Andreessen Horowitz relies on crypto to break Big Tech's power

Andreessen Horowitz, the risk capital group from the Silicon Valley, relies on crypto to break up the excessive concentration of big-tech power, in which the company has played an outstanding role in one of its leading partners.

Chris Dixon, founder of Andreessens Krypto-Arm, said that the Internet had led to a handful of companies, including Facebook and Twitter, who supported the risk capital group at an early stage, held power.

"I don't think any of us expected this concentration," he said to the Financial Times tech tonic podcast. "I don't think this is a good result, both from a social and business perspective because our business is investing in entrepreneurs.

his comments come while the company tries to refine a new investment strategy based on cryptocurrencies and digital tokens to replace the traditional equity investments of VC companies and create a new model for investments in growth-strong start-ups.

supporters of the Web3 movement claim that decentralization will move the power balance away from centralized platforms and towards the users.

However, critics warn that companies like Andreessen will use the new technology to create a new generation of internet gatekeen.

"The Internet is currently being newly centralized in the hands of some small investors or in some cases exactly the same people who have so much power on the current Internet," said Molly White, a software engineer and prominent critic of Web3.

The co-founder of the risk capital company, Marc Andreessen, is one of the longest-serving board members of Facebook owner Meta. The company earned $ 78 million with its seed investment in Instagram when it was taken over by Facebook in 2012, which corresponds to a return of 300 percent

Andreessen also invested $ 80 million in Twitter before going to the stock exchange and was one of the Elon Musk's first offer for the platform at the beginning of this year.

DIXON believes that blockchain technology offers protection against competitive activities by incorporating rules into intelligent contracts that are written in the computer code.

"Well, [Business People] will try to create monopolies and large companies and maximize the shareholder value," he added. "What we can do to create a better internet is to create new systems in which the network effects of the community benefit instead of the company."

Since the laying down of his crypto fund in 2018, Andreessen has raised more than $ 7.6 billion to invest in cryptocurrencies and related technology companies.

Instead of maintaining traditional equity, it has invested in TOKEN, a form of digital assets that are built on the blockchain and can be traded.

"It is a completely different type of economic model in Web3, in which our investments are mainly in token instead of in companies," said Dixon. "And that was a big change. That is a large part of the reason why we set up a separate crypto fund.. It requires a completely different legal structure."

The portfolio of Andreessen comprises the crypto exchange Coinbase, the NFT marketplace OpenSea and Flowcarbon, a crypto-carbon credit venture that was founded by the former WEWORK boss Adam Neumann.

DIXON said Krypto was an opportunity for new entrepreneurs and start-ups, since companies like Amazon and Google focus on other emerging technologies such as artificial intelligence and virtual reality.

"I have not seen any evidence of this [dominant] companies will interfere," he added. "We have a much larger scope for our start-ups than in areas such as AI and virtual reality in which the established companies make considerable investments."

While the cryptocurrency values ​​have been in a gradual decline since the end of last year, the market collapsed in May after the collapse of the StableCoin Terrausd. The market instability drove the price of Bitcoin to the level in front of the pandemic and contributed to the collapse of a series of crypto loans and hedge funds.

DIXON said that web3 investments made the downturn more attractive.

"There are many great entrepreneurs who enter the room, there are many great ideas and prices are lower," said Dixon. "Hopefully you buy cheap and sell at risk capital.. So my experience was that there were opportunities."

Additional reporting by Jemima Kelly

You can listen to the complete interview with Chris Dixon on the FTS tech-tonic-podcast