Andreessen Horowitz, the Silicon Valley enterprise capital group, is betting on crypto to interrupt up the extreme focus of Massive Tech energy that the agency performed a outstanding position in creating, in response to one in every of its main companions.
Chris Dixon, founding father of Andreessen’s crypto arm, mentioned the web had led to energy being held by a handful of firms together with Fb and Twitter, which the enterprise capital group backed at an early stage.
“I don’t suppose that any of us anticipated this stage of focus,” he advised the Monetary Occasions’s Tech Tonic podcast. “I don’t suppose it is a good end result, each societally and from a enterprise standpoint, as a result of our enterprise is investing in entrepreneurs . . . the thought of getting the web managed by 5 firms may be very dangerous for entrepreneurs and dangerous for VCs.”
His feedback come because the agency is searching for to hone a brand new funding technique constructed round cryptocurrencies and digital tokens to interchange the standard fairness investments made by VC companies and create a brand new, community-led mannequin for investing in high-growth start-ups.
Proponents of the Web3 motion declare decentralisation will shift the stability of energy away from centralised platforms and in direction of customers.
Nevertheless, critics warn companies reminiscent of Andreessen will use the brand new expertise to create a brand new technology of web gatekeepers.
“The online is simply changing into re-centralised within the arms of a small few buyers, or in some instances the identical actual individuals who maintain a lot energy within the present internet,” mentioned Molly White, a software program engineer and outstanding critic of Web3.
The enterprise capital agency’s co-founder Marc Andreessen is one in every of Fb proprietor Meta’s longest-serving board members. The agency made $78mn from its seed funding in Instagram when it was acquired by Fb in 2012, a 300 per cent return.
The agency additionally invested $80mn in Twitter earlier than it went public, and was among the many monetary backers of Elon Musk’s preliminary bid for the platform earlier this 12 months.
Dixon believes blockchain expertise gives safeguards towards anti-competitive exercise by constructing guidelines into good contracts written into the pc code.
“After all, [business people] will attempt to create monopolies and massive companies and maximise shareholder worth,” he added. “What we will do to create a greater web is create new techniques the place the community results accrue to the neighborhood as an alternative of to firms.”
Since its crypto fund was launched in 2018, Andreessen has raised greater than $7.6bn to spend money on cryptocurrencies and associated expertise firms.
As a substitute of receiving conventional fairness, it has been investing in tokens, a type of digital asset constructed on the blockchain, which may be traded.
“It’s a fully completely different sort of financial mannequin in Web3 during which our investments are principally in tokens as an alternative of firms,” Dixon mentioned. “And that was a giant change. That could be a large a part of why we created a separate crypto fund . . . it requires a complete completely different authorized construction.”
Andreessen’s portfolio contains the crypto trade Coinbase, NFT market OpenSea, and Flowcarbon, a crypto carbon credit score enterprise arrange by former WeWork chief government Adam Neumann.
Dixon mentioned crypto was a possibility for brand spanking new entrepreneurs and start-ups, as firms reminiscent of Amazon and Google concentrate on different rising applied sciences reminiscent of synthetic intelligence and digital actuality.
“I’ve seen no proof that [dominant] firms will muscle in,” he added. “We’ve got a a lot wider berth for our start-ups to function, as in comparison with areas like AI and digital actuality, the place the incumbents are making important investments.”
Whereas cryptocurrency values had been in a gradual downturn since late final 12 months, the market plummeted in Might after the collapse of the terraUSD stablecoin. Market instability drove the worth of bitcoin to pre-pandemic ranges and contributed to the collapse of various crypto lenders and hedge funds.
Dixon mentioned the downturn had made Web3 investments extra interesting.
“There are a number of nice entrepreneurs getting into the area, there are a number of nice concepts and costs are decrease,” Dixon mentioned. “In enterprise capital, you’re hopefully shopping for low and promoting excessive . . . so my expertise has been downturns have been alternatives.”
Extra reporting by Jemima Kelly
You may take heed to the complete interview with Chris Dixon on the FT’s Tech Tonic podcast