Andreessen Horowitz has chosen London for its first office outside the US, betting that the UK government will create a more hospitable climate for blockchain start-ups amid a crypto crackdown by the American financial regulator.
The Silicon Valley venture capital firm — which has about $35bn in assets under management and was an early backer of Facebook, Twitter, Coinbase and Stripe — is expanding to the UK at a time when London’s status as a fintech centre has been shaken. There has been a dearth of public listings, struggles at flagship start-ups such as Revolut and Checkout.com, as well as the loss of top talent such as Monzo founder Tom Blomfield while the appeal of rival European capitals, such as Paris, has grown.
Andreessen Horowitz’s London office will focus on crypto and blockchain start-ups, to which it has committed $7.6bn in capital globally, and includes running a Crypto Startup School accelerator programme early next year as part of a broader set of initiatives intended to boost the local fintech community.
The firm’s decision to open an office in London comes after a renewed clampdown on crypto in the US. The Securities and Exchange Commission, the financial regulator, last week filed lawsuits against industry bellwethers Binance and Coinbase, the biggest names in a blitz of enforcement actions against big crypto companies this year.
In contrast, the UK has set out its ambitions to attract crypto businesses and is developing a regulatory framework that brings digital assets trading closely in line with standards for securities such as stocks and bonds.
Rishi Sunak, UK prime minister, said in a statement that he was “thrilled” at Andreessen Horowitz’s arrival, which he said was “testament to our world-class universities and talent and our strong competitive business environment”.
Andreessen Horowitz’s overseas expansion is coming later than many of its US peers but follows last week’s move by Silicon Valley rival Sequoia Capital to split off its China and India units, retrenching internationally amid rising global tensions.
The firm chose London over other potential locations including Singapore and Dubai that have sought to lure crypto talent, even as the UK has suffered a 57 per cent drop in tech investment this year, the sharpest decline among big European markets, compared with the first half of 2022, according to VC firm Atomico.
“London is a major financial hub, it’s a major tech hub and frankly it’s a very attractive place for people to live,” said Chris Dixon, who leads Andreessen Horowitz’s crypto investments. “You just need to get it to a critical mass to really get it going and we’re hoping that we can become a part of that and nudge [London] into being a more active hub of technology.”
In May last year, Dixon’s unit unveiled a $4.5bn fund, the biggest of its kind. In the following months, a “crypto winter” obliterated the value of tokens and crypto companies and Sam Bankman-Fried’s cryptocurrency exchange FTX collapsed, facing allegations of fraud. Bankman-Fried has pleaded not guilty to all charges against him.
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The industry reset has stalled the sector’s growth and narrowed the options for Andreessen as it looks to deploy billions of dollars. A new outpost in London could help to mitigate that problem.
Dixon contrasted the UK’s “thoughtful approach” to regulating crypto with legal uncertainty in the US that he said made it “tough to be an entrepreneur” there, although the firm still plans to invest in American crypto companies. “Our assessment is the UK is ahead of the curve and instituting [crypto] policies that will eventually becoming a global standard,” he said.
Andreessen Horowitz’s first international outpost will open this year led by Sriram Krishnan, one of the firm’s general partners, who recently served as an adviser to Elon Musk at Twitter following the billionaire’s takeover of the social media company.
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