Famed venture capital firm Andreessen Horowitz is betting big on a blockchain startup. The Dfinity Foundation, which bills itself as “a blockchain supercomputer designed to host the next generation of software and services,” raised $102 million in a token sale to accredited investors (including Andreessen Horowitz). They have now raised over $190 million in total capital from names like Polychain Capital, SV Angel, Aspect Ventures, and Multicoin Capital.
The venture capital giant did not disclose how much they invested in Dfnity but did divulge that the company occupies the biggest position in its two-month old cryptocurrency fund. Andreessen Horowitz’s Chris Dixon, a general partner and co-leader of the crypto fund, said in a telephone interview that the firm is high on Dfinity’s leadership – the company is staffed by former Alphabet and Uber engineers, along with Yale PhDs. This will be Andreessen Horowitz’s second investment in Dfinity, joining Polychain as repeat investors.
Investors have shown a willingness to invest in blockchain projects despite wild cryptocurrency price fluctuations after 2017’s massive boom. Cryptocurrency news site CoinDesk reported that blockchain companies had received $16 billion in funding this year – double 2017’s total and coming despite a slowdown in initial coin offerings (ICOs) and venture capital investment in July.
Dfinity is working to build “a new kind of public decentralized cloud computing resource,” designed to eliminate the complexities associated with databases, backup and restore systems, and Amazon Web Services. Foundational to this resource is a new kind of blockchain computer – like Ethereum, but with “vastly improved performance and, ultimately, unlimited capacity”. Dfinity claims that their new kind of cloud computer can eliminate the human capital designed to maintain traditional systems, cutting costs by 90 percent or more.
The uncertain regulatory climate means Dfinity has not carried out an ICO, but investment-via-token has paid dividends. Tokens were purchased for $4.18 each, according to Dfinity president and chief scientist Dominic Willaims, and an additional $35 million of coins were distributed gratis (or ‘airdropped’) to members of the Dfinity community.Because venture firms have not purchased equity in the company, they will not profit from Dfinity’s revenue but instead from the increase in token value.
Williams, who claimed a beta version of Dfinity’s network will be available in the first half of 2019, told reporters that the capital influx will be used to further develop the technology and promote the protocol, as well as to hire additional employees. The company expects to triple in size from its current 46 employees as they work towards their goal of becoming “…the network to hold the next generation of software and services.”
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