- Andreessen Horowitz is launching a $US300 million fund to invest in cryptocurrency companies and protocols, called “a16z crypto.”
- The top VC firm hired Katie Haun, a former prosecutor with the US Department of Justice, to lead the fund alongside partner Chris Dixon.
- The new crypto fund plans to invest consistently over time, even in the event of another “crypto winter.”
As the price of bitcoin slips to a 2018 low, top Silicon Valley venture firm Andreessen Horowitz shows it’s not backing down with the launch of a $US300 million venture fund, called a16z crypto, which will invest in cryptocurrency companies and protocols.
Leading the effort alongside partner and crypto fanatic Chris Dixon is Katie Haun, a former prosecutor who helped bring down corrupt agents on the Silk Road task force, as well as the head of BTC-E, a digital currency exchange popular with criminals.
Haun is the first-ever female general partner at Andreessen Horowitz.
The new crypto fund will invest in companies and protocols at all stages, from seed-stage pre-launch projects to fully developed later-stage networks like bitcoin and Ethereum. The firm said it plans to hold investments for over 10 years, which means it cares a lot less about the day-to-day fluctuations in price than about building long-term platforms and infrastructure that it hopes will serve billions of people someday.
The plan is to invest consistently over time, even in the event of another “crypto winter.” Bitcoin fell below $US6,000 on Sunday, reaching a new low for the year.
“We’ve been investing in crypto assets for five-plus years. We’ve never sold any of those investments, and don’t plan to anytime soon,” Dixon said in a statement.
Dixon believes that products and services built on the blockchain will someday be used by “hundreds of millions and eventually billions of people,” he told Business Insider.
“That takes time,” Dixon said. “We think that, in the same way that if you went back and invested in social networks 15 years ago, the right answer would have been to hold onto those investments for 10-plus years. It really took that long for those networks to kind of get to scale and for people to really realise their full value.”
While other traditional venture firms were slow to get into crypto, Andreessen Horowitz has been making bets on blockchain technology since 2013.
The young venture firm led the Series B funding round for Coinbase, an online platform for buying, selling, and storing digital assets that added thousands of users a day during the bitcoin price bull run of 2017. It’s the largest bitcoin exchange in the US.
Andreessen Horowitz has shifted its strategy slightly from early investments in bitcoin mining and exchanges, like Coinbase, toward new foundation-layer protocols, cryptocurrencies, and decentralized applications. In 2018, the firm put $US12 million into Cryptokitties, one of the first successful games built on the blockchain.
It also participated in a $US61 million funding round for the Dfinity blockchain project, a not-for-profit foundation that’s building a crypto-powered “internet computer.”
Haun said she’s especially interested in applications that use blockchain technology to put people in control of their own data, for reasons around security and privacy.
“The basic architecture of crypto is to give power back to individuals. And I think there are a lot of promising ideas that we’re hearing about just now,” Haun said.
Before joining the firm, Haun spent over a decade as a federal prosecutor with the US Department of Justice, where she focused on fraud, cybercrime, and digital assets. She is perhaps best known for her role in the criminal investigation around Silk Road, the notorious online black market that sold everything from heroin to fake passports.
Haun prosecuted – and convicted – two federal agents who were working undercover to investigate Silk Road, while stealing millions of dollars worth of bitcoin.
Haun, who also sits on the board at Coinbase and HackerOne and teaches at Stanford, said the transition from prosecutor to venture capitalist has felt natural.
“I think fundamentally being a prosecutor is in sourcing out the good from the bad,” Haun said. “So I think when my team is talking about separating out the wheat from the chaff, in terms of projects and people, just having that sense will translate well.”