TechCrunch noted a week ago that private markets appeared strongly bullish on future startup value creation, while public markets were drifting lower, repricing possible exit values for today’s upstart companies. The was, it seemed, a rising gap between the level of bullishness in the private and public markets.

That dissonance has only increased in volume in the intervening days. New data from China’s private market, sharper central banking forecasts, sliding tech shares and rampantly bullish funding rounds make today’s startup cocktail even more confusing than what we saw a week ago.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

In broad terms, the era of cheap money is coming to a close as startups continue to raise record sums, creating a possible collision course between private-market enthusiasm and a tightening stock market. And the discrepancy is only getting bigger.

Let’s talk about it.

What’s changed?

This morning, Goldman Sachs updated its expectation regarding how quickly the U.S. Federal Reserve will tighten monetary policy. Three hikes to the key overnight rate were anticipated this year; that figure has risen to four. The financial giant also expects the Fed to start to shrink its balance sheet in July. This is a full-on reversion of today’s policy that has kept rates at effectively zero and bond-buying afoot.

The macro environment is going to change mightily this year, meaning that we’ll close 2022 in a very different state than we began it. You might not know that, looking at the market today.

A few data points for flavor concerning startup fundraising:

London-based Kodland, which started out back in 2018 offering in-person courses for children to learn digital skills like computer programming before switching focus to online learning from early 2020, has closed a $9M Series A funding round to scale into more markets.

The round is led by Redseed Ventures, with participation from Baring Vostok, Kismet, Flyer One Ventures, and Alexander Nevinsky, a partner at New York based I2BF.

Kodland’s remote courses for children aged 6-17 are currently available in the UK, Ireland, US, Canada, CIS Region, Malaysia, Indonesia, and Argentina — with the startup offering proprietary localized content for each target region (although its users are spread across some 40 countries). So far, it says some 16,000 children have been signed up for its paid courses.

The new funding will be used to further expand the reach of its online courses.

The courses focus on group- and project-based learning, teaching kids digital skills including coding, website building, games creation, animation and video editing in a way that’s structured to be more fun and interactive than traditional classroom-based lessons. Although the online learning offered by Kodland’s platform is guided by teachers rather than self serve.

Kodland says it has around 1,000 teachers on its platform (some are employed by it, some are gig workers, depending on the market); while the “typical” ratio is one teacher per 15 pupils. It notes its platform does also offer one-to-one teaching.

The edtech startup  says it’s focused on extracurricular teaching of digital skills for kids vs selling tools and resources to schools as it’s easier to scale globally — meaning it skips the complexities of K12 procurement.

And with a nod towards the creator economy, it’s established its own “accelerator” — called Out of the Box — where it offers (extra) support to the most talented students to help them monetize their digital creations by turning them into “real-life” products.

Kodland’s latest tranche of funding — which brings its total raised to date to $11M — will be used for market expansion, with courses in a further eight languages planned over the next two years. It says it will also be spending on product development.

“During 2022 we will expand further in English-speaking countries, in addition to UK and Ireland, enter Spanish-speaking countries and several countries in South-East Asia,” the startup tells TechCrunch.

A smaller slice of the funding will be ploughed into its accelerator program.

The Series A funding comes off the back of what Kodland bills as “considerable traction” with students and “robust top-line growth” — noting that it grew its revenue 6.5x in the third quarter of 2021 vs the same period last year. 

Edtech generally has had a booming pandemic, given all the extra screen time caused by lockdowns and restrictions on in person mixing — not to mention the demand for support as homeworking parents have sought tools to keep their offspring gainfully employed while they try to work.

That does mean competition is pretty heated, though.

Funding giants like Softbank have been ploughing millions into the space and a clutch of edtech unicorns is also driving plenty of M&A activity. A bunch of cohort-based learning platforms has also been successful in attracting recent investment — by, similarly, seeking to bridge the gap between edtech and the creator economy.

Where kids are concerned, a giant of the category remains Roblox — which leverages social gaming to get children interested in learning programming and potentially earning money off of their creations.

Still, Kodland’s structure and focus — STEM skills for kids delivered via teacher-led classes — may help it carve a niche in the growing sea of edtech plays.

Billing itself as a “international online digital skills school for kids and teens”, its marketing is geared toward pitching parents on the notion of quality educational screen time for their offspring — selling bundles of four classes (aka a “module”) for €110; or a “complete” course of 32 classes from €660.

Commenting on the Series A in a statement, Eugene Belov, managing partner at Redseed, said: “Traditional educational institutions have a hard time keeping up with the rapid pace of technological development in today’s world. This often leads to a disconnect between the supply (skills and abilities of young graduates) and demand for talent (the requirements of modern workplaces). [Co-founders] Alexander [Nosulich] and Oleg [Kheyfets], are working hard on filling this gap by teaching their students skills which are very often left out of classical school programs, but which are becoming essential in today’s digital universe. And the unique result-oriented way their programs are structured make them highly appealing to modern kids. We are very excited to support Kodland on their journey.”

“There is no monopoly in the educational segment now, which means that more and more players are entering the market to meet the growing demand for educational services,” added Vital Laptenok, general partner at Flyer One Ventures, in another supporting statement. “Those who understand the real needs of their customers will be able to become major players and set trends in the market. The Kodland team focuses precisely on the practical knowledge and opportunities for children to learn relevant professions in an interactive manner.”

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This is our Monday show, our short ramp into the week. Yes, it’s Monday again. No, you can’t stay in bed. Things are already happening!

• Take-Two is buying Zynga: In a cash and stock deal worth around $12.7 billion (enterprise value), the transaction has delighted Zynga shareholders and bummed out Take-Two’s own.
• Paytm is taking shots, as other 2021 IPOs slim down.
• The macro environment that startups exist in is about to change for the first time, from a monetary perspective.
• Pine Labs is looking to go public in the United States, China venture capital data is looking pretty strong, Assent Compliance raised a huge round, and Arive is apparently a thing.
• All that and we are just getting ready for earnings season, so stay hype as there is a lot of data coming in short order.

Welcome to the week! The Equity team is entirely back from vacation now, and we are ready to freaking rock this year. Let’s kick some ass!

French startup Ankorstore has raised a $283 million Series C funding round (€250 million). Founded in November 2019, it took Ankorstore around two years to reach a post-money valuation of $2 billion (€1.75 billion). The company operates a wholesale marketplace for independent retailers across Europe.

Ankorstore lets independent brands sell their products to independent retailers. Those retailers can then sell those products to their own customers. It’s a B2B2C play with a focus on offline sales at the end of the chain.

You can find a bit of everything on Ankorstore, from household supplies to maple syrup, candles, headbands, bath salts and stationery items. Some verticals have been working quite well in particular, such as non-perishable groceries, beauty products and items for your home.

And it’s been working extremely well given the company’s trajectory. There are currently 200,000 retailers using the marketplace and sourcing items from 15,000 brands. In May 2021, when Ankorstore raised its Series B, the company told me it was working with 50,000 shops and 5,000 brands.

This leads us to today’s funding round. Bond and Tiger Global led the Series C. Eurazeo and Coatue also participated in the round. Some existing investors put more money on the table, such as Index Ventures, Bain Capital Ventures, GFC, Alven and Aglae Ventures.

There aren’t a lot of companies competing in the space. The best known wholesale marketplace is probably Faire, a U.S.-based company that has raised over $1 billion — it has recently started its European expansion. Creoate and Orderchamp also operate wholesale marketplaces in Europe.

A marketplace without inventory

Ankorstore has teams in five countries — France, the U.K., Germany, the Netherlands and Sweden. It sells products in 23 European markets. Retailers can pay up to 60 days after ordering something and there are no hidden fees for them. Essentially, Ankorstore helps retailers focus on curation, service while the startup takes care of procurement.

As for brands listing their items on Ankorstore, they give a 10% cut on each transaction following a higher 20% cut on the first order through Ankorstore.

Some brands still have direct deals with massive retailers, such as department stores. And Ankorstore doesn’t prevent brands from hiring sales people, going to fairs, etc. The marketplace is just another sales channel and another opportunity to find customers.

And this is the beauty of the business model of wholesale marketplaces. Ankorstore doesn’t have any warehouse and doesn’t own any inventory. The company only facilitates transactions between brands and retailers without any capital investment.

“We think we’re closer to LinkedIn in the way we operate — it’s a network of professionals and we help them connect with each other,” co-founder and co-CEO Nicolas Cohen told me.

And like all social networks, there are some strong network effects as the platform gets bigger. In particular, Ankorstore expects to expand to new categories, such as perishable food.

The startup already has a deal with UPS to help brands with shipping. But the company hasn’t done much when it comes to warehousing solutions for small brands. That’s another opportunity down the road.

With 400 employees and a lot of money in its bank account, Ankorstore could act as the unifying layer of this highly fragmented industry.

This morning private-market powerhouse Andreessen Horowitz announced that it has closed $9 billion in new capital for its venture capital, growth-stage, and biotech-focused vehicles.

The firm, better known by the moniker a16z, also raised a $2.2 billion crypto-focused fund last year.

The collection of fundraises by the firm highlight the rising size of private-market investing vehicles that we tend to group under the venture capital banner, and the burgeoning capital base of a16z itself.

Looking back in time, the group’s last generation of funds — including its seventh venture fund worth $1.3 billion, its second growth fund worth $3.2 billion, and its third bio-focused fund worth $750 million — were worth just a touch over half of its latest aggregate fundraise. So, it appears that a16z is not only reloading, it’s raising more capital than ever for its usual crop of focuses.

That the group is raising larger investment capital pools should not surprise. Its first crypto fund was worth $300 million, its second $515 million, and its most recent around four times that much. As an investing collective, a16z like many private-market investors is putting more capital to work per new crop of new funds.

The trend of larger funds is generally thought to be a contributing factor to larger startup funding rounds, and some of the pressure regarding deal access (harder) and startup valuations (higher).

To underscore just how big venture, and venture-ish funds are today, recall that Norwest Venture Partners closed a $3 billion fund last month. That pushed the group’s total capital it has raised “across the decades” as our own Connie Loizos put it, to $12.5 billion. So, a huge fraction of the firm’s historical capital was raised just last quarter.

It’s a capital arms race in the private markets, as enthusiasm for technology companies both traditional (software, etc.) and frontier (crypto, quantum computing, metaverse, etc.) remains red-hot. That the public markets are taking a slightly different tack in recent weeks doesn’t appear to have slowed the venture capital firm side of the fundraising coin. Not yet, at least.

The relationship between economic news and the value of technology stocks has been a fun puzzle in recent months.

You might think that strong jobs reports, for example, would lead to general economic optimism and, therefore, upward movements for technology stocks. And you might also expect that poor economic data would lead to general economic pessimism, and therefore downward movement for technology stocks. You know, because tech is a big part of the present-day economy.

Ha, no. Well, partially yes, but also no.

Heading into today’s jobs report, there was a specter hanging over the markets. Namely, the U.S. Federal Reserve, which will begin to tighten monetary policy this year, perhaps through the end of its bond-buying program, cutting its balance sheet and raising rates. The result of the Fed tightening rates is that bonds and other lower-risk assets would become more attractive. At the same time, rising rates are expected to make expensive tech stocks less attractive given risk-adjusted return evolution.

Given that dynamic, you might expect that a strong jobs report today would mean that tech stocks would go down, and a jobs report miss would mean that tech stocks would go up. That almost happened. Today’s December jobs data missed (199,000 net new jobs reported, about half of expectations) and tech stocks initially sold off. But then when markets opened, they ripped higher, with the Nasdaq up 0.34% — while the Dow Jones Industrial Average is down a fraction — and software stocks are up around 0.8%.

Why the drop and then bounce in tech stock value?

There’s concern that we’ve effectively reached full employment. Which could mean that the lackluster December jobs number was not driven entirely by a lack of employer demand, but also in part due to a lack of worker supply. (The fact that we remain in a global pandemic plays into this dynamic, of course

We find ourselves, then, in the weird situation when a poor jobs report could indicate that the economy is stronger (closer to full employment) than anticipated, implying that wages and prices will continue to rise, inducing the Fed to raise rates. Which, as noted above, would mean that higher-risk assets would sell off and less risky assets would become more attractive. And yet tech stocks are a touch higher because, well, it appears that the markets are deciding that the poor-ish report will net out positive for tech shares, which have sold off sharply in recent weeks. Or that the lackluster jobs report will prove less Fed-provoking than a strong jobs report, in essence.

So, tech stocks are higher today and everyone who works in the industry gets a little wealth bump.

Hello and welcome back to Equity, a podcast about the business of startups where we unpack the numbers and nuance behind the headlines.

We’re getting back up to full speed this week, so Mary Ann and Alex along with Grace behind the scenes took on our Friday show. Next week Natasha and Chris are back, and we’ll do our regular three-show lineup. Today, however, despite a smaller team we had just as much as always go chew through:

• OpenSea’s epic new fundraise: Alex did a little Fun Math on the company’s trading volume and possible revenue totals. The gist is that OpenSea is a big business. But with NFTs as volatile as they are, charting regular growth will prove difficult.
• During our crypto chat, we also dug into the Web 2.0 vs. web3 debate that has been raging.
• From there we pivoted to fintech, with notes on Petal’s funding round, Ribbit’s new fund, and how Mexican fintech Bankaya is going after its target customers via offline methods.
• Then it was notes on the private and public markets’ dissonance, and a few moments to complain about COVID.

We are back Monday morning! Chat you then!

French startup PayFit just announced that it closed a new $289 million Series E round (€254 million) before the holidays. Following this round, the startup has reached a post-money valuation of $2.1 billion (€1.82 billion).

The company has been building a payroll and HR software-as-a-service platform for small and medium companies. It is operating in a handful of European countries — around 150,000 people currently get paid through PayFit.

General Atlantic is leading the round, while some of PayFit’s existing investors are participating once again, such as Eurazeo, Bpifrance’s Large Venture fund and Accel.

The startup has been on a roll as it raised a Series D round in March 2021. I asked about PayFit’s valuation and how it has changed since the Series D.

“It’s true that we had never communicated about our valuation before. We only shared the size of our funding rounds,” co-founder and CEO Firmin Zocchetto told me. “I can only tell you that our valuation has greatly increased.”

He listed two reasons why PayFit has had little issues raising at a higher valuation. First, the company is doing well when it comes to revenue. The startup’s annual recurring revenue has increased by 70% in 2021.

Second, there’s a lot of money floating around for the best performing tech companies. He said that the current climate is “extremely favorable.” And I bet a lot of people would recommend taking advantage of the situation.

The market opportunity

But let’s try to dissect PayFit’s business a bit more to find out how the company ended up here. PayFit lets you manage your payroll from a web browser and automate as many steps as possible.

PayFit has a product advantage compared to other solutions as you don’t need to be an expert and work for an accounting firm to generate payroll. The startup makes sure you remain compliant and hides the complexity. For instance, if there are regulatory changes, PayFit will update the logic of its application.

The company also has a big market opportunity. Every company needs a payroll solution and it’s incredibly hard to switch from one solution to another — it’s the perfect Venn diagram for a software-as-a-service product.

There are currently 6,000 companies using PayFit. Around 80% of them are based in France. Other customers are located in Spain, Germany or the U.K. Most importantly, when someone creates a company from scratch, many of them choose PayFit and stick with it.

When you think about it, 150,000 employees getting paid through PayFit is not that much. There are tens of millions of employees in France, the U.K., Spain and Germany. Before opening a branch in new countries, PayFit wants to capture more market share in these four markets.

Labor laws vary from one country to another, which means that there could be different geographical leaders as there’s a natural barrier to entry. For instance, Gusto and Justworks are doing well in the U.S. but they don’t operate in other markets. It’s going to be important to see if PayFit has what it takes to become the clear market leader in France, the U.K., Germany and Spain.

Finally, once PayFit owns the relationship with the HR or admin specialist in the client company, it can provide additional services. “We started with payroll, but what we really care about is the employer-employee relationship,” Zocchetto said.

PayFit offers different tools to manage vacation, facilitate onboarding, manage time sheets and track employee expenses. Soon, the company will also offer a way to handle annual performance reviews in PayFit.

Essentially, PayFit is part of a cohort of startups that are reinventing the admin stack. PayFit’s founder names Qonto and Alan as two companies that are also working on overhauling back-end tools. Qonto offers bank accounts for SMBs while Alan offers health insurance products for companies.

With 700 employees in Paris, Berlin, Barcelona and London, PayFit now wants to diversify its product offering, integrate with more third-party products and improve its customer service. The company wants to “offer small companies the same perks that you would get by working for big companies,” Zocchetto said.

Some of the most high-flying stocks of the pandemic are struggling in the new year and it’s bad news for tech companies of all sizes.

TechCrunch noted yesterday that software stocks were having a pretty poor start to the year. That was, it turned out, only the beginning of the damage. Today’s trading took yet another bite out of the key tech sector.

Observe the following five-day chart of the WisdomTree Cloud Computing ETF, which tracks the Bessemer Cloud Index, long a key barometer of the performance of modern software shares:

Image Credits: YCharts

Per YCharts data, the index closed at 46.30, or some 29% and change from its recent all-time highs. The turnaround in the value of software stocks is pretty wild. Today alone the index shed 5.91%.

For a sense of scale, a 10% decline from highs is considered a correction. A 20% decline is a technical bear market. And a 30% decline? I think that’s called a shitstorm.

Public fear versus private ebullience

The disconnect that we discussed yesterday of the private markets staying incredibly bullish while public markets run colder on some of the hottest startup categories is underscored by today’s trading.

But it’s worth noting that there is quite a lot of momentum to today’s pace of startup investment, hinting that the stock market’s decision to revalue software stocks may take some time to trickle down to the startup level. What do we mean? That venture capital funds have already been raised at particular dollar amounts and investment schedules. This in essence sets up a lot of big, high-priced startup rounds to get done even as their future exit window tightens; it’s going to be harder to land an up exit if the public markets keep their minds changed regarding the value of software revenue.

In more on-the-ground terms, startups that today raise, say, a Series A that values them on future revenues are setting up a challenge in which they have to keep raising at high revenue multiples as they grow. This will become a more difficult narrow to shoot as they scale through later rounds. The closer those startups get to IPO scale, the more that public markets will impact their ability to price their shares. Falling public prices and fat private valuations will get into a tangle at some point. And there are a lot of unicorns out there that won’t fare super well on the exit front if stocks keep falling as they are.

Not a great start for 2022 for your local venture capitalist’s near-term liquidity chances, it appears.

Brankas, an open banking startup for Southeast Asian markets, is entering the new year with a $20 million Series B. The funding was led by Insignia Ventures Partners, with participation from returning investors Beenext and Integra Partners. Other backers included Visa (Brankas was a member of its 2021 Accelerator Program), AFG Partners and Treasury International, the venture capital firm led by fintech veterans including Jeff Cruttenden, co-founder of Acorns and Eli Broverman, co-founder of Betterment, also invested.

Brankas’ platform offers a roster of more than 10 “banking-as-a-service” embedded APIs, including ones for opening online bank accounts, credit scoring, identity verification, e-commerce transactions and gig economy payments. Founded in 2016, Brankas goal is to “democratize access to financial and identity data.” Clients include traditional financial institutions, banks and fintech startups.

Brankas says it is seeing 30% month-on-month growth in API usage and is now used by more than 40 banks and 100 enterprise customers and channel partners. Since many of its fintech clients focus on “unbanked” people, or people who don’t have traditional bank accounts or credit cards, Brankas’ partners include financial providers like remittance companies and e-wallet.

For more about Brankas’ start, see TechCrunch’s 2019 profile of the company, the same year it raised its Series A.

Since then, Brankas chief of staff Bala Subramanian told TechCrunch that it’s been “aggressively building new products during the pandemic, which have seen great uptake in our current operating markets of Indonesia, the Philippines, Thailand and Singapore.”

For example, these included four new payments products—Direct, for account-to-account bank transfers; Disburse for remittances directly from accounts; Pay, a no-code solution for micro-businesses to collect payments; and for enterprise customers, IPG, a platform created for large financial institutions to collect payments on behalf of merchants).

In terms of data, Brankas developed four new APIS—Statement, for retail and corporate transaction retrievals; Balance, to let people view their current and average account balances; Income, which uses machine learning to identify individual income or salary; and Telco, to allow clients access to users’ telecom data.

Since its Series A in 2019, Subramanian said Brankas has witnesses more regulator support for open finance, because they see it as an enabler to financial inclusion and greater customer choice. Its also seen more “banking-as-a-service” products, or bank products like savings accounts, cards and loans offered as “embedded finance” on third-party apps, including e-commerce, SME account management and HR and payroll software. As a result of increasing adoption, he said that “large multinational financial service providers like Visa are embracing open finance, even if it may threaten their legacy business in the short term.”

Open finance has also been adopted by the mainstream cryptocurrency community, he added, thanks to increasing demand for “tradefi” products to complement crypto earnings.”

Brankas new funding will be used to build new APIs and double its current team of 100. It also plans to add more capabilities to its payments, data and banking-as-a-service API product menu in Indonesia, the Philippines and Thailand. Tt will also announce partnerships with digital banks and fintech companies in Vietnam and Bangladesh, two new markets where Brankas will go live early this year.

Brankas also plans to [[deepen the capabilities of its payments, data and banking-as-a-service API product menu in Indonesia, the Philippines and Thailand. Will also announce partnerships with digital banks and fintech leaders in Vietnam soon and Bangladesh, going live early this year].

Other open finance API startups in Southeast Asia include Finantier and Finverse. Subramanian said Brankas’ differentiators include its regional coverage and being the only company to offer regulated payments APIs enabling direct bank transfers and remittances without a middleman, as well as cryptocurrency payment and wallet linking APIs. He also said that through Visa, Brankas enables open finance for all Visa partner banks in the region and is currently developing new solutions for payments, identity and data analytics.

In a statement about its investment in Brankas, Insignia Ventures Partners principal Samir Chaibi, said, “We have also been impressed by Brankas’s approach to market development and their ability to launch and scale their products in a regulatory compliant manner while ensuring that developers benefit from a reliable and stable source of banking and financial data and beyond.”

Justworks released an updated IPO filing today, providing fresh financial results and a look at what the company may be worth when it debuts.

For those of you in search of a single number, using a simple share count, Justworks could be worth more than $2 billion at the top end of its current range.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

But that’s hardly enough information. So this morning, The Exchange is going to calculate the company’s various simple and fully diluted valuation marks, run multiples using its most recent quarter’s results, and compare all the data to the firm’s final known private valuation.

I had wanted to write up a 2022 IPO primer this morning, discussing the upcoming Reddit and Via IPOs, but that will have to wait a day. The Justworks S-1/A filing is here, if you want to follow along. Let’s talk SMB-focused HR software!

Justworks’ recent financial performance

If you missed our first look into the Justworks story, let’s catch you up: The company has two core business lines. The first, called subscription, is what Justworks charges for access to its service — things like “HR expertise, employment and benefit law compliance services, and other HR-related services,” per its filing.

The other, larger component of its top line is called “benefits and insurance-related revenue.” The former is pretty high margin, the latter less so.

Here’s how the company did on an aggregated basis in its November 31, 2021, quarter:

Image Credits: Justworks S-1/A filing

As you can see, Justworks posted fairly material growth on a year-over-year basis, and even better gains in terms of gross profit. If you are surprised that the company’s resulting gross profit is so small compared to its revenues, recall that Justworks is not merely a software company; its revenues include lots of that lower-margin “benefits and insurance-related revenue” that we noted above.

More simply, the company is in the SMB HR space, so its software unlocks customer activity that will not generate SaaS-like margins. Still, the company’s aggregate results detail growth and very limited losses. So we can note that the company’s revenue mix is different from what we see from most software companies while also not being rude about that fact.

We’ve been gifted another episode of “Tech Versus Tech: Crypto Edition” today.

The argument among the tech elite about just who owns what in the Web 2.0 and web3 worlds continued this weekend. And once again the dustup featured former Twitter CEO Jack Dorsey and a16z, the investing firm best known in recent years for its capital deployments into the blockchain domain.

Dorsey, after pulling the rip cord from his perch atop Twitter and rebranding his fintech firm Square to the more crypto-friendly “Block,” has decided to talk more publicly about his views.

And views he has. The well-known tech exec is a known Bitcoin fan, which you might think would slot in nicely with a16z’s general crypto bullishness.

It does not.

Jack, web3, and who owns what

We dug into the early Dorsey-versus-a16z arguments here, but will provide a summary for those of you who would prefer something brief.

Dorsey’s ideas surrounding Bitcoin are centered around his belief in decentralization as a good. Bitcoin is a reasonably decentralized system. Its founder is out of the picture, it is owned by no single entity, and its community has managed to keep working on the project despite it lacking a traditional leader or external investment.

How does that contrast with web3, the blockchain projects that also trumpet the power and importance of decentralization? Dorsey thinks that web3 is, in fact, centralized due to ownership — control — accruing in the hands of external investors, a16z among them. This is because, unlike with Bitcoin, web3 companies are busy hoovering up venture capital at a rate that is frankly staggering, meaning that many decentralized projects are racking up large external investors in their central holding companies — centralization squared, I suppose.

Dorsey’s complaints about ownership, web3, and the role of external capital in funding so much of the crypto market came to a head in a series of tweets posted between December 20 and 22, with the well-known Twitter user taking potshots at venture capital in crypto more generally, and a16z in particular.

One example for flavor:

Them’s fighting words.

So what happened most recently? Well, a16z denizen and prolific Twitter blocker Chris Dixon took a shot back at Dorsey’s argument yesterday with the following: