a16z crypto head Chris Dixon. Kimberly White—Getty Images
As the political climate grows increasingly hostile toward the crypto industry—with the Securities and Exchange Commission handing out lawsuits like candy—opportunities overseas are looking more appealing for venture funds. On Sunday, Andreessen Horowitz and its $7.6 billion a16z crypto fund announced its first-ever international office, opening its umbrella like a VC Mary Poppins and flying off to London.
On a Friday video call, as the crypto industry was still reeling from the one-two SEC punch against Coinbase and Binance, a16z crypto head Chris Dixon told me that the move does not mean the firm has given up on the U.S. Instead, it is acknowledging the increasing difficulty of doing business here. “What’s going on now with the Biden administration is they’re basically just trying to kill off the technology,” he said.
The U.K. is taking a more welcoming approach, led by Prime Minister Rishi Sunak, who was a vocal advocate for crypto and blockchain as finance minister and worked with a16z to bring the venture firm to London. Although the country is not without its skeptics—the parliament’s Treasury committee advised last month that cryptocurrency trading should be treated as a form of gambling rather than a financial service—a16z believes that the U.K. represents a promising crypto hub.
Brian Quintenz, the head of policy for a16z crypto, said that the U.K. is considering a regulatory regime that resembles one recently proposed by two Republican-led House committees. While the U.S. bill is unlikely to go anywhere given the current climate, Quintenz argued the U.K. has a shot at making progress.
“We’re thinking of this as an investment in the U.K. with the appropriate regulatory treatment that ensures a high bar of customer protection, but that embraces decentralization,” Quintenz told me in an interview on Thursday.
As part of the move, a16z plans to base the next iteration of its Crypto Startup School accelerator program in the U.K. in spring 2024. It also announced a $43 million investment in the U.K.-based Gensyn, a crypto-meets-A.I. startup that Dixon described as an “Airbnb for GPUs.” The London office will be led by general partner Sriram Krishnan.
Despite the setbacks in the U.S., Dixon said that he has no plans to leave the U.S. as crypto founders warn of being pushed offshore. He speculated that lawmakers are still wary due to the bad optics created by the collapse of FTX, but that “the U.S. will eventually get it right.”
“I never have believed in this other model of offshore, unregulated, centralized exchanges,” he said, pointing to Binance, which also was the recipient of an SEC lawsuit last week. “I think that will go away.”
Other crypto-native funds are looking overseas for investments, but a16z’s move is a major shift in talent and dollars departing the U.S. Will other firms follow?
You can read the full story here.
See you tomorrow,
Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.
PRIVATE EQUITY
– Brookfield Asset Management agreed to acquire Network International Holdings, a Dubai-based credit card processing company, for about £2.2 billion ($2.77 billion).
– Direct Scaffold Supply, a Highlander Partners portfolio company, acquired Granite Industries, an Archbold, Ohio-based frame scaffold, carts and dollies, and staging equipment manufacturer. Financial terms were not disclosed.
– Affiliates of Kohlberg & Company agreed to acquire Riveron, a Dallas-based business advisory firm. H.I.G. Capital will retain a minority stake. Financial terms were not disclosed.
– PSG acquired a majority stake in Loopback Analytics, a Dallas-based analytics and data-enabled services provider for health systems and life sciences organizations. Financial terms were not disclosed.
– Weil Foot & Ankle Institute, a Stonehenge Partners and Aureus Capital portfolio company, has merged with Balance Health, a San Francisco-based lower-extremity-focused physician practice. Financial terms were not disclosed.
OTHER
– GiveCampus acquired Community Funded, a Fort Collins, Colo.-based giving day and crowdfunding technology provider. Financial terms were not disclosed.
