February 7, 2018 / 11:09 AM / 14 days ago

Blockchain project raises $61 million from Andreessen Horowitz, U.S. hedge fund

NEW YORK (Reuters) - A non-profit organization that wants to develop a more decentralized internet using blockchain has raised $61 million in funding from U.S. venture capital firm Andreessen Horowitz and hedge fund Polychain Capital, it said on Wednesday.

DFINITY Stiftung wants to create what it calls an “internet computer,” an open network that serves as a large virtual mainframe computer in cyberspace. That would allow decentralized versions of many online technology services such as Uber, Dropbox, and eBay, according to a company statement.

The new investment brings total project funding to more than $100 million, DFINITY’s president and chief scientist Dominic Williams said in an interview with Reuters.

Ryan Zurrer, venture partner of Polychain Capital, called the technology an “extremely compelling innovation” and said his company was “committing our largest-ever capital deployment.”

Reuters was unable to reach Andreessen Horowitz for confirmation of the investment or comment.

Of the $61 million funding, $21 million will go directly to research and development of the network, while the rest is going to DFINITY’s Ecosystem Venture Fund, said Williams.

The fund will be a capital pool, co-managed by the founders of DFINITY and Polychain Capital. It will invest in specific projects building applications on the DFINITY platform. Blockchain is the technology that underpins bitcoin and other cryptocurrencies.

“At the moment, we’re looking very hard in how to widen distribution,” said Williams. “We’ve got demand in the hundreds of millions wanting to participate in the project.”

Williams said the company launched a token sale last year, raising some funds, but he distanced himself from 2017’s rash of initial coin offerings, a financing strategy in which startups create and sell virtual tokens to investors to raise funds.

“If you look at these ICOs, some of them have suspicious dimensions. They have taken advantage of market conditions and made huge amounts of money,” said Williams.

“The problem is that there’s going to be backlash against that. We don’t want to be guilty by association.”

Reporting by Gertrude Chavez-Dreyfuss, Editing by Rosalba O'Brien

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