Andreessen Horowitz, the Silicon Valley venture capital group, is betting on crypto to break up the excessive concentration of Big Tech power that the firm played a prominent role in creating, according to one of its leading partners.<\/p>\n
Chris Dixon, founder of Andreessens crypto arm, said the internet had led to power being held by a handful of companies including Facebook and Twitter, which the venture capital group backed at an early stage.<\/p>\n
I dont think that any of us expected this level of concentration, he told the Financial Timess Tech Tonic podcast. I dont think this is a good outcome, both societally and from a business point of view, because our business is investing in entrepreneurs...the idea of having the internet controlled by five companies is very bad for entrepreneurs and bad for VCs.<\/p>\n
His comments come as the firm is seeking to hone a new investment strategy built around cryptocurrencies and digital tokens to replace the traditional equity investments made by VC firms and create a new, community-led model for investing in high-growth start-ups.<\/p>\n
Proponents of the Web3 movement claim decentralisation will shift the balance of power away from centralised platforms and towards users. <\/p>\n
However, critics warn firms such as Andreessen will use the new technology to create a new generation of internet gatekeepers. <\/p>\n
The web is just becoming re-centralised in the hands of a small few investors, or in some cases the same exact people who hold so much power in the current web, said Molly White, a software engineer and prominent critic of Web3.<\/p>\n
The venture capital firms co-founder Marc Andreessen is one of Facebook-owner Metas longest-serving board members. The firm made $78mn from its seed investment in Instagram when it was acquired by Facebook in 2012, a 300 per cent return.<\/p>\n
Andreessen also invested $80mn in Twitter before it went public, and was among the financial backers of Elon Musks initial bid for the platform earlier this year.<\/p>\n
Dixon believes blockchain technology offers safeguards against anti-competitive activity by building rules into smart contracts written into the computer code.<\/p>\n
Of course, [business people] will try to create monopolies and big businesses and maximise shareholder value, he added. What we can do to create a better internet is create new systems where the network effects accrue to the community instead of to companies.<\/p>\n
Since its crypto fund was launched in 2018, Andreessen has raised more than $7.6bn to invest in cryptocurrencies and related technology companies.<\/p>\n
Instead of receiving traditional equity, it has been investing in tokens, a form of digital asset built on the blockchain, which can be traded.<\/p>\n
It is a completely different kind of economic model in Web3 in which our investments are mostly in tokens instead of companies, Dixon said. And that was a big change. That is a big part of why we created a separate crypto fund...it requires a whole different legal structure.<\/p>\n
Andreessens portfolio includes the crypto exchange Coinbase, NFT marketplace OpenSea, and FlowCarbon, a crypto carbon credit venture set up by former WeWork chief executive Adam Neumann.<\/p>\n
Dixon said crypto was an opportunity for new entrepreneurs and start-ups, as companies such as Amazon and Google focus on other emerging technologies such as artificial intelligence and virtual reality.<\/p>\n
Ive seen no evidence that [dominant] companies will muscle in, he added. We have a much wider berth for our start-ups to operate, as compared to areas like AI and virtual reality, where the incumbents are making significant investments.<\/p>\n
While cryptocurrency values had been in a gradual downturn since late last year, the market plummeted in May after the collapse of the TerraUSD stablecoin. Market instability drove the price of Bitcoin to pre-pandemic levels and contributed to the collapse of a number of crypto lenders and hedge funds.<\/p>\n
Dixon said the downturn had made Web3 investments more appealing. <\/p>\n
There are a lot of great entrepreneurs entering the space, there are a lot of great ideas and prices are lower, Dixon said. In venture capital, youre hopefully buying low and selling high...so my experience has been downturns have been opportunities.<\/p>\n
Additional reporting by Jemima Kelly<\/p>\n
You can listen to the full interview with Chris Dixon on the FTs Tech Tonic podcast<\/p>\n
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See more here: <\/p>\n
Andreessen Horowitz bets on crypto to break up Big Tech power - Financial Times<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Andreessen Horowitz, the Silicon Valley venture capital group, is betting on crypto to break up the excessive concentration of Big Tech power that the firm played a prominent role in creating, according to one of its leading partners. Chris Dixon, founder of Andreessens crypto arm, said the internet had led to power being held by a handful of companies including Facebook and Twitter, which the venture capital group backed at an early stage. I dont think that any of us expected this level of concentration, he told the Financial Timess Tech Tonic podcast Continue reading