a16z ("our" partner was Chris Dixon) led our seed round at Wit.ai. Working with them on a day-to-day basis was an incredible experience. They never asked for anything, but were always ready to jump in instantly when we needed anything from sales intros to offices in Palo Alto. When we got an offer from Facebook we founders wanted to accept it. They initially disagreed with us, but once we confirmed our decision they supported us 100% in the negotiation process. That's what I call class.
<i></i>tl;dr<i></i> - A16Z is reclassifying themselves as an "investment advisor", which will allow them to make riskier bets (crypto, real estate, etc). They'll still invest in startups like any other VC firm.
Skepticism might be warranted, but it should be noted by now that decentralized finance has a place in the present and future of our planet and it's not going away. I strongly encourage technologists to keep an open mind and do in depth research into the space.<p>Yes, 2017 was over-hyped. The tech was not mature then, and while it has matured some since then, there's still quite a ways to go.<p>Bitcoin Lightning network is growing. Ethereum has successfully navigated core upgrades and has a clear path to scalability. Other platforms are doing great innovative things.<p>But to the core of the argument that crypto has no use case. It's 2019. We've seen our internet rights to speech and expression violated by companies imposing their values on their user base. We've seen digital ghosting, deplatforming, fake news manipulation, propaganda and all kinds of insidious behaviors from corporate giants that are too big to be truly accountable anymore.<p>Bitcoin et al. are a very real promise that the future of banking and finance and money will be decentralized. Which as far as I'm concerned, is about freedom as much as speech is. You don't have any freedom if you have to beg VISA or PayPal for permission to spend your money. That alone should be enough to justify the existence of block chain technology and we should all be cheering on its eventual success.<p>But besides that, the tech is being used in novel ways. From gaming to loans to tokenized asset trading. Cryptocurrency is programmable in a way that is just not possible with dollars.
"put a dent in the universe" ... "disagreeableness" ... "weaponizing his popular blog" ... "Being number one"<p>A phrase from each of the first four paragraphs. Is this parody, or just pandering cliche?
The investment returns on the funds sounded unimpressive given the time period. I found some info online from the WSJ suggesting the first fund was on track to return around 250% since 2009. Just investing in the NASDAQ would have returned over 500% over that same period. Am I missing something here or is the performance as unimpressive as it appears?
If they're now an IA, they're not able to talk about their investments publicly? Doesn't that hurt the value proposition for startups/etc. taking money from the new a16z?
Kind of depressing that they gave up on the "GPs must have been operators" rule (presumably due to pressure by LPs or the press). Do any large VC firms still maintain that?
As a financial advisor, will A16Z have fiduciary responsibilities towards advisees that it doesn't now?<p>(I don't know this area, other than a little small business personal finance, but I recall hearing about some fluctuation in rules about financial advisors, within the last few years.)
I've had my morning coffee and it's dawning on me what this means (dawning slowly because it is quite a change). Yes, A16Z gets to extend its reach, as if investing in seed and growth stage tech companies wasn't risky+lucrative enough.<p>Maybe I'm conservative, but I'd rather they stuck to their knitting (which they're pretty damned good at). There are downsides to this 'diversification' first and foremost, losing focus, but also risk. Basically, I can't help but think of SV's overall trend towards Too Big To Fail.<p>I'm not a fan of crypto at all. Re-structuring A16Z so that they can bet on that seems worse than silly. Real estate? Perhaps they can bet on Chinese ghost cities as well.
Honestly, I don't understand the implications this has on their investing activities or the mechanism of this structure. I also don't fully understand the regulations around VC Funds and RIA's in USA (I'm from India).<p>From what I understand though, a16z is trying to breakaway from investing in the limited scope of securities (e.g. equities) of private companies. They want to offer a suite of wealth management services to their Investors in addition to VC investing.<p>But then, will the Investors pool capital in the Fund and the Fund be advised by the RIA? Or will the RIA directly advise the Investors? The structure isn't too clear to me. Apologies for the ignorance.
Matt Levine's take is this is due to fact that "private markets are the new public markets"[0]. The lines between public and private markets are blurring so this is a prudent move by A16Z.<p>TLDR;<p>As companies stay private longer, and get bigger and raise more money while staying private:<p>* The secondary market for private shares becomes more important.<p>* VC's now may have more asymmetric information or more reasons to invest in public markets.<p>* Mutual funds are competing with VCs in later private rounds so why should VCs be able to compete with Mutual Funds in public markets.<p>* The obligatory crypto reference.<p>Another one he doesn't touch on is maybe it's difficult to efficiently deploy > $10 billion in just private markets?<p>[0] <a href="https://www.bloomberg.com/opinion/articles/2019-04-03/buying-the-good-stocks-can-be-bad" rel="nofollow">https://www.bloomberg.com/opinion/articles/2019-04-03/buying...</a>
I kinda think getting rid of the VC status is better than you can encourage investment in something unethical and risky without being on the hook because "we are just the advisors, it's the person with money who takes final shot with what they wanna do with their money"<p>I can see why it can help if the opportunities are shrinking in the legit space.<p>Maybe the winter is finally coming?
Dear Gentlepeople, can I point out the Elephant in the room, or better the one leaving it. The most interesting part (especially for HN) is not where A16Z is going, but what it is leaving behind: VC. Setting aside the shift in social tide for a moment, why does A16Z think there will be no more profit in VC? Any thoughts?
> venture capitalists have long traded a lack of Wall Street-style oversight for the promise that they invest mainly in new shares of private companies. It was a tradeoff firms gladly made—until the age of crypto, a type of high-risk investment the SEC says requires more oversight. So be it, says Andreessen Horowitz. By renouncing its venture capital status, it’ll be able to go deeper on riskier bets: If the firm wants to put $1 billion into cryptocurrency or tokens, or buy unlimited shares in public companies or from other investors, it can.<p>Pitchforks and funding purism aside (forget about blockchain debates), crypto assets are here to stay. They're the new publicly traded vehicles and function as a way for new startups to raise capital from new truly global 'capital markets' along with being a valuation metric. a16z figured this out. They knew what happened with facebook in SecondMarket [1] and also knew the largest upside in shareprices (aka IPOs/exits) are dictated by a public market marketplace, not with private startups.<p>Factor what Fidelity with $6T AUM has already released in rolling out global crypto services [2].<p>Separate crypto, as a capital raising vehicle and trading vehicle, from 'blockchain' and then it all begins to make sense. Real scientific and technical due diligence will help too [3].<p>[1] <a href="http://fortune.com/2012/05/18/facebooks-pre-ipo-pricing-history/" rel="nofollow">http://fortune.com/2012/05/18/facebooks-pre-ipo-pricing-hist...</a><p>[2] <a href="https://www.coindesk.com/coindesk-most-influential-blockchain-2018-tom-jessop" rel="nofollow">https://www.coindesk.com/coindesk-most-influential-blockchai...</a><p>[3] <a href="https://medium.com/@492727ZED/vectorspace-ai-due-diligence-dd-guidelines-for-crypto-for-2019-aa8cea3df5f7" rel="nofollow">https://medium.com/@492727ZED/vectorspace-ai-due-diligence-d...</a>
As a side note, I generally like reading, but I cannot for the life of me pay attention this circus of an article. The animations give me motion sickness.<p>I see comments here which indicate there may be something worth reading in there, but my brain is screaming at me to ignore it. The whole thing feels like an advertisement.<p>Perhaps it's because suits are making a corporate comeback.
A16Z’s unapologetic bet on cryptocurrency and blockchain companies is big for the industry. As crypto heats up again and blockchain 3.0 projects emerge (Cosmos, Polkadot, Ethereum Proof of Stake) VC will help legitimize the industry.
A18Z: "we'll submit to more SEC oversight so that we can trade like Wall Street firms"<p>Wall Street: "Welcome to the big leagues. Ever heard of the efficient market hypothesis?"