Andreessen Horowitz Makes Big Bet on Blockchain

Marc Andreessen and Ben Horowitz have been active in investing in almost every big player in the creation of the Internet: Netscape, Google, Facebook, Twitter, Uber, and Lift. More recently they have made big bets on blockchain, including Ripple, Coinbase, and Ethereum.

Now their VC firm, Andreessen Horowitz, and hedge fund Polychain Capital have invested $61 million into a non-profit called DFINITY Stiftung to create a decentralized Internet computer.

Depending on your viewpoint, they are now either betting against their first wave of investments that centralized all the data of the first wave or simply investing in the next iteration of the Internet.

DFINITY Stiftung said the funding would go toward development of its blockchain protocol to support a public decentralized cloud computing platform.

About a third of the cash, $21 million, will be dedicated to development with the rest devoted to a venture fund aimed at supporting developers and teams working on applications of the protocol.

“Though the DFINITY Foundation is well capitalized, our focus with this financing was to bring in key partners who can provide real strategic value and help distinguish us from the noise in the market,” said Dominic Williams, DFINITY’s president and chief scientist, said in a statement.

Andreessen Horowitz can definitely open any doors they need, but it remains to be seen if they will work hand in hand with the Googles of the world or with 2.0 blockchain companies such as Ethereum or blaze a new technological path.

Andreessen Horowitz’s investment in Coinbase, too, could prove valuable as the near future may involve the extension of exchanges to all types of transactions from currencies to air miles to carbon credits, or decentralized exchanges where every app is an exchange.

Wide distribution

The new investment brings total project funding to more than $100 million, Williams told Reuters.

Ryan Zurrer, venture partner of Polychain Capital, called the technology an “extremely compelling innovation” and said his company was “committing our largest-ever capital deployment.”

The fund will be a capital pool, co-managed by the founders of DFINITY and Polychain Capital. It will invest in specific projects building applications on the DFINITY platform. Blockchain is the technology that underpins Bitcoin and other cryptocurrencies.

“At the moment, we’re looking very hard in how to widen distribution,” said Williams. “We’ve got demand in the hundreds of millions wanting to participate in the project.”

Williams said the company launched a token sale last year, raising some funds, but he distanced himself from 2017’s rash of initial coin offerings, a financing strategy in which startups create and sell virtual tokens to investors to raise funds.

The big three competitors that could be affected are players in cloud services such as Amazon, Google, and Microsoft. In return for their investment, Andreessen Horowitz and Polychain will get Dfinity tokens when the network launches.

The tokens will be at the heart of the plan for the planned “Internet computer” and will also be distributed as rewards to computers that provide it with coin-mining power.

Dfinity said its large virtual mainframe computer could in future host decentralized versions of online services such as Uber, Dropbox, and eBay.

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