As crypto deals slow, a16z’s Chris Dixon shifts to accelerator reboot, regulations

Andreessen Horowitz may have a fresh $4.5 billion fund to invest in crypto startups. But in the face of a crypto winter, even the leading blockchain evangelist is scaling back its investment pace as it concentrates on founder development and lobbying.

General partner Chris Dixon said the firm is rebooting an accelerator program for crypto entrepreneurs that it first held in 2020. Next spring, a16z will resurrect Crypto Startup School as an accelerator program.

The relaunch comes at a time when the firm’s crypto team—which employs more than 90 people and manages $7.6 billion—is making fewer investments. In Q3, the firm participated in seven cryptocurrency and blockchain VC deals, down from a peak of 24 deals in Q4 2021, according to PitchBook data.
 

“The ingredients to build great products, first and foremost, is people—and specifically entrepreneurs and developers,” Dixon said during an on-stage interview Tuesday at TechCrunch Disrupt. “In that regard, crypto is very, very strong right now—far better than it has been in the past.”

The seven-week accelerator program includes $500,000 in exchange for a 7% stake. The firm is accepting applications now for a cohort to begin in March.

Graduates of the 2020 program have raised a collective $300 million, according to a16z. That class included decentralized credit platform Goldfinch and crypto wallet startup Phantom.

Another area of focus for the firm is lobbying, where it has spent heavily on advancing what Dixon calls “smart regulation.” The firm has spent $2.2 million on campaigns this election cycle, Forbes reported.

“There are a bunch of bills before Congress now to clarify the regulatory situation, some of which we think are really good,” Dixon said. “We’ve been getting more active and involved in discussions with policymakers and advocating for regulation.”

A16z’s retreat from crypto deals is mirrored by a widespread depression in deal activity for the sector, which has been exacerbated by falling digital currency prices. The global market capitalization of cryptocurrencies has fallen by more than half since the start of the year, according to price-tracking website CoinMarketCap.

A16z’s success in crypto is thanks primarily to its investment in Coinbase. A little more than a year following the crypto trading platform’s IPO, a16z sold or distributed to LPs about $5 billion worth of Coinbase stock, or more than half its stake in the company, according to regulatory filings.

Coinbase stock closed Tuesday at $66.21, down more than 80% from its all-time closing high.

The firm’s first fund is on pace to return 10 times its initial $300 million investment, The Information reported last week.

A previous version of this story incorrectly stated that Andreessen Horowitz spent $2.2 billion on campaigns this election cycle. The correct number is $2.2 million. (Oct. 19, 2022)