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Chain News ChainNews (ID: chainnewscom)

With big funds in hand, big vision in mind, and big investments—in the investment track of this emerging field of blockchain, are those traditional venture capital institutions in Silicon Valley big leeks or big winners? As Andreessen Horowitz (a16z), a legendary institution in the Silicon Valley venture capital circle, announced the establishment of a second crypto asset investment fund with a capital scale of more than $500 million at the end of the first quarter, such questions have been asked again and again.

In the field of traditional Internet investment, a16z has become a legend in the Silicon Valley venture capital circle because of its brilliant achievements in investment history, eclectic investment philosophy and bold and innovative investment decisions. In the cryptocurrency world, a16z is also an early risk taker. The full text of the Bitcoin white paper written by Satoshi Nakamoto is hung on the wall of the company’s Silicon Valley office. It has been in the encryption field for nearly 7 years. “Long-term investment” and “all-weather investment” are its investment concepts for the encryption field. , just as it insisted on practicing in the previous long bear market, regardless of the market and market conditions, it is "firmly optimistic about the cryptocurrency and blockchain fields."

It is time for a16z to sort out its investment history, investment logic and latest investment business map in the field of encryption assets and blockchain. Let’s see how a16z tries to continue writing its past in the field of encryption Investment myths, and thinking about these questions: How should traditional venture capital institutions deploy in a new field like blockchain? What are their chances of success?

A culture is not a set of beliefs. It’s a set of actions.

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As the global economy slows down, a16z’s crypto investment business accelerates its expansion

In a16z's corporate culture, words are empty and action is the most important thing.Culture is not a set of beliefs but a set of actions.Since entering the field of encryption investment, a16z has been proving its importance and continuous investment in this emerging technology field with practical actions.

At the end of 2019, research institutions X-Order and Lianwen launched the "

"The report shows that among the more than 300 venture capital funds involved in the investment in the cryptocurrency primary market, a16z ranks first in the overall list, which shows that in the past few years, a16z's investment activity, investment continuity and senior practitioners The overall weighted score of indicators such as word-of-mouth and other indicators is the highest.

The report also shows that a16z is the most enthusiastic lead investor among many crypto funds. Funds that lead the investment usually have more say in investment transactions and are likely to obtain better transaction prices, but leading the investment also means that they have a larger proportion of the initial investment amount, and at the same time need to undertake more in the follow-up related affairs. Therefore, frequent leading investment fully demonstrates a16z's determination and courage to invest in the encryption field.

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High-profile launch of the second encryption fund, expanding the scope of encryption investment business

The newly established second encryption fund with a scale of up to 515 million US dollars has exposed a16z's ambition and determination in the encryption investment track. On April 30, Chris Dixon and Katie Haun, two general partners of a16z, jointly issued a document announcing the establishment of this encryption fund, saying that the new fund will continue to focus on blockchain and cryptocurrency businesses, and also highlighted that a16z is Five areas of encrypted assets to focus on: next-generation payment systems, Bitcoin, DeFi, new business models based on cryptocurrencies, and Web 3.0. So far, a16 has managed a total of USD 865 million in encryption funds.

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Build a cryptocurrency entrepreneurship school and deepen venture capital services

a16z has become a myth in the investment circle not only because of its amazing investment results, but also because of its unique and high-quality venture capital services and its accumulated industry influence.

In October last year, a16z first announced the launch of the "Crypto Startup School" (Crypto Startup School) program, a free seven-week educational program for cryptocurrency upstarts on "how to build a crypto business." In other words, a16z hopes to use its successful entrepreneurial and management experience and abundant resources to help more crypto start-ups grow stronger.

Most of the speakers at the Crypto Startup School are outstanding entrepreneurs, investors and operators in the field. Including a16z general partner Chris Dixon and advisor Dan Boneh, as well as executives from well-known venture capital and technology companies such as Paradigm, Union Square Ventures, Galaxy Digital, Facebook's Calibra, and Coinbase.

Zhen Tianhong, the founder of the computing power derivatives platform Honeylemon, is one of the selected students. She told Lianwen that the course layout not only has the basis of blockchain and cryptocurrency, but also includes the sharing of how to start a business. "The entire project design is based on popular science concepts, inspiring innovation, and free teamwork. The main content of the course is to invite experts in the digital currency industry to give lectures, or to hold talks, and there are also interactions between students and instructors. There are offline courses, as well as Online. In the remote classroom, students conduct design thinking-oriented brainstorming in the form of workshops, share project progress together, and answer each other’s questions.”

These students have scattered backgrounds, many of them are from Internet giants such as Google, and many are entrepreneurs of entrepreneurial projects in Silicon Valley and around the world, and many of them are from well-known blockchain projects such as Coinbase, 0x, Handshake, and Numerai. Core developer and cryptographer.

Zhen Tianhong said that her biggest achievement in this project organized by a16z is that she has found many "like-minded" friends. At that time, she took her own decentralized computing power derivatives entrepreneurial project Hashedge to participate in the course, in which she accidentally met and recruited key members of the core product Honeylemon of the Hashedge project, and two a16z students joined the second phase of the Hashedge project Work.

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Continue to expand investment portfolio and talent team

In addition, in March this year, a16z also completed additional investment in Arweave, a blockchain storage protocol that focuses on permanent storage services. This round of financing totaled US$8.3 million. In addition to a16z, investors also included Union Square Ventures and Coinbase Ventures. And a16z also led Arweave's last round of financing of $5 million at the end of last year.

In addition, a16z's talent team is also growing. In March of this year, Arianna Simpson, founder and managing director of Autonomous Partners, an investment fund for cryptocurrencies and digital assets, announced that she would officially join a16z as a partner. Arianna Simpson founded Autonomous Partners in 2018 and raised tens of millions of dollars in funding from Coinbase CEO Brian Armstrong, Union Square Ventures and others. Since then, Autonomous Partners has invested in many of the same founders and companies as a16z, and Arianna Simpson believes that the alliance with a16z will be "very meaningful."

At the same time, a16z's "alumni" network is also expanding. Recently, former a16z partner Jesse Walden established a new venture capital firm, Variant Fund, dedicated to building an "ownership economy" driven by cryptocurrencies. Jesse Walden said that he will cooperate with entrepreneurs and the community in the early stage, and has already received the support of Chris Dixon and Marc Andreessen, general partners of a16z, Union Square Ventures and Robert Leshner, founder and CEO of Compound, and has carried out invested.

Actively prepare talent funds to accelerate the absorption of entrepreneurial talents

a16z also launched a "talent fund for entrepreneurs", but this fund did not specify which investment areas it will focus on. On June 3, a16z officially announced the launch of the "Talent x Opportunity Fund" (TxO Fund for short), which is specifically aimed at entrepreneurs who are talented, motivated, and have ideas but lack background and resources. a16z can not only provide seed funding, but also provide a16z's knowledge network and business network through training programs and other means. Investments are exchanged for equity in the business, while 100% of the return on investment remains in the fund for other investments.

In order to prepare for this special fund, a16z has conducted research for six months, including building prototype models, formulating training plans, doing research, looking for hidden geniuses in Silicon Valley, and so on. The TxO fund will be led by Nait Jones, a partner at a16z. The fund has already received $2.2 million in donations from a16z partners. TxO plans to invest in a small group of seed-stage startups in the first year and gradually scale up in the next few years. .

The beginning of a16z investment myth

a16z is one of the few venture capital giants involved in cryptocurrencies. Its large-scale layout in the field of cryptocurrencies and blockchains is due to its brilliant achievements in traditional Internet venture capital, and it is also due to its nearly ten years of experience Foresight and foresight precipitated in the rapid rise. If you want to understand a16z's amazing courage and determination, you need to understand the background and development history of this legendary venture capital.

Like most well-known American VCs, a16z is also turned from a successful entrepreneur. The full name of a16z "Andreessen Horowitz" is named after the surnames of the two founders, Marc Andreessen and Ben Horowitz.

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Marc Andreessen and Ben Horowitz

Marc Andreessen is a typical technical genius. He started to contact computers at the age of 9 and taught himself Basic language. In April 1994, Andreessen, who had just graduated from university, co-founded Mosaic Communications (the predecessor of Netscape) with American computer scientist James Clark. A few months later, the Mosaic web browser developed by Andreessen successfully occupied 80% of the browser market The above share, Mosaic Communications was successfully listed in August 1995, and its market value was once as high as 3 billion U.S. dollars. However, Netscape (Netspace) eventually lost to Microsoft in the first browser war and was forced to sell in 1998. to America Online (AOL), but the JAVA, SSL, cookie and other technologies left by it have been used by the industry, and Andreessen is also known as "the igniter of the Internet".

After that, in 1999, Andreessen and Ben Horowitz, who was a project manager at Netscape before, founded Loudcloud, which mainly provides Internet infrastructure services. After the Internet bubble, it transformed into Opsware, a software service industry, and was successfully sold to HP in 2008 for $1.6 billion.

In July 2009, Marc Andreessen and his old partner Ben Horowitz jointly founded the venture capital fund Andreessen Horowitz, officially entering the investment circle from the entrepreneurial circle. At that time, the financial crisis had just passed, and the investment industry was in a slump. The two founders still bucked the trend and raised a fund of about 300 million US dollars. With years of successful entrepreneurial experience, extremely high technical acumen, and reputation in Silicon Valley, they began to build Belong to their own investment empire.

Andreessen Horowitz, abbreviated as "a16z", is named after the initial letter "a", the last letter "z" and the combination of 16 letters in the middle. Facts have proved that the arrival of a16z quickly set off a revolution in the entire industry.

Soon, a16z quickly became famous for investing in well-known companies such as Facebook, Twitter, Skype, and Groupon, and made early investors get rich returns. In November 2010, the New York Times reported that a "new generation of venture capitalists" represented by a16z is trying to "shake up an industry that needs to change."

In just a few years, a16z has continuously increased its investment frequency and quantity, and has taken a place in almost every important investment case. Its assets have accumulated from the initial 300 million start-up capital to more than 4 billion US dollars, and it has invested in well-known Skype, Airbnb, and Jawbone. , Buzzfeed, Foursquare, Groupon, Pinterest, Zynga and other more than 90 companies have leapt to the ranks of top investment institutions, and are on par with established venture capital institutions such as Accel, Benchmark, Greylock, Kleiner and Sequoia.

Among a16z's 180 investments in the first three years, about 120 were at the "seed stage". A16z not only invested in many high-valued companies, but also made decisive investments in these companies before they were well-known. It can be said that the real Bole of start-ups.

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a16z's heart, ambition and determination to invest in the encryption track

The most important ability of an investor is the ability to judge and foresee the future.

a16z is one of the first venture capital firms to enter the field of encryption technology. They keenly grasped the huge potential of this emerging field and quickly allocated resources to devote themselves to it.

Since 2013, a16z's investment tentacles have extended into the encryption field, successively invested in Ripple and Coinbase, and made a high-profile investment of US$25 million to participate in Coinbase's B round of financing. In 2014, when Bitcoin was still full of controversy and doubt, a16z decisively invested another 25 million US dollars.

In June 2018, a16z officially launched a special encryption fund "a16z crypto" of up to 350 million US dollars, focusing on investment in enterprises, tokens and technical agreements in the blockchain field. There are two people at the helm of this fund:

One is the expected Chris Dixon, a well-known opinion leader and investment expert in the field of cryptocurrency, a senior expert who has long focused on investment in the field of cryptocurrency, and has also been an investment leader in the blockchain field within a16z. The firm's investments in cryptocurrency exchange Coinbase and cryptocurrency fund Polychain Capital.

The other is Kathryn Haun. It is worth mentioning that the female co-helmsman is a former federal prosecutor of the US Department of Justice. She is new to a16z and is the first woman in the nine-year history of a16z. partner.

Both Chris Dixon and Kathryn Haun are general partners of the a16z company, and both are eligible to attend the company's partner meetings and draw remuneration from the company.

The establishment of "a16z crypto" largely demonstrates a16z's determination to take root in the encryption field. The establishment of a separate encryption fund will allow a16z to bypass the investment limit allowed by US law and facilitate participation in various forms in the cryptocurrency field. invest.

a16z believes that cryptocurrency will be one of the new trends, and its official website also clearly describes the internal logic of investing in the blockchain and encryption fields:

We believe that the three major trends in the new era (next-generation computing platforms, AI, and digital currency) will intersect and strengthen each other just like the three major trends in the previous era (mobile phones, social networking, and cloud).

Chris Dixon, the helm of a16z crypto, has repeatedly talked publicly about his optimism about the blockchain. He recognized the blockchain technology, because the blockchain changed the principle of Internet governance from "do not be evil" to "cannot be evil". In his opinion, “The most interesting thing about blockchain technology is that it can provide richer and more advanced protocols. They have the best features of Web 1.0—decentralized governance: rules are fixed, people can Create and invest on this basis.”

a16z brings its successful experience of traditional venture capital to the crypto world, while constantly adapting to the changes brought about by this emerging field.

In April 2019, a16z announced that it would give up its status as a VC fund company, and all 150 employees were registered as financial advisors (FA), which is a major transformation of a16z.

• On the one hand, the shift from VC to FA will help a16z bypass regulatory restrictions and be allowed to invest in a higher proportion of "high-risk assets."

• According to the regulations of the US SEC, VC's investment in high-risk assets such as cryptocurrencies and secondary market stocks cannot exceed 20% of its total fund size, while FA's investment in cryptocurrencies can reach 50%, and it is registered as an investment consultant. , a16z's ambition and determination to intervene in high-risk encrypted digital currencies can be seen.

• On the other hand, the transformed a16z can get rid of the restrictions of the VC business model to a large extent, and choose a variety of profit methods. Through the identity of FA, a16z can:

Conduct securities transactions directly among their portfolio companies and participate in the trading of digital currency/token assets;

Recommend securities and investment products to portfolio companies.

This move undoubtedly paved the way for a16z to increase its investment in the encryption field. a16z is no longer a traditional VC, but more like a Wall Street investment bank. Because a16z realizes that there will be more and more blockchain start-ups in the future, and their financing methods are no longer traditional VC equity financing, a16z must change its identity in order to participate in more radical and riskier ventures. Highly diversified investment activities. The switch will allow a16z to invest as much as $1 billion in riskier investments such as cryptocurrencies or other digital assets, according to Forbes.

In April 2020, a16z launched its second encryption fund of US$515 million, and admitted that it will focus on five major branches of the encryption field, including next-generation payment systems, Bitcoin, Defi, new business models based on encrypted tokens, and Web 3.0. So far, the crypto funds managed by a16z have accumulated a total of 865 million U.S. dollars, which kicked off the further expansion of its crypto investment landscape.

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In the past 7 years since entering the encryption field and investing in the track, a16z has invested in no less than 40 blockchain projects.

The investment stage includes multiple stages from seed fund (seed), venture capital (venture) and growth stage fund (growth stage), covering public chain, stable currency, exchange, payment and other fields, including Bitcoin, Ethereum, MakerDAO , Coinbase and other early blockchain projects, as well as rising stars such as Compound, Celo, and OASIS Labs.

Lianwen sorted out a16z's investment in the encryption field and made a portfolio map.

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• Some investment cases of a16z in the encryption field

• As can be seen from the above investment portfolio, in addition to investing in a small amount of encryption funds (such as Polychain Capital, Blocktower), in the encryption field, a16z invests mostly in infrastructure projects, especially those that focus on blockchain underlying protocols and Large-scale smart contract platform projects, including Ethereum smart contract platform, public chain Near Protocol, decentralized computing platform Dfinity, decentralized service platform AVA Labs, decentralized domain name service platform Handshake, and enterprise-level blockchain platform Anchorage, Axoni, TradeBlock, etc., in addition to decentralized storage protocol projects like Filecoin and Arewave.

• In addition, a16z also prefers blockchain projects anchoring the future financial services field, and there are three types of projects in its portfolio that fall into this field:

The second is to target three major projects in the global payment field: Ripple, a distributed payment protocol, Libra, a digital currency project launched by Facebook, and Celo, an open source platform for financial applications.

Finally, Harbor, a tokenized securitization platform, and TrustToken, a stablecoin project, are also included.

a16z seems to seldom invest directly in blockchain applications, but it is not completely uninvolved in application projects. In 2018, a16z invested in Dapper Labs, the developer of the famous DApp application CryptoKitties (Encryption Kitties), but Dapper Labs is also investing in Platform-based enterprise transformation; in addition, a16z also invested in the blockchain game platform Forte in March 2019.

a16z's unique encryption investment service logic

In the course of more than ten years in Silicon Valley, a16z seems to have been embracing and promoting changes, and in the midst of countless transformations and changes, a16z has shown its own unique and stable investment style and investment logic.

Unknowingly, a16z has actually left a distinct investment image in the venture capital circle. After consulting a lot of information, Lianwen summed up the following "investment characteristics" displayed by a16z on the encryption investment track.

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Adhere to "long-term" investment and "all-weather" investment

Long-term investment and all-weather investment are investment concepts that a16z has publicly emphasized many times.

We are long-term and patient investors. We have invested in encrypted assets for more than 5 years, but have never sold/cashed out such investments, and do not plan to sell them in the near future. We formed the a16z encrypted fund in the hope of being able to hold 10+ years investment.

Indeed, as they said, they did not cash out these blockchain projects at the high point of the market, but have been holding them and growing together with these blockchain startups.

In addition, a16z also emphasized that their crypto fund is an "all-weather" fund and will continue to invest during this time regardless of market conditions and crypto prices. Even in the "crypto winter", will continue to actively invest. During the long crypto bear market from 2018 to 2020, a16z has continued to expand its crypto investment business, established two high-profile crypto funds with a cumulative management of more than 800 million US dollars, and has invested in no less than 40 blockchain and cryptocurrency projects .

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Favor technology flow hard-core blockchain projects, and spare no expense to seek "dark horses"

Perhaps because the founder of a16z is a technology entrepreneur himself and has been immersed in the field of Internet technology for many years, a16z's encryption portfolio also particularly favors infrastructure and "technical flow" hard-core blockchain projects. For example, Dfinity, Oasis labs, NEAR Protocol, Handshake, Ripple, Libra, etc., all of them have excellent technical teams and innovative technical concepts.

In addition, in the traditional venture capital circle, many venture capital companies have been complaining that a16z is too "lavish" in investment. When it wants to invest in a company, it seems that it doesn't care about the price, causing other venture capital competitors to follow suit. Over time, the industry has dubbed this situation the "Andreessen Horowitz Effect."

In the field of traditional Internet investment, the "Andreessen Horowitz Effect" once shook the entire Silicon Valley VC community. Many people have noticed that in some high-profile transactions completed by Andreessen Horowitz as the lead investor, the valuations are generally high. $), Foursquare’s $50 million round in 2012 (valued at $600 million), Fab’s $40 million Series B round (valued at $200 million), and more. In addition, in July 2011, the a16z family invested 100 million US dollars to complete the financing of Github (valued at 750 million US dollars at the time).

Other VC firms see these deals as examples of a16z overpaying. a16z responded that these deals are actually very good deals, and sharply pointed out that "after all, every venture capital firm that said we invested too much actually wished they had made the same investment in the first place."The investment in the encryption field seems to be the same, perhaps because many of the projects invested by a16z are strong in themselves, or it may be that the actual valuation has been pushed up in the competition of venture capital.A typical example is Dfinity. In early 2018, a16z led Dfinity's first round of financing of US$61 million, when the project was valued at US$1.9 billion.

Lianwen Note: About the reason why Chris Dixon bet on Dfinity, you can read "

"Learn more about.

Chris Dixon, head of the a16z crypto fund, said the Dfinity team was the most important factor in the fund's investment choices. The Dfinity team includes former Google and Uber engineers and several Yale PhDs, including Andreas Rossberg, one of the co-designers of WebAssembly, the acceleration technology used by major Internet browsers today. Dixon pointed out that WebAssembly may be one of the most important technologies of the last 10 years. In addition, Dixon believes that the valuation of nearly $2 billion in the previous round of financing is reasonable considering the huge multi-trillion-dollar commercial market that Dfinity will face in the future. Soon, a16z led Dfinity’s second round of financing at $102 million a few months later, at an undisclosed valuation.

There is a basic thesis behind a16z's investment strategy, that is, no matter what year, more than 90% of the investment returns will come from only 15 companies. They know that a good venture capital company does not mean fewer failed investment projects, but more investment projects that can achieve great success. Therefore, a16z often looks for and enters such potential companies regardless of the cost.

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High proportion of follow-up investment, continue to raise potential projects

Perhaps it is because a16z is willing to continue to increase its stake in projects that it is optimistic about, and is keen to support projects that it has been optimistic about. In recent years, more than half of a16z's investment cases are additional investments.

Coinbase is one of a16z’s early successful crypto investment projects. In the Coinbase project, a16z’s chasing investment style can be said to be vividly displayed. After participating in Coinbase’s A and B rounds of financing in 2013, and in 2015 And in 2018, it successively pursued the C and E rounds of financing with a scale of US$75 million and US$300 million.

The same is true for Dapper Labs, a blockchain game development platform, and OpenBazzar, a decentralized e-commerce platform. The following two rounds of financing were invested with a scale of 15 million and 11 million. a16z also participated in OpenBazzar's two seed rounds and the A round of financing.

In addition, a16z has invested in many other projects for more than two rounds, including MakerDAO, Compound, Dfinity, Arweave, Anchorage and other well-known projects.

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Perfect post-investment management and service

a16z's investment vision is to "support those bold entrepreneurs to create the future through technology", and the support they provide is not only financial support, but also continuous support for business management and operations. Build post-investment value-added services as the company's core competitiveness.

The official website of a16z specifically emphasizes that the encryption and non-encryption fields "share the same operation team of more than 80 people in a16z". The operation team of a16z has profound expertise in executive and technical recruitment, regulatory affairs, communication and marketing, and many entrepreneurial management. The original intention of establishing this team is to leverage their existing successful experience, network resources and industrial relations The network conducts efficient post-investment management and guidance for the projects it invests in.

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Part of the a16z encryption team

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summary

Anyone who has known a16z is amazed at its huge investment portfolio and fruitful investment results, and hopes to analyze its investment logic and success secrets. In fact, for many years, what a16z has insisted on doing is just the simplest original intention of venture capital, that is: try to make it easier for innovators to bring their innovative ideas to the market.

Investment institutions rely on performance, and the best way to build performance is precisely to help the CEO of a start-up company build the best company, so that venture capital is expected to obtain high returns.