Wednesday, 27 June 2018

Fortune/Robert Hackett: Andreessen Horowitz Pours $300 Million into Crypto Fund


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Crypto fund

Andreessen Horowitz Pours $300 Million into Crypto Fund

Chris Dixon, general partner at Andreessen Horowitz, has led the venture capital firm's crypto investments to date. Dixon is spearheading the firm's new $300 million fund, called a16z crypto, alongside a new general partner, Kathryn Haun (not pictured).
Michael Nagle—Bloomberg via Getty Images

By Robert Hackett June 25, 2018

Andreessen Horowitz on Monday debuted a $300 million investment fund that will specialize in cryptoassets and projects that build on blockchains, the distributed ledger technology that underpins virtual currencies like Bitcoin and Ethereum.

The prominent Silicon Valley venture capital firm on Monday also added another general partner to its ranks who will co-lead the new fund: Kathryn Haun, a former federal prosecutor best known for her work against corrupt agents tied to the Silk Road drug market.

Andreessen Horowitz’s new fund, called “a16z crypto,” comprises a subset of the main fund’s limited partners, and it will be administered by an 8-person team, the firm said. Chris Dixon, a longtime general partner who has served as the firm’s lead crypto investor in recent years, is set to be the fund’s co-lead manager.

“There are some regulatory constraints we were running into that limit how many times we could do different investments in our main fund,” Dixon told Fortune, referring to unconventional deals that include purchasing and holding crypto tokens. The new fund will be classified as a registered investment advisor, a legal regime for hedge funds (versus the traditional venture capital legal regime, Exempt Reporting Advisers or “ERA”).

The new classification should give the fund “maximum flexibility” for deal-making, Haun said. She noted that the fund would plan to hold on to investments for the long term, rather than flipping digital coins on online exchanges as a hedge fund might

Andreessen Horowitz has been one of the earliest and most prolific backers of crypto ventures. The firm’s main fund has invested more than $100 million in companies such as online exchange Coinbase, hedge fund Polychain Capital, and most recently the blockchain-based social payment app Celo.

“Having our LPs [limited partners] opt into a new thing having its own set of risks and rewards was important,” Dixon said. All new crypto investments will be managed under the new fund, although past investments will continue to be managed under the firm’s main, pre-existing fund. Each fund will continue to received the same support the firm offers to all entrepreneurs, Dixon said.

Dixon and Haun first met last year while serving as members on the board of directors for Coinbase, the biggest U.S. crypto exchange and an Andreessen Horowitz portfolio company. Haun later invited Dixon to speak at a Stanford University course on cryptocurrencies she taught.

“Part of it is to focus and create a separate team, and another part is doubling down,” Dixon said of the reasoning behind creating the new dedicated fund.
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