Fortune Magazine: Why Did Star Investor Katie Haun Leave a16z?

Author: Katie Haun

This veteran of a16z became famous for placing large bets on Coinbase and OpenSea. Her new venture is poised to become the largest fund raised solely by female venture capitalists in Web3.

Haun stated that her seven-person company is already operating at full capacity.

Katie Haun took me on a tour of her art collection. Conveniently, this visit required no trip to a gallery or even her home—Haun's preferred medium is NFTs, so we are browsing her complete digital image catalog on her phone. These digital collectibles are stored on the blockchain, just like cryptocurrencies, and are currently a hot product in the tech industry where Haun resides.

She scrolls through lush floral images and avant-garde cyberpunk-style avatars ("My collector's taste is very diverse," Haun admits), searching for one of her favorites. While some of the hottest pieces in the booming NFT market have sold for tens of millions, this pixelated image of a girl with pink braids cost her nothing—it was a birthday gift.

She received it from her friend Elena Silenok at the end of last year. Notably, Silenok is the wife of Chris Dixon from Andreessen Horowitz. Since Haun left her job at the Department of Justice to dive into venture capital, he has been a partner in the firm's cryptocurrency fund.

However, while this pink-haired girl may be forever etched on the blockchain, the connections between real humans are much more malleable. For example, Haun and I are here to discuss her bombshell announcement that she is leaving Dixon and the powerful Andreessen firm to launch her own fund.

While the average American may not know her, she has unexpectedly become a rock star in the cryptocurrency and broader Web3 space. Web3 encompasses not only NFTs and currencies like Bitcoin and Ethereum but also the underlying blockchain infrastructure that supports these currencies.

When she got involved in the field in 2013, she had no interest in cryptocurrency—indeed, she was a federal prosecutor in San Francisco investigating how cryptocurrencies were used in criminal activities.

"I didn't choose this assignment," Haun says, noting that her previous legal work included prosecuting white-collar criminals, prison gangs, and corrupt federal agents. "However, I did choose to stay in this space."

Andreessen Horowitz, also known as a16z, is one of Silicon Valley's largest and most well-known venture capital firms. Founders Marc Andreessen and Ben Horowitz were early believers in Web3 when many VCs were still hesitant to invest in cryptocurrency. They saw in Haun the expertise they needed but that few possessed: the ability to navigate the complex regulatory environment that was evolving alongside the nascent cryptocurrency industry.

This former prosecutor signed on to become the firm's first female investing partner. She co-created and led a cryptocurrency team of about 50 people with a16z partner Dixon, which raised an astonishing $2.2 billion in its previous fund.

Soon after, this former industry outsider became one of a16z's most recognizable partners, investing in hot companies like cryptocurrency exchange Coinbase and NFT marketplace OpenSea.

In mid-December, she announced she would leave a16z to create a brand new company, a move that sent a flurry of signals—celebration, astonishment, and inquiry. This is a big deal, with reports suggesting Haun is planning to establish a $1 billion fund. If she succeeds, it would be the largest cryptocurrency fund ever raised solely by a female venture capitalist.

Amy Wu, head of FTX Ventures, said, "There aren't many women in the crypto space." She herself was just invited to invest in the $2 billion fund launched by the cryptocurrency exchange in January. In fact, there are not many women writing venture capital checks; in the U.S., female venture capitalists hold only 15.4% of general partner positions.

Now, this former prosecutor faces new challenges. After four years at a16z, her profile has risen, her network is extensive, and her investment track record is strong. But she also leaves behind a well-funded, enviable resource-rich company with over 300 employees.

Haun and her six-person team are proposing a radically different approach to founders. Her new company will enter a world swinging between reckless gold rushes and nauseating corrections—much like the world we find ourselves in now. Can Haun 2.0 survive in this turbulence and get founders to sign contracts?

Haun and I first sat down one January morning at the Rosewood Hotel in Menlo Park, just steps from her old office at a16z. We sat on an outdoor terrace with a stunning view of the Santa Cruz Mountains. We were the only patrons at this usually bustling hotel, a gathering place for many venture capitalists working in the area. It made sense: Omicron cases were surging in the Bay Area and beyond.

Even if the place were packed with venture capitalists as usual, Haun would stand out. She has golden hair and deep blue eyes, and I have never seen her wear anything with an Arc'teryx or Patagonia logo—those are the hallmark brands of the Silicon Valley casual look. Today, Haun arrived in a black-and-white polka dot dress. The last time I saw her, she was in a pale pink Valentino suit.

She has that elusive quality of being able to talk to anyone, whether in a boardroom or a courtroom. She can be very persuasive and determined. But she is also charming, even exuding excitement and exhilaration when discussing her new company.

Those close to her new venture say Haun is raising at least $1 billion for her first fund. Haun is reluctant to confirm this figure, stating she is "legally and regulatory prohibited" from commenting, which is standard VC fundraising response, as they worry about angering the SEC.

But given the influx of capital into cryptocurrency, $1 billion seems like a feasible if not conservative number. According to the latest data from PitchBook, U.S. venture funding reached a record $128.3 billion last year. And the share of that money flowing into cryptocurrency funds is rapidly increasing, from less than 0.5% in 2017 to nearly 7% last year.

Once VCs put in their money, their own investors, the limited partners, will rush in to replenish their coffers. Coupled with Haun's proven ability to engage in the hottest cryptocurrency trades, this is a good sign for her. The fact that she is starting small and focusing solely on cryptocurrency? That could also work in her favor.

"One of the things I've learned in the past four years at the firm is that I am actually an entrepreneur. It's time for me to step out. It's that simple." — Katie Haun

"Real crypto-native funds are very attractive to LPs," says Ilya Fushman, a partner at venture capital firm Kleiner Perkins. "That's because these investors can attract exciting new founders."

Haun is seizing the moment. Her new firm has already made seven investments, including an undisclosed amount in Autograph, a Los Angeles-based startup that helps athletes and celebrities launch and market NFTs. Fushman's firm co-led this round of investment, and both he and Haun will serve on Autograph's board. (Interestingly, the startup also has the backing of Tampa Bay Buccaneers quarterback Tom Brady.)

But guess which venture capital firm co-led this $170 million round of funding? Dixon from a16z also joined the board. While this may be hard to believe—any breakup carries a degree of tension—both sides insist that Haun's departure from her former employer was amicable.

She says her time at a16z was productive. She believes the firm's founders gave her a chance. "Not many people would think, 'Oh, she's going to be a great venture capitalist,'" Haun says.

But Haun says her experience working with founders changed her view of what she wanted. "One thing I learned in the past four years at the firm is that I am actually an entrepreneur," she says. Last year, when a16z's third dedicated crypto fund was fully deployed, it was a natural moment to move forward. "Given that we were at this inflection point, it led me to a lot of reflection," she says. "It was time to step out on my own. It's that simple."

Haun points to a patio near where we are sitting. She says that just last month, she and Dixon discussed the details of her departure there, such as how many people she could take with her. (An insider referred to these negotiations as a "horse-trading meeting.") Ultimately, all parties agreed that Haun would take six members from a16z, including her chief marketing officer Rachel Horwitz and her new company's global policy head, Tomika Tillerman.

The firm also decided that a16z would become an early investor in her new fund. Undoubtedly, Haun's company will compete with a16z for some deals, but as an investor in her new venture, her former employer will certainly benefit, no matter who wins. Beyond that, both Haun and a16z have stated they plan to continue collaborating, just as they recently did with Autograph.

Dixon stated in a written statement to Fortune, "We often talk about promising projects and teams in the space and continue to work together on several boards." "So we will continue to work closely together."

Despite multiple requests, Dixon was unwilling to speak directly with me, indicating a divergence between a16z's strategy and the one Haun is adopting. As one might expect from a former prosecutor—this job often requires trying to leverage the media to advance your case—Haun has become a focal point, giving interviews and becoming a regular at tech conferences (she has spoken at three Fortune events).

Meanwhile, a16z's attitude toward the media has grown more aloof—co-founder Marc Andreessen is notorious for blocking reporters on social media, and he has even started his own internal content operation, completely avoiding journalists.

You know who else hates the media? Celebrities. (The old hipster, having spent years in the media industry, types this line with calm.)

But that hasn't stopped Mindy Kaling from summarizing her first impression of Haun to reporters: "She is a venture capitalist I would love to go on vacation with." Kaling told me via email that she is an actress, writer, and producer, perhaps best known for her role in The Office.

Last fall, Kaling met Haun at a dinner in Los Angeles attended by a group of women from the entertainment industry. One of the purposes of the gathering was to allow Haun to share her insights into the world of cryptocurrency with this group, some of whom were interested in getting involved in Web3. (According to insiders, Gwyneth Paltrow also attended the meeting that night, and she later announced an investment in Bitcoin miner TeraWulf.)

In 2004, she worked with Supreme Court Justice Anthony Kennedy. She clerked for this justice from the end of that year until 2005.

One of the ways Haun plans to distinguish herself from competitors is by focusing on "verticals," bringing in expert advisors for each area. She appointed former Google executive Jared Cohen and fellow prosecutor William Frenzen to represent technology and government policy, respectively. When she needed an entertainment advisor, she called Kaling.

Kaling said, "I think I agreed before she finished asking the questions." "She is a legend in the cryptocurrency community; who wouldn't want to be with her?"

Haun's plans also include some significant changes to the funds she co-managed at a16z. She said, compared to the firm's massive scale, "We want to stay nimble, so our team is smaller." While a16z is known for providing a range of services to its portfolio companies, from marketing to legal, Haun stated that she plans to take a more targeted approach to establish what her company can and cannot do for founders.

For Haun, a smaller, more targeted approach does not contradict globalization. She said she plans to look for startups far from typical hubs like Silicon Valley. Haun stated, "I believe some of the best cryptocurrency founders will be found globally." "So I think one of the things my company will do is increasingly focus on the global stage." (a16z has stated that most of its cryptocurrency portfolio companies are "settled" in the U.S., but many of those companies have employees distributed around the world.)

Of course, there's the name. So far, Haun has named her new venture "KRH," which stands for Kathryn Rose Haun. But the investor says this is just a placeholder for legal documents. "I don't want to rule anything out, but I don't believe I will name it after myself," Haun told me. "I'm building a franchise, and I believe that one day, others will take over."

As a venture capitalist, it is difficult to quantify Haun's success. This is partly due to the nature of the industry—many investments do not succeed, and those that do often take over a decade to "exit," meaning going public or being acquired. In the past four years, Haun and a16z's crypto team have made over 60 investments.

So far, only one cryptocurrency exchange, Coinbase, has exited the market, going public last year through a direct listing with a valuation close to $100 billion.

While Coinbase was Haun's first job as an insider in cryptocurrency—this startup invited her to join their board after she left the U.S. Department of Justice in 2017—it's worth noting that a16z made its initial investment in the company back in 2013, long before Haun joined.

That said, the valuations of the companies she has backed have seen astonishing growth, with pre-exit valuations often cited as the most common measure of success. For example, OpenSea has become the leading marketplace for NFTs; just last year, it was valued at $1.5 billion, and now it is worth over $13 billion.

"She is a heat-seeking missile," said former a16z investor Jesse Walden, who also left the firm in 2020 to start his own cryptocurrency fund. "She knows where the space is going and who you need to know to get there. As an investor, that's a superpower."

She is a heat-seeking missile. She knows where the space is going and who you need to know to get there.

Jesse Walden, former a16z investor and founder of VARIANT FUND

In fact, finding the right people and getting them to say yes seems to be a significant part of Haun's success so far. At her new company, she plans to leverage this ability to build her own team, help her portfolio companies build theirs, seek deals, and of course, close deals.

"That's what I've been doing for over a decade," she says, referring to her previous career as a federal prosecutor. "I make deals, I negotiate, I sit across the table from the other side, and I have to figure it out quickly."

"Katie is an OG," says Justin Blau, co-founder and CEO of Royal, a service that allows musicians to sell ownership of their royalties to fans, a company Haun invested in while at a16z. "Because she has been so active in this space for so long, her relationships cover not only the cryptocurrency companies but also extend far beyond the crypto community."

After Dixon announced her departure, Haun and Dixon were at a16z's team dinner.

Coinbase's COO Emily Choi recalls how Haun intervened when another potential board member was considering joining another company. According to Choi, Haun took that person out to lunch, sat them down, and told them they would be crazy not to join Coinbase. It worked. "She knows what to say to really make it work," Choi says. "And she goes all out."

At a16z, Haun was involved in building the cryptocurrency team, which grew from two members to about 50 over four years. She says she recruited "most" of the team over the years. (Dixon stated in an email, "Recruiting is a team effort, and Katie was a key part of that team.")

Haun needs to continually bring in top talent to compete in the increasingly crowded crypto investment market. But she also needs to leverage the regulatory and legal knowledge that initially drew her attention in Silicon Valley. Cryptocurrency may no longer be an unknown quantity since a16z first knocked on the door, but it remains just as concerning.

As cryptocurrency expands globally, the challenges and controversies it faces are also growing. Last year, China's ban on cryptocurrency caused an uproar, and other countries have restricted the use of cryptocurrencies for fear they could undermine national control over existing monetary systems.

Additionally, there is another brewing concern: some digital currencies are notoriously energy-intensive, leaving a huge carbon footprint. This issue became a focal point during a hearing of the U.S. House Energy and Commerce Subcommittee on January 20, where lawmakers discussed how to make cryptocurrency more environmentally friendly.

"Regulatory compliance is the most important topic in the crypto space this year," Wu stated.

In addition to external threats, the rapid growth of cryptocurrency has also drawn criticism from the broader tech ecosystem. Founders of startups like Box's Aaron Levie and Airbnb's Brian Chesky have expressed skepticism about the adoption and impact of Web3. Increasingly, many within the crypto community are concerned that power is being concentrated in the hands of a few elites, particularly the largest startups that have received large amounts of cash from venture capital.

For those who support Web3's promise of "decentralizing" information control, this is a curse. In theory, Web3 spreads power in a way that traditional networks never have.

Scene from Coinbase's IPO in 2021.

Haun's former company a16z has been sharply critical of its detractors, stating that Web3 is still young but will ultimately deliver on its promises. Andreessen has also continued to block another tech expert—Twitter founder Jack Dorsey. The two have publicly clashed over whether crypto companies are decentralized or centralized.

Haun is taking a more diplomatic approach. "I think it's very exciting to see people like Moxie Marlinspike (a tech insider who has expressed skepticism about Web3) and Jack Dorsey entering this space and providing nuanced critiques," Haun says. "I welcome that."

However, despite her engagement with critics, Haun states that she is not unsettled by the hype surrounding cryptocurrency. Yes, the infrastructure is not fully in place, but it is on its way. Meanwhile, she says the potential of the technology has exploded.

When she entered the investment space in 2018, most people believed that the only truly meaningful area for cryptocurrency was financial applications. Haun says, "What I understand is that there are far more use cases than we imagined at the time."

Meanwhile, there are more pressing issues. In January, during Haun's fundraising efforts, the cryptocurrency market experienced a crash, with $1.4 trillion in market value evaporating. Some called it a "bloodbath," while others referred to it as a "correction." Haun is not worried; she points out that volatility is nothing new for the space: "The nature of running a cryptocurrency fund is to take risks."

Many of the structures of cryptocurrency trades—including the ones Haun says she will engage in with her new company—can be extremely risky. Unlike traditional venture capital, where equity is exchanged for cash, many cryptocurrency investors take what are known as tokens as part of their equity. These tokens are essentially digital securities stored on the blockchain and face the same extreme volatility as the broader cryptocurrency market.

However, for Haun, it is important to distinguish between risk and uncertainty, as risk and uncertainty do not exist in her dictionary.

"Like many things in my career, I think things are either 'hell yes' or 'no.' When Andreessen Horowitz offered me a job, it was 'hell yes,' and when I decided to go independent, it was also 'hell yes.' There have been many other moments in my legal career that were the same.

I have always been someone who follows my intuition, and my intuition, which is also my interest, is really no different. Have I had moments in the past few weeks where I wondered what I was doing? Yes, of course. However, I am very committed. I know this is the right decision."

Jessica Matthews contributed reporting.

Editor’s Note: A previous version of this story misreported Elena Silenok's last name. Fortune regrets the error.

The Blockchain Bet

Haun has invested in some of the fastest-growing and most promising startups in the cryptocurrency space. However, the industry is so young that it has yet to crown many winners or push losers off the stage. Here are some of Haun's most notable investments and board positions to date.

Arweave

This Berlin-based company claims to be a pioneer in a new form of data storage that uses blockchain technology to "store" information. Haun led a $5 million funding round in 2019, which was entirely token-based, meaning investors purchased digital securities recorded on the blockchain rather than traditional stock.

Autograph

The NFT company co-founded by football star Tom Brady raised $170 million in January. Haun's new company (as well as her former employer Andreessen Horowitz) participated in this funding round, and Haun has now joined Autograph's board.

Coinbase

In 2017, Haun became the first independent director of this startup. This move ultimately led to her joining a16z, which was an early investor in the cryptocurrency exchange. In April of last year, Coinbase went public with a valuation of nearly $100 billion, a rare feat in the crypto industry.

OpenSea

OpenSea is one of the hottest startups in the rapidly growing NFT market, currently valued at over $13 billion. While at a16z, Haun led two funding rounds and joined OpenSea's board. She invested again through her new company, contributing a hefty $300 million in the Series C funding round earlier this January.

Royal

Another investment Haun made while at a16z is Royal, which allows musicians to sell ownership of their royalties to fans, a new application of NFTs. Among other venture capital firms, artists like the Chainsmokers and Nas also joined Royal's $55 million Series A funding last year.