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Andreessen Horowitz announced a $300 million crypto fund yesterday.
This mega-fund will be focused on making investments across the blockchain ecosystem, including directly holding cryptocurrencies and participating in ICOs. The headlines are focused on the $300 million number, but a few other things caught my eye:
Andreessen Horowitz said they have invested ~$100 million in crypto over the last 5+ years. This makes them one of the largest and most active investors in the space.
The firm explicitly stated that they have never sold one of their crypto investments and have no plan to do so at this time. This is counter-intuitive given the popular VC strategy across the industry of investing in private ICO rounds and then selling shortly after when the tokens are liquid.
The fund is set up in such a way that it will allow the firm to hold investments for longer than 10 years (normal venture fund lifecycle). Most investors would like to do this, but usually their LPs are the ones who push back on the idea.
The firm promises to continue investing in the industry regardless of market conditions - they even call out the potential for another “crypto winter” and said they would be “investing aggressively” in that scenario.
This fund announcement is a big deal because it lends credibility to the crypto industry. The fund is run by two professionals (Kathryn Haun and Chris Dixon), has large amount of capital to invest, and is structured in a way that should allow the investment team to make the best decisions over a long period of time.
The days of “get rich quick” investing are numbered. The true professionals are finding deeper conviction in the high-risk asset class, which is bringing in the deep-pocketed LPs necessary to quickly raise a fund with hundreds of millions of dollars.
It wouldn’t surprise me to see more mega-funds announced in the coming months. The word is out…...or better yet, the virus is spreading.
Andreessen Horowitz pours $300 million into crypto fund: Andreessen Horowitz debuted a $300 million investment fund that will specialize in crypto assets and projects that build on blockchains, the distributed ledger technology that underpins virtual currencies like Bitcoin and Ethereum. The firm also added a general partner to will co-lead the new fund: Kathryn Haun, a former federal prosecutor best known for her work against corrupt agents tied to the Silk Road drug market. Read more.
Alibaba’s Jack Ma says Bitcoin is 'likely' a bubble: Chinese billionaire Jack Ma criticized people who have been speculating on Bitcoin, pledging to avoid the asset class and saying the blockchain technology underpinning it should be instead used to solve social problems. “It is…not right to become rich overnight by betting on blockchain,” he said. “Technology itself isn’t the bubble, but bitcoin likely is,” he added. Read more.
Circle sees boom in crypto demand from institutional investors: Despite bitcoin's plunge last month, Goldman Sachs-backed startup Circle had a big uptick in hedge funds and other big league investors joining its digital currency trading platform. Month over month, Circle says, it had a 30% increase in new institutional clients and was doing 15 times more transaction volume per day from a year ago. Meanwhile, the price of Bitcoin fell roughly 20% in May. Read more.
FTC warns consumers could pay high price for crypto scams: Consumers lost $532 million to cryptocurrency-related scams in the first two months of 2018, an official for the Federal Trade Commission said. Andrew Smith, director of the trade watchdog's Bureau of Consumer Protection, said that the figure could swell into the billions by the end of the year. "Consumers will lose more than $3 billion by the end of 2018," he said. Read more.
Chinese Bitcoin miner manufacturer files for IPO: Ebang Communication, one of the largest Bitcoin mining hardware manufacturers in China, has filed for an IPO with the Hong Kong Stock Exchange. Read more.