A16z’s Chris Dixon sits down with Sifted

Good morning there,

AI dominated the headlines late last week — specifically, money flowing within AI companies. The Financial Times reported on Friday that US-based LLM poster child OpenAI has already hit $2bn in annualised revenue; meanwhile, our own Tim Smith reported that UK-based AI startup Stability AI, which reportedly raised close to $50m late last year from Intel, has committed to using a majority of the funds to purchase access to the US chip company’s hardware resources — and that it can't use the investment to pay salaries. 

While the news cycle is rarely dull in the burgeoning AI field, today I dig deeper into another emerging area of tech: crypto, and more specifically, blockchain. I recently (virtually) sat down with US VC powerhouse Andreessen Horowitz's crypto chief Chris Dixon, to dig into UK crypto regulation, how much money the firm has invested in UK-based Web3 startups and, of course, his thoughts on AI. Read on for more. 

— Anne Sraders, senior reporter

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A16z's top crypto investor Chris Dixon sits down with Sifted

The US may have an edge when it comes to developing and funding massive AI companies like OpenAI, but the UK could have an edge in another emerging area: blockchain technology, which underpins the likes of Bitcoin and projects like decentralised social media apps. At least, that’s according to Chris Dixon, the top crypto investor at US VC giant Andreessen Horowitz, who recently chatted to me over video call from Andreessen’s London office. 

Dixon’s just released a new book, Read Write Own: Building the Next Era of the Internet, in which he makes the case for why blockchain networks will become the next phase of the internet, restoring its early promise as a decentralised, open and democratic network for people to learn and create — and, now, own their creations; I found the book itself to be a fairly cogent argument for blockchain. 

Dixon dished his views on how the UK can lead the way with crypto regulation, why proponents of open-source AI and blockchain have more in common than they might think and what we can expect to see in the UK and EU crypto space in 2024. (He also explained to me what a unicorn was.) You can read the full thing here, but I pulled out a few highlights below. 

As always, I’m curious to hear from you: Are you interested in reading more about crypto? What applications of blockchain are you excited about, either as a founder or investor? Who in Europe should I be talking to? Send me a line. 

(Our Q&A has been edited and condensed for clarity.) 

You've been very active with talking to and lobbying politicians in the US. To what extent are you and a16z involved with EU regulators or regulators in the UK? What's your sense of optimism? 

Our focus has been the US and UK right now — [that’s] part of opening the office here. I'm long-term optimistic in all of these areas, and I think the conversations we have are positive for the most part. Eventually all of the G7 countries will probably converge on a similar regulatory framework for blockchains and crypto. But there's an opportunity — for example, in the UK — to do so sooner and to lead the way. If you're early on something, you can establish an ecosystem and leadership. We've shared that view with policymakers in the UK and that seems to resonate, so we're optimistic. But, as you know, these are complex processes and take time.

Our hope with the UK office is that we can establish a first jurisdiction with clear rules. On our side, we're making investments here, and we're also [doing] the Crypto Startup School, [an accelerator programme for Web3 startups] which is happening in a few weeks.

Are you planning to invest more in the UK and Europe this year?

We're hoping by being on the ground, by being earlier stage, that we'll be able to. 

There's great universities here, there's a lot of good energy. Years ago I was [an entrepreneur and investor] in New York in the 2000s, and it kind of reminds me of that: at the time, it was sort of a nascent tech industry, and I think people would say now New York is pretty booming. I hope that a lot of European countries are following a similar pattern.

You've written about how you're pro-AI, but you're concerned the top tech companies will dominate it. There have been numerous open-source AI companies in Europe, including Mistral, which a16z just invested in. What do you think about open-source AI within that context? 

If you have super high quality open-source models, that means if I'm building a startup that's competing with Adobe or Google, I'll have access to this awesome AI as well. I think that's a very important thing for levelling the playing field. We generally are very pro open-source AI. And I think that will be a key policy issue going forward: will there be restrictions on that? Our view is that of course, you need to regulate AI, but the right way to do it is not at the infrastructure layer, it's at the application layer.

The two most important policy issues for keeping the internet open are open-source software, and then blockchains, which I think of as open services — the way to keep the core services of the internet open for developers and creators. Those are important issues, I believe, both for society but also for venture capital, because we're in the business of investing in startups, and if it's not a level playing field, it won't be a good business.

— Anne Sraders, senior reporter

💰 Fresh details on Stability AI’s investment from Intel. Late last year Bloomberg reported that London-based startup Stability AI had raised nearly $50m from Intel. Now Sifted has learned that a majority of the money came with hefty commitments that mean “Stability can’t pay salaries with that part of the investment”, according to sources.

• The deal saw Stability committing to using a majority of the round to purchase access to the US chip company’s hardware resources, according to three people with knowledge of the deal. Stability will get access to Intel’s compute resources via a new, AI-optimised supercomputer that the two companies have announced they are co-developing.
• Stability — which also landed a $101m Series A in October 2022 and employs more than 190 people — has raised far less funding, with far more people on its team, than some of its competitors. France’s Mistral, by comparison, employs 51 people and has raised $537m since June 2023, while Germany’s Aleph Alpha employs 84 people and has raised $641m since launching in 2019.

🤑 ChatGPT maker OpenAI has reportedly surpassed a whopping $2bn in annualised revenue, according to the Financial Times. The SF-based company has seen massive interest from customers for its large language models (LLMs), which has prompted some questions over whether alternative, open-source AI model makers like France’s Mistral, which give out some of their source code for free, will be able to make similar sums. 

🧪 The UK government has announced £100m in funding from the Department for Science Innovation and Technology for six ‘Engineering Biology Mission Hubs’ and 22 ‘Mission Award’ projects across the country. The hubs will be led by universities including Cranfield, Imperial College London and the University of Edinburgh.

• Eligible researchers are using bioengineering to develop things like food systems, new medical therapies and diagnostics and more sustainable manufacturing processes.
• Among the aims are to spin bioengineering research out into biotech startups and help researchers develop licensable and commercialised tech.

🇸🇪 Renowned Swedish climate tech investor Harald Mix is betting on circularity and textiles as a way to solve the climate crisis. Mix is a cofounder of the battery scaleup Northvolt, green steel scaleup H2 Green Steel and heat pump startup Aira, and now his investment company Vargas has founded HMVX together with the Swedish retail giant H&M. 

• What exactly the company will do is being kept secret ahead of its launch later this year, but according to documents on Swedish Companies House, it has recently raised €2.7m, bringing the total it has raised to €10m.

🇫🇷 “The exit market is the big issue” — Station F and Sequoia’s Roxanne Varza joins the Sifted pod to discuss what’s on founders’ minds right now, Station F’s expansion plans and what she’s learned so far as an angel investor. Read the conversation highlights here, or listen to the full episode.

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🤖 Europe’s undergoing somewhat of a robot revolution — with robotics startups in Europe popping up across the region doing useful jobs in factories, operating theatres and even on the streets of Estonia.

• The sector has also been somewhat resilient to the wider funding slump; robotics startups in Europe brought in more than $2bn in 2023, only a slight step down from the $2.6bn and $2.4bn they brought in during 2021 and 2022, respectively — according to Dealroom data cited in Sifted’s latest briefing (exclusively for Pro subscribers).
• One reason for the boom is that software to help train robots and manage their integration with other products is getting better. Germany is a particular dab hand in this space; Dresden-based Wandelbots, for example, offers a platform that helps people without technical backgrounds programme and train robots, while Darmstadt-based Energy Robotics provides software designed for the management of robot fleets in challenging remote environments.
• There are also companies working to make our domestic lives easier — OpenAI alum Shariq Hashme is building a robot butler for the home, as is Norwegian startup 1X, which is backed by OpenAI and Tiger Global and recently raised a $100m Series B led by EQT Ventures.

💰 Tomorrow we’ll be hosting our first Intelligence conference call, digging into exit horizons for 2024 — exclusively for Pro subscribers. We’ll share our analysis of the M&A climate and then open the floor, so you can debate the current state of M&A and share your insights. RSVP.

🔥 On February 27, we’ll be showcasing five of the leading European early-stage fintech startups currently fundraising at our Pitch event, exclusively for Pro subscribers. RSVP.

💸 On March 13, Amy Lewin is bringing together a panel of experts to discuss what is in store for M&A activity and how startups can prepare.  RSVP.

Besançon, France-based Pixee Medical, which is developing computer-assisted tools using augmented reality for orthopaedic surgery, raised $15m in funding. Relyens Innovation Santé, UI Investissement, Innovacom, Angelor and Bpifrance led the round. 

Aarhus, Denmark-based Holdbar, a platform to help experience providers like tour operators digitise their businesses, raised $3.5m in seed funding from investors including Seed Capital and Firstminute Capital.

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