Regulation
A16z steps up UK charm offensive with London demo day debut
Silicon Valley venture capital giant Andreessen Horowitz’s (a16z) London charm offensive is well underway, following its first demo day abroad for its crypto startup accelerator in the UK capital.
Last Tuesday’s event saw a cast of founders, investors and journalists descend on an underground venue in the capital, typically known for hosting musicians such as Charli XCX, Nia Archives and Kaytranda.
The demo day marked a glittering opening to the firm’s long-term commitment to the UK, which has seen three of its partners – Sriram Krishnan, Jay Drain and Liz Harkavy – move to the country permanently after setting up a shop in London last June.
Spectators sat in front of a stage topped with a massive 8K screen, in front of which 25 cryptocurrency founders had the task of presenting their startups to an audience of 100 people including press, investors and limited partners. To coincide with the occasion, a16z’s crypto division also held an off-site event in London last week.
While it may have been the founders who were in the spotlight, the proceedings often looked like a concocted attempt not only to course-correct perceptions of the asset class, but also to consolidate the VC firm’s confidence in the UK as a hub cryptographic.
The founder of a16z’s $7 billion crypto fund, Chris Dixon, kicked off proceedings by highlighting how the firm chose London to “tap into all the talent in the UK and across Europe and to help accelerate the cryptocurrency here”.
The regulatory winter of cryptocurrencies
When the fund announced its decision to host it crypto accelerator program in London last year arrived in the midst of a bruising crypto winter. Venture capital investments globally plummeted from $21.2 billion in 2022 to $4.1 billion in 2023 as regulators in the United States clamped down on cryptocurrencies.
“Historically, regulation and politics were not something a startup founder had to focus on, but in the cryptocurrency industry that hasn’t been the case,” says Jason Rosenthal, head of the accelerator. “One of the reasons we opened an office in the UK is that we are excited about the regulatory outlook for the industry here.”
This year has seen the introduction of major legislative changes globally, most notably the approval in January of eleven bitcoin ETFs in the US, the introduction of the European Crypto Asset Market (MiCA) regulatory framework and two weeks ago, the first major cryptocurrency bill passed one of the houses of the US Congress.
While they have yet to ignite trading volumes, the UK’s first known crypto exchange-traded funds, investment products similar to exchange-traded funds, were launched last month. list on the London Stock Exchange.
A break from the norm
He argues that regulatory progress has paved the way for crypto startups that would have been harder to sell last year. He highlights how the demo day began with the UK’s Playmint, a blockchain gaming startup with a team of legacy gaming brands such as Electronic Arts and Unity.
He also mentions Roux, a “food culture network” led by one of the first Resy restaurant employees, which uses blockchain to enable the ownership and monetization of food recipes online. Likewise, Tata Bazaar, a startup looking to use digital product passports sold with fashion items to increase brand engagement (for example by rewarding wearers based on the amount of time an item is worn or tracking secondary sales of a specific item).
Lisa Grimm, CEO of Roux. Photo: Serpell-Rand Photography / a16z encryption
“I think it would have been very difficult to build these companies even a year ago because the infrastructure wasn’t there,” he says. “But I think we’re at a time and place where not only does that make sense, but I would also be very optimistic about their prospects and what they’re building and their ability to raise capital.”
Another notable break from the norm is the inclusion of female founders: of the 25 who took the stage, Sifted counted five women. A study this year of the top 50 cryptocurrency companies identified only three female crypto CEOs, a meager 6%.
A charm offensive in the UK?
All the startups that showed up at demo day took part in a ten-week program where founders were coached every Wednesday in a16z’s London office by a who’s who in digital assets. Some names invited to speak included 16z CTO Eddie Lazarin, Alex Blania, the CEO of the company behind Sam Altman’s Worldcoin crypto project, and Ben Rubin, the pandemic-favorite Houseparty founder who has since founded a social media startup web3.
Evening activities were continued with social excursions to Bletchley Park, the site of the British code-breaking team during the Second World War, and a dinner at the British Parliament.
“Because a16z has good relationships with politicians and these politicians are excited that a16z is bringing in business, there is a symbiotic relationship,” says Playmint founder David Amor.
And a16z is just trying to build on those relationships. Policy chief Brian Quintenz says he was in Manchester last week for a round table with Labor Mayor Andy Burnham hosted by US cryptocurrency exchange Coinbase.
It points out that a16z does not have an incorporated entity in the UK and is precluded from engaging in political activity, including direct donations.
“Our message here is that we can help realize the growth ambitions of whoever is in charge of government,” he says.
Rosenthal was also confident in the UK’s approach to the EU’s MiCa, a regulatory framework for the cryptocurrency industry currently being implemented across Europe. According to him, the bloc’s approach of considering regulation as a source of innovation “does not create a good environment to carry out new transformative projects”.
Who is British Economic Secretary Bim Afolami? made a public push for stablecoin regulation, was due to give a keynote speech at demo day, but pulled out when the UK general election was announced last month. Some industry observers now fear that the bill sponsored by Afolami could fall by the wayside if he is not re-elected.
Labour’s shadow economic secretary Tulip Siddiq, on the other hand, did solicited Reform is needed to prevent Britain becoming the “Wild West” of cryptocurrencies.
However, a16z’s Quintez doesn’t seem concerned about the prospect of a Labor government, describing them as “open-minded” towards cryptocurrencies.
“They just want to handle the situation responsibly and I think that’s exactly the right position they should take,” he says.
And while Rosenthal suggests that cryptocurrencies have grown up, the industry’s sometimes childish sense of humor was on display with some presentations using memes of Kabosu, the late Shiba Inu dog known as the face of the Dogecoin cryptocurrency, to capture l public attention. But what the demonstration day made clear is that a16z is committed to the UK, regardless of the outcome of next month’s election.