Some people lose money by speculating in coins, and some VCs have made a lot of money by investing in cryptocurrency exchanges.

In mid-April, the Bitcoin trading platform Coinbase went public, and it broke 100 billion US dollars in intraday trading on the day of listing. Despite the subsequent decline in the price of Bitcoin, the current market value of Coinbase is still close to US$48 billion. The Silicon Valley venture capital Andreessen Horowitz (referred to as A16z) is the big winner behind this.

A16z is the largest external shareholder of Coinbase, holding 14.8%of the shares, but currently, it has cashed out most of its shares.

According to Futu data, A16z has reduced its holdings of Coinbase by 154.5596 million shares, valued at approximately US$4.375 billion, and the remaining holdings of 14.0179 million shares, with a shareholding ratio of 6.72%, valued at approximately US$3.3 billion.

A16z, which is unique in the marketing field, has achieved hardcore results.

Enough to rank among the”top VCs”

In the past, people remember that the way A16z invests is more famous than its achievements.

For example, marketing. In the early years, he hired Margit Wennmachers, a well-known communications officer in Silicon Valley and also the hidden founder of A16z, and then hired an editorial team to build his own media matrix. They not only talk about investment insights, but also often speak out to entrepreneurs with a variety of content.

Another example is grabbing items. There is a comment that is simply not too classic,”They are so overbearing that they have to intervene in every transaction.” There are also examples. A16z has raised Twitter’s valuation. It was also in 2011 when Airbnb raised its B round of financing. Defeated Sequoia and became the lead investor. The frequency of shots can also be verified. According to pitchbook data, they were the second-largest VC in Silicon Valley in terms of investment volume last year.

The same is true for post-investment management. What they learned to serve startups is the method of Hollywood brokerage company CAA. Some people commented,”They are forcing us to change.”

As far as the results are concerned, their performance is not as eye-catching as the process of how to invest.

Isn’t there not enough A16z star cases? Nor is it. In 2009, A16z invested US$50 million in Skype. Two years later, Skype was Microsoft at a price of US$8.5 billionAcquisition, with a return of over US$100 million. In 2010, A16z invested $250,000 in Instagram. Two years later, Instagram was acquired by Facebook for $1 billion, with a return of $78 million.

Because they are latecomers, they quickly build a strong sense of presence in the market. Compared with established VCs such as Sequoia and Benchmark, A16z was established later. In 2009, it was 4 years later than FoundersFund, which was established in 2005.

Not only can they compete with established VCs, they also have high self-esteem. For example, A16z founder Mark Anderson once mocked Bill Gurley, a former partner of Benchmark.

Even in the field of public opinion, they are also arrogant. They treat the media as a top-down marketing tool, but don’t care much about the bottom-up news of the media. After the huge scandals of the invested companies were exposed, they only chose to oppose the media. Mark Anderson once criticized the blood testing company Theranos for fraud in Tweeting the”female version of Jobs” Reporter.

They also have a high position on themselves,”doing first-class business in a first-class way.”

But in Silicon Valley, where strong players are like forests and a fixed venture capital circle, it is inevitable to be scrutinized by everyone. The return is usually the simplest and most direct evaluation dimension.

However,”The Wall Street Journal once stated in 2016 that the investment of A16z The results are not as good as Sequoia, Benchmark, and Founders Fund.

The article uses data as an example. This seems to have pierced the twenty-four golden lights on the top of A16z. In terms of performance, they still belong to the second echelon. The founder Mark Anderson also came out to make a statement, this is when he rarely showed a low profile.

Now it is not the same as in the past. A16z’s investment in Coinbase returns at least more than 7 billion U.S. dollars, which is enough to be written into history.

On this evaluation standard, the distance between them and the VCs of the first echelon of Silicon Valley has been reduced by a big step, and they are also called”top VCs”. I don’t know if they will be more arrogant.

8 bets on Coinbase

Let’s take a look at how A16z invests in Coinbase.

In 2013, when Coinbase had only 8 people, A16z led the company’s US$25 million Series B financing.”The Wall Street Journal” reported that this may be the largest venture capital investment in the Bitcoin field at that time.

It was also the year when the Bitcoin investment boom just started. The price of Bitcoin has risen all the way from 13 U.S. dollars to December of that year, even exceeding the international gold price for the first time, breaking through 1,000 U.S. dollars, creating history.

There are also reasons why A16z shot early and dared to pull the trigger.

Joined A16z in 2011, Coinbase investor Chris Dixon is a serial entrepreneur in the Internet field, and his understanding of new technologies and emerging things is reasonable. The company he founded was acquired by security software company McAfee and financial payment company eBay. In his early years on the blog, he expressed his optimism about Bitcoin.

But the point is that A16z founder Mark Anderson is optimistic. At the end of January 2014, when Bitcoin fell back to around $860, he wrote an article”Why Bitcoin is Important”. He said that Bitcoin is far from a purely liberal fairy tale or a simple Silicon Valley hype. It is to redefine the financial systemOperation in the Internet era provides an opportunity.

Mark Anderson, a star entrepreneur in the Internet era in the 1990s, Netscape browser /span>The founder, it’s not surprising that these words came out of his mouth.

And Armstrong, the founder of Coinbase, is also a top technical talent and has extensive work experience in large companies. He has worked in IBM, Deloitte worked as a engineer and joined Airbnb in 2011. Mainly responsible for the business of fraud prevention, and understand the payment system in 190 countries and regions covered by Airbnb.

His interest in Bitcoin comes from practice. While working at Airbnb, he has already started writing code to store cryptocurrency.

The timing of A16z’s investment in Coinbase is already at a stage where it is easier to make decisions. Before their investment, Coinbase had already obtained endorsements from well-known early-stage investment institutions, well-known entrepreneurs in the Internet field, established venture capital partners, and financial systems.

In the 2012 Coinbase angel round of financing, there was entrepreneurial incubator YC, as well as RedditThe figure of the founder. In the A round of financing, Heguang Investment and NEA partners who had invested in Twitter also participated. In addition, because Coinbase’s co-founder Fred is a former employee of Goldman Sachs, they also won Bank financial support.

Looking back at A16z, which lasted 8 years, it is impossible to achieve such a result if it is not firm enough. At the end of 2017 and 2018, the price of Bitcoin experienced a sharp drop, reaching nearly $20,000 at its peak, and hovering at $3,500 during the period of underestimation. At the same time, the Coinbase executive team was in turmoil. Co-founder Fred stepped down and left, and established a Bitcoin investment company with an investor from Sequoia.

But A16z made a total of 8 bets before and after, unwavering.

Aggressive digital currency investment

Throughout the layout of A16z in the entire digital currency field, it can be described as radical.

The size of the bitcoin fund they raised separately has almost caught up with the benchmark two The size of the comprehensive fund for the period. The current A16z management scale is USD 16.5 billion, and the Bitcoin fund scale is USD 865 million.

The Bitcoin fund with a larger scale than the first phase is also a manifestation of their determination to deploy. The scale of the first phase established in 2018 was US$350 million, and the scale of the second phase established last year was US$515 million.

Now this fundraising figure is even more amazing. According to media reports, A16z is raising the third phase of the Bitcoin fund. The first time the fundraising scale was 1 billion US dollars, the second time it was 2 billion US dollars. This has even caused peers to mock their motives. Some people say that they are pursuing management fees.

From the star cases, A16z already has strong competitiveness in this investment field. In addition to Coinbase, they also invested in Libra, a decentralized financial project promoted by Facebook, and the founder of A16z is a founding member of the project. Projects led by major Internet companies are not something that ordinary institutions can participate in, and they have entered the game from the very beginning.

I have to mention another female investor of A16z who specializes in digital currency investment, Katie Haun. She has worked at the FBI for 10 years and is familiar with financial fraud, network security, money laundering and so on. She is a director of Coinbase and was subsequently invited to join A16z as a partner in 2018.

According to CNBC reports, Katie Haun’s deepest understanding of cryptocurrency comes from White-collar crime

span> and the public corruption case. She has handled cases where government agents used early Bitcoin adopters for personal gain, such as the agents stole 20,000 A Bitcoin, the founder of Silk Road, a black market for blackmailing the Internet, and so on. She found that”there is no way to catch criminals without the technology behind Bitcoin.”

In 2015, she set up the first cryptocurrency working group within the government and led the investigation of the world’s largest cryptocurrency exchange Mt.Cox. At that time, she also used to communicate with government officials such as the National Taxation Bureau, Ministry of Finance and other government officials. She also He also teaches cryptocurrency courses at his alma mater Stanford.

An investor who is familiar with policies and regulations is undoubtedly the right one to make investment decisions And it will add a lot to the management of invested companies.

Although Bitcoin suffered a sharp drop in 5.19, A16z’s investment in digital currency has been rapid since the beginning of this year. According to media statistics, A16z has invested in 8 encryption projects within 1.5 months.

But the question is, is there another Coinbase?