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A $1 billion crypto fund could be on its way from Andreessen Horowitz

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Building on its previous crypto involvement, VC firm Andreessen Horowitz is now reportedly gathering thunder for another fund, according to an article from the Financial Times, or FT.

“The new fund, Andreessen’s third that is focused on cryptocurrency investments, is aiming to raise between $800m and $1bn from investors, according to four people with knowledge of the process,” FT wrote on Friday.

A Venture Capital, or VC, firm, Andreessen Horowitz also operates under the name a16z. The entity is active in the crypto and blockchain sector, and has invested in a number of projects. It plans to aim the new fund’s capital toward crypto industry projects and digital assets, FT reported.

The VC player was also a heavy investor in Coinbase, which recently went public on April 14. Andreessen Horowitz has offloaded about $120 million of its Coinbase stock, although it held roughly $11 billion in the asset at the time of its listing, according to regulatory filings cited by FT.  

In April 2020, headlines surfaced regarding the entity’s pursuit of $450 million for its second crypto-specific fund. The firm ended up securing $515 million. 

The crypto space overall has seen considerable capital inflows over the past year, evident in the industry’s $2 trillion asset market cap valuation, which it reached in April 2021.

A $1 billion crypto fund could be on its way from Andreessen Horowitz

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Andreessen Horowitz leads $23M round for NFT marketplace OpenSea

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OpenSea, one of the largest digital collectible marketplaces, has secured backing from venture capital firm Andreessen Horowitz, or a16z, and others in a new funding round.

According to Andreessen Horowitz, the firm is leading a $23 million Series A round for OpenSea alongside a16z’s Cultural Leadership Fund, as well as angel investors Ron Conway, Mark Cuban, Tim Ferriss, Belinda Johnson, Naval Ravikant, Ben Silberman, and others.

“OpenSea makes NFTs searchable, usable, and organized,” said a16z general partner Katie Haun. “But it goes further and provides a marketplace that brings all platforms together and eases transactions among all parties, the way eBay and Amazon do.”

The venture capital firm cited OpenSea’s growth in its decision to back the non-fungible token, or NFT, marketplace, saying it had been “off the charts” in the last six months, with transaction volume having grown 100-fold. In addition, a16z praised the marketplace’s leadership, including CEO Devin Finzer and CTO Alex Atallah.

As one of the first venture capital firms to enter the space, Andreessen Horowitz has invested in a variety of crypto projects so far, including Libra, Maker DAO, and Coinbase. Last month the firm backed Optimism’s L2 scaling solution.

This story is developing and will be updated.

Andreessen Horowitz leads $23M round for NFT marketplace OpenSea

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Andreessen Horowitz just closed its second crypto fund

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Two years ago, the venture firm Andreessen Horowitz (a16z) took the wraps off a dedicated crypto fund from a subset of its limited partners, who’d provided the firm with $300 million in capital commitments. Now, the firm says it has closed a second fund in the same vein, this time with $515 million in capital commitments.

As general partner Chris Dixon — who leads the fund with general partner Katie Haun — tells Fortune: “It’s very rare that major, new computing paradigms come along, and we think this is on the scale of cloud and mobile for the Internet.”

Certainly, the firm has less competition for crypto deals at the moment than it might have back in 2018. Many VCs pulled back last year, with overall funding in 2019 down 28% from 2018’s peak of $4.3 billion, according to CB Insights.

Bitcoin and the cryptocurrency markets were also hammered, along with the broader stock market in a downturn sparked by the COVID-19 crisis, causing some to conclude they are as vulnerable to a lot of other instruments to stock market shifts.

A big upswing since — along with this obvious endorsement by a16z — could turn those trends around, however. Indeed, the entire market capitalization of cryptocurrencies jumped $35.3 billion in 24 hours as of 2:19 p.m. Singapore time, according to data from CoinMarketCap.com and reported by CNBC.

Bitcoin, specifically, which fell below $4,000 last month, shot up to $9,388.30 by earlier today (though, as this is being written, it has slipped to $8,695.41).

Industry participants attribute the rally to central bank monetary policy and the “bitcoin halving” that’s expected next month, when for the third time in the network’s history, the reward for mining a block will be divided by two.

Andreessen Horowitz has invested directly in cryptocurrencies like Bitcoin and Ethereum, along with a range of other bets that include Coinbase, the crypto lender Compound and Anchorage, a cryptocurrency custody service.

It’s also a member of both the Libra Association and the Celo Alliance for Prosperity, both of which are inviting developers to build decentralized mobile apps that are based on their own cryptocurrencies.

To drum up even more deal flow, a16z last month kicked off a free, seven-week program for cryptocurrency startups that aims to educate and “supplement — not replace — the many other excellent programs and resources that help founders learn about building tech startups,” Dixon wrote of the school late last year.

The firm isn’t taking equity in the startups as part of the program, it says. Instead, it’s apparently looking to build connections to and between founders who it might want to work with it in the future.

Read more: https://techcrunch.com/2020/04/30/andreessen-horowitz-just-closed-its-second-crypto-fund/

Libra rival Celo launches 50-member Alliance For Prosperity

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Some Libra Association members like Andreessen Horowitz and Coinbase Ventures are double-dipping, backing a competing cryptocurrency developer platform. Launching today with over 50 partners, non-profit The Celo Foundation’s ‘Alliance For Prosperity’ offers a way for developers to build decentralized mobile apps that are based on Celo’s blockchain platform and USD stablecoin.

The open-source Celo platform is still in testing with plans to officially launch its mainnet in April. The non-profit founded in 2017 has raised $36.4 million, including its Series A where Andreessen Horowitz’s a16z Crypto bought $15 million worth of Celo Gold tokens.

The biggest differentiator of Celo’s network versus other blockchains is that payments in the Celo Dollar stablecoin can be sent to people’s phone numbers rather than complicated addresses. The goal is to make delivering utility via blockchain easier by building a flexible network of applications that doesn’t scare regulators like Libra has.
The Alliance For Prosperity includes Andreessen Horowitz (which funded Celo), Coinbase (Ventures), Bison Trails, Anchorage, and Mercy Corps — all of which are also Libra Association members. That could potentially create a conflict of interest regarding which cryptocurrency and developer platform they promote to their portfolio companies, integrate into their products, or focus on for delivering financial services to the needy.

Other high-profile Alliance partners include Carbon, GiveDirectly, Grameen Foundation, Maple, and Polychain. Partners have made a somewhat vague commitment to “backing development efforts of the project, building infrastructure, implementing desired use cases on the platform, integrating Celo assets in their projects, or collaborating on education campaigns in their communities to further advance the use of blockchain technology” according to Chuck Kimble, Celo’s cLabs head of business development and head of the Alliance. Anyone can apply to join the open network, and there’s no minimum financial investment like Libra’s $10 million prerequisite.

Celo isn’t trying to replace the dollar with its own synthetic currency, and its reserve is backed with other cryptocurrencies rather than fiat cash. That might make it more acceptable to regulators who were worried that Libra’s token and fiat currency bundle-backed reserve could impact the global financial system. The first of the decentralized apps on the platform, the Celo Wallet, is already available for iOS and Android.

Like many blockchain projects, there are some lofty intentions for social impact with Celo. Use cases include “powering mobile and online work, enabling faster and affordable remittances, reducing the operational complexities of delivering humanitarian aid, facilitating payments, and enabling microlending” says Kimble. The real driver of this potential is Celo’s promise of much lower transaction fees than traditional middlemen charge.

When asked what the biggest threats to Celo’s success are, he told me “Banking infrastructure improving faster than we expect” and “Mobile adoption or LTE data not expanding on their current trajectory.” He did not mention the developer fatigue, regulatory scrutiny, technical complexity, or slow adoption of blockchain utilities that have plagued other crypto for good projects.

Here’s the full list of members working towards these goals:

Abra, Alice, AlphaWallet, Anchorage, Appen, Ayannah, Andreessen Horowitz, B12, BC4NB (Blockchain for the Next Billion), BeamAndGo, Bidali, Bison Trails, Blockchain Academy Mexico, Blockchain.com, Blockchain for Humanity (b4h), Blockchain for Social Impact (BSIC), Blockdaemon, Carbon, cLabs, CloudWalk Inc, Cobru, Coinbase, Coinplug, Cryptio, Cryptobuyer, CryptoSavannah, eSolidar, Fintech4Good, Flexa, Gitcoin, GiveDirectly, Grameen Foundation, GSMA, KeshoLabs, Laboratoria, Ledn, Maple, Mercy Corps, Metadium, Moon, MoonPay, Pipol, Pngme, Polychain, Project Wren, SaldoMX, Semicolon Africa, The Giving Block, Utrust, Upright, Yellow Card, and 88i. [Update: Ledger joined this morning.]

“Many of these organizations have on-the-ground operations that will begin to get Celo into the hands of those who have been underserved by the current global financial system” Andreessen Horowitz general partner Katie Haun told me. “Our hope is that this partnership will start unlocking the potential of internet money”. To spur adoption, the Alliance will distribute ‘Prosperity Gifts’ in the form of financial grants to developers proposing Celo products that would benefit society. 

There are also some peculiar characteristics of Celo’s system. People exchange other cryptocurrencies for Celo Gold, then exchange that for Celo Dollars they can spend, though they can get Celo Dollars from other exchanges too. The reserve is backed with other cryptocurrencies like bitcoin and ethereum rather that fiat, and doesn’t have to be fully collateralized though the protocol pushes towards full collateralization. That could make it vulnerable to a Celo bank run or crash in price of those currencies. Celo also lets arbitrageurs pocket the difference if Celo Gold and Celo Dollars get out of sync.

While it might not be a danger to the world financial system like Libra, it could be a danger to itself. At least on the anti-money laundering front, cLabs — the team that’s kicking off development of the Celo platform — has hired former Capital One head of enterprise risk management Jai Ramaswamy. Plus, the Celo founders come well pedigreed, including Marek Olszewski and Rene Reinsberg who spun out machine learning startup Locu from MIT and sold it to GoDaddy, as well as EigenTrust inventor and former MIT Media Lab professor Sep Kamvar.

So far, 130 teams have expressed interest in building on the Celo platform. For reference, Libra said 1,500 organizations had said they wanted to work on that project four months after its reveal. Celo Camp and Blockchain for Social Impact Incubator will also be fostering projects for the blockchain.

Celo could make banking cheaper and more accessible while power new fintech innovation. But for any of that to happen, it will need to get enough developers building truly useful products, make the blockchain and currency exchange simple enough for mainstream audiences in developing nations, and grow adoption to meaningful levels few cryptocurrency projects have yet achieved. The Alliance For Prosperity will have to throw their weight into this project, not just their names, if it’s going to succeed.

[Update 3/12 8:30am PT: Clarified that Celo Dollars can also be bought on exchanges and that the protocol attempts to maintain full collateralization.]

Read more: https://techcrunch.com/2020/03/11/celo-alliance-for-prosperity/

Arweaves permaweb stops coronavirus censorship, raises $8M

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The Chinese government has been removing criticism of its coronavirus response from apps like Weibo, the local equivalent of Twitter. But before it can, that content is being saved, decentralized and highlighted thanks to Arweave’s permaweb. Today it’s announcing another $8.3 million in funding from Andreessen Horowitz, Union Square Ventures and Coinbase Ventures.

Arweave has developed a new type of blockchain based on Moore’s Law of the declining cost of data storage. Users pay upfront for a hundred years of storage at less than a cent per megabyte, and the interest that accrues will cover the dwindling storage cost forever. More than one million pieces of data are now stored on the permaweb, and nearly 200 apps have been developed.

That includes perma-apps like WeiBlocked, which crawls Weibo for content likely to be censored. It indexes these posts and decentralizes them in the storage of hundreds of Arweave nodes operated around the world. WeiBlocked later checks back to see if the content has been censored, and then highlights them on its permaweb site you can access from a standard web browser. “By censoring it, it puts it out of the control of the censor,” says Arweave founder Sam Williams. 

It’s like the Streisand Effect in product form. The act of censorship actually causes the sensitive content to become increasingly visible. The more the Chinese government tries to hide information about Dr. Li Wenliang, an early coronavirus whistleblower who was pressured into silence by Chinese police and later died of the sickness, the more attention it receives. Williams tells me he’s excited that WeiBlocked is “Putting the censorship protection of the network into practice.”

Funding the immutable future

The potential to become the unmutable layer of the internet attracted the new $8.3 million in funding just four months after Arweave raised its last $5 million from Andreessen Horowitz, USV and Multicoin Capital. Along with video chat apps, Arweave is one of the startups benefiting from the unfortunate ripple effects of the tragic coronavirus.

How Arweave’s Permaweb cheaply hosts sites & apps forever

Rather than providing traditional equity in exchange for cash, Arweave sold investors some of its cache of its blockchain’s tokens. These are what users spend to store data on the Arweave permaweb. There’s only a finite number in the market, so as demand for everlasting storage increases, so does the value of the tokens. Investors could later sell their stake to generate returns.

Arweave founder Sam Williams

But what’s especially interesting is how Arweave is employing these token economics to build out its developer ecosystem. “We can invest fiat dollars into developers, increasing usage of the network, thereby increasing the value of the tokens,” Williams explains. “That makes it sustainable so we can do it in the future, endlessly investing in the ecosystem.” As long as investments in developers cause Arweave’s token stash to accrue more value than the size of the investment, it will always have more to deploy. “We can make it recurring, indefinitely.”

Regarding the new $8.3 million, the startup writes, “This money is for you, the Arweave community. The founding team now sees it as our primary role to dispense these funds carefully to the community.” Specifically, it will dispense Arweave Grants to fund proposals for startups, projects, organizations and marketing initiatives that will grow permaweb usage. It’s also launching Arweave Boost, which gives $50,000 worth of free storage to startups and projects trying to build on the permaweb. Both resources come with technical guidance and mentorship from Arweave and its investors.

With more than 500 nodes in operation, Arweave supports decentralized blogging platforms, indestructible documents, a social network called FEEDweave and apps that can keep running even if their owners go out of business. Unlike Bitcoin, where miners are rewarded for storing or verifying just the latest block, Arweave’s blockchain incentivizes storage of old blocks on unused server space.

“WeiBlocked maintains an up-to-date list of politically sensitive search phrases and hashtags that are being censored in Weibo searches,” its creators Aidan O’Kelly and Sam Rahini tell TechCrunch. “WeiBlocked makes use of the ‘permaweb’ capabilities of the Arweave blockchain . . . This makes it impossible to block users within China from viewing the content in the WeiBlocked archive, as there is no one host or IP that can be blocked by the firewall (or attacked by CCP hackers).”

Williams believes Arweave has hit a tipping point, with a functioning economy that means the network will keep running even without his company’s involvement. “I find it increasingly easy to sleep at night. We’re just focused on pushing adoption and the question is ‘how fast’ not ‘if.’ It’s a truly decentralized network now.”

There’s always the risk of some yet-undiscovered code problems, or another permanent approach to the web undercutting Arweave. But with countries like Russia pushing new attempts to wall themselves off from the outside internet, there’s increasing need for Arweave’s network. “Activity is exploding, expectably around where censorship resistance can be valuable.”

Next, the permaweb community wants to safeguard itself from even a disruption of internet connectivity itself. There’s an initiative to make Arweave work over high-frequency radio. Through a Morse code-like system, sensitive content could be smuggled out of a country via radio, indexed, and kept accessible forever.

Read more: https://techcrunch.com/2020/03/05/coronavirus-censorship-arweave/

The crypto rich find security in Anchorage

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Not the city, the $57 million-funded cryptocurrency custodian startup. When someone wants to keep safe tens or hundreds of millions of dollars in Bitcoin, Ethereum or other coins, they put them in Anchorage’s vault. And now they can trade straight from custody so they never have to worry about getting robbed mid-transaction.

With backing from Visa, Andreessen Horowitz and Blockchain Capital, Anchorage has emerged as the darling of the cryptocurrency security startup scene. Today it’s flexing its muscle and war chest by announcing its first acquisition, crypto risk modeling company Merkle Data.

Anchorage Founders

Anchorage has already integrated Merkle’s technology and team to power today’s launch of its new trading feature. It eliminates the need for big crypto owners to manually move assets in and out of custody to buy or sell, or to set up their own in-house trading. Instead of grabbing some undisclosed spread between the spot price and the price Anchorage quotes its clients, it charges a transparent per transaction fee of a tenth of a percent.

It’s stressful enough trading around digital fortunes. Anchorage gives institutions and token moguls peace of mind throughout the process while letting them stake and vote while their riches are in custody. Anchorage CEO Nathan McCauley tells me, “Our clients want to be able to fund a bank account with USD and have it seamlessly converted into crypto, securely held in their custody accounts. Shockingly, that’s not yet the norm — but we’re changing that.”

Buy and sell safely

Founded in 2017 by leaders behind Docker and Square, Anchorage’s core business is its omnimetric security system that takes out of the equation passwords that can be lost or stolen. Instead, it uses humans and AI to review scans of your biometrics, nearby networks and other data for identity confirmation. Then it requires consensus approval for transactions from a set of trusted managers you’ve whitelisted.

With Anchorage Trading, the startup promises efficient order routing, transparent pricing and multi-venue liquidity from OTC desks, exchanges and market makers. “Because trading and custody are directly integrated, we’re able to buy and sell crypto from custody, without having to make risky external transfers or deal with multiple accounts from different providers,” says Bart Stephens, founder and managing partner of Blockchain Capital.

Trading isn’t Anchorage’s primary business, so it doesn’t have to squeeze clients on their transactions, and can instead try to keep them happy for the long-term. That also sets up Anchorage to be a foundational part of the cryptocurrency stack. It wouldn’t disclose the terms of the Merkle Data acquisition, but the Pantera Capital-backed company brings quantitative analysts to Anchorage to keep its trading safe and smart.

“Unlike most traditional financial assets, crypto assets are bearer assets: In order to do anything with them, you need to hold the underlying private keys. This means crypto custodians like Anchorage must play a much larger role than custodians do in traditional finance,” says McCauley. “Services like trading, settlement, posting collateral, lending and all other financial activities surrounding the assets rely on the custodian’s involvement, and in our view are best performed by the custodian directly.”

Anchorage will be competing with Coinbase, which offers integrated custody and institutional brokerage through its agency-only OTC desk. Fidelity Digital Assets combines trading and brokerage, but for Bitcoin only. BitGo offers brokerage from custody through a partnership with Genesis Global Trading. But Anchorage hopes its experience handling huge sums, clear pricing and credentials like membership in Facebook’s Libra Association will win it clients.

McCauley says the biggest threat to Anchorage isn’t competitors, though, but hazy regulation. Anchorage is building a core piece of the blockchain economy’s infrastructure. But for the biggest financial institutions to be comfortable getting involved, lawmakers need to make it clear what’s legal.

Read more: https://techcrunch.com/2020/01/15/anchorage-trading-from-custody/