockchain company that focuses on stable coin, was mainly invested by another partner, Katie Haun. Her first emphasis was on MakerDao’s technical ingenuity. Several other factors include execution, community building, and how to regulate the stable coin. Katie believes that through this cooperation, they can build a more convenient, inclusive and stable global financial system.
What do these invested companies have in common? Stable coin, security, cloud computing, and finance are the keywords of these companies.
For example, Oasis Labs which got invested first and Dfinity which received the highest investment both focus on cloud computing. The other two startups, TrustToken and MakerDao, build stable coins. MakerDao is the first decentralized stable currency on Ethereum. The financial derivative platform dYdX, the public chain Handshake which focuses on domain name authentication protocols, its work on the registration, authentication, transaction and analysis of decentralized domain names also reflects A16Z’s focus on finance and the infrastructure of the entire blockchain industry.
If A16Z is a patient investor like it claims to be, what kind of post-investment service does it offer? MakerDao official revealed that A16Z provides three years of capital operation, commercial network, marketing personnel and operations, as well as the support for regulatory compliance and large-scale adoption. According to A16Z, the fund has more than 80 people on its service team.
The first project to be invested: the close integration of academic and industry
Two weeks after A16Z Crypto Fund was established, it made its first investment.
On July 9, 2018, Oasis Labs became the first project to be invested by A16Z’s new $300 million crypto fund. A16Z lead its $45 million Series A financing; Polychain also participated in the Series A financing. Oasis Labs is a typical example of close integration of academic and industry, its founder and CEO Dawn Song is currently a professor of computer science at the University of California, Berkeley. Her field of research include deep learning, security, distributed system and blockchain.
In 2009, she won the MIT Technology Review Top 35 Innovators under 35 award. In 2010, she was awarded MacArthur Fellows Program.
How special is the MacArthur Fellows Program? It was established in 1981 by MacArthur Foundation and awarded to 20 to 40 individuals each year. The award judging criteria has three dimensions: whether it is creative; whether the achievements are good enough; whether there is potential to create more brilliant achievements. Winners receive a $625,000 bonus each year for a five-year period and are free to use the funding.
As a scholar researching in the security field for decades, Dawn Song is the most cited scholar in the world of computer security and was given the AMiner award. According to Professor Dawn Song, for decentralized, transparent blockchains, privacy protection is not provided. To address the privacy challenge, it requires integration of a variety of privacy protection technologies, including security hardware, encryption algorithms, and forked privacy.
In addition to the delivery of outstanding talents and technologies, what other influence does the academic community have on the blockchain industry to help its development?
If you are curious to hear the insights from Professor Dawn Song, come to the Blockchain Connect Conference: Academic 2019! Hopefully you’ll get to know more about her research during the keynote presentation.
Below are some of the guest speakers at the conference (more guests are being invited):
Conference official website: goblockchainconnect.com
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