Andreessen Horowitz’s Crypto Fund Just Made Its Biggest Bet Yet
(Bloomberg) — Venture capital giant Andreessen Horowitz is putting more money into a startup that hopes to become the foundation for the next Internet.
The blockchain-based project, called Dfinity Foundation, raised $102 million in a private sale of tokens to accredited investors, bringing its total capital raised to more than $190 million. Other backers include Polychain Capital, SV Angel, Aspect Ventures, and Multicoin Capital. Andreessen Horowitz, which said Dfinity is the biggest position in its two-month old cryptocurrency fund but declined to disclose how much it invested, participated in the project’s previous funding round with Polychain.
The bet signals some investors are still willing to back blockchain projects despite this year’s slump in cryptocurrency prices. While initial coin offerings and venture capital investment both slowed in July, funding for blockchain companies has topped $16 billion this year, a record and more than double the amount raised in all of 2017, according to data compiled by CoinDesk Inc.
Dfinity’s team is the biggest reason why Andreessen Horowitz is betting on the project, Chris Dixon, a general partner at the firm who leads the crypto fund with Katie Haun, said in a telephone interview. Dfinity staff members include former Alphabet Inc. and Uber Technologies Inc. engineers, and Yale University Phds. Like many blockchain-based business models, investors will profit as Dfinity’s tokens increase in value, not from the project’s revenue, Dixon said.
Bitcoin, the world’s most popular cryptocurrency, was little changed on Wednesday near a three-week high. It’s down about 50 percent this year.
Venture investors in this and past rounds have bought Dfinity’s digital tokens, rather than equity. Tokens were sold for $4.18 each in this round, Dominic Williams, Dfinity’s president and chief scientist, said in a telephone interview. Coins worth about $35 million were also distributed for free to members of the community in what’s called an airdrop. Dfinity hasn’t done an ICO because of regulatory uncertainty, Williams said.
A beta version of the network is slated to launch in the first half of next year, Williams said, adding that funding will be used to develop the technology and promote the protocol. The organization has 46 employees and is expected to at least triple its head count over the next 12 months, he said.
“Our ambition is for the network to hold the next generation of software and services,” Williams said.