Venture Capital firm A16Z changes its business model to invest in Cryptocurrency startups
One of the world’s most famous Venture Capitalist, Andreessen Horowitz (A16Z), is changing their business model completely to invest in cryptocurrency startups. The firm is dropping the venture capital business and is becoming a financial advisor, reports Forbes.
The news comes after the new SEC regulations demand cryptocurrency investments should be regulated. Previously VCs have had freedom investing in any companies they want as the companies they invest in are private. But with cryptos and SEC regulations, it is getting difficult for VCs to invest in cryptocurrency startups. According to Forbes,
“Venture capitalists have long traded a lack of Wall Street-style oversight for the promise that they invest mainly in new shares of private companies. It was a tradeoff firm gladly made—until the age of crypto, a type of high-risk investment the SEC says requires more oversight”
The company has been facing stiff competition from other funds especially Softbank and is looking to diversify its portfolio in riskier bets which include Cryptocurrencies, public companies, and Real Estates.
“So be it, says Andreessen Horowitz. By renouncing its venture capital status, it’ll be able to go deeper on riskier bets: If the firm wants to put $1 billion into cryptocurrency or tokens, or buy unlimited shares in public companies or from other investors, it can. And in doing so, the thinking goes, it’ll again make other firms feel like they have one hand tied behind their back. “
A16Z has set up a team consisting of experts from Biotech to cryptocurrency industry to identify next potential businesses to invest in. Andreessen Horowitz has backed many billion dollar startups including Lyft, Pinterest, Facebook, Whatsapp, Instagram, Airbnb, Coinbase, etc.
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