With the opening of its first overseas office in London last Thursdaya16z made its first UK investment announcement today.
The venture capital firm led a $4.2 million seed round Pimlico. Based in London—as one might guess from its name borrowed from the charming area of the city—the startup is building the infrastructure for developers to make more user-friendly decentralized applications, or dApps.
“With Pimlico only a few weeks old, [its CEO] Kristof joined our Crypto Startup School Spring 2023 cohort in Los Angeles. Within weeks, we were blown away by the speed with which Kristof and the team were shipping products and closing important, early partnerships for Pimlico,” Sriram Krishnan, general partner at crypto-focused a16z, wrote in a blog.
While a16z continues to invest globally, the Pimlico team in London will be particularly focused on UK founders and startups, the investor told TechCrunch.
“The combination of incredible universities creating the next generation of talent, a deep capital market, the complexity of financial regulators and the potential for clear and practical regulation all point to the UK’s potential to become a hub for tech start-ups — but especially web3 startups. Pimlico founder and CEO Kristof Gazso said, adding that his team will work closely with the Crypto Startup School, which will be hosted in London next spring.
With five employees worldwide, Gazso is moving everyone to London after the funding round. Explaining the decision, the founder said: “Despite the magnetic force you’ll see in places like Silicon Valley and New York, London is really establishing itself as the world’s new crypto hub.”
Smart accounts for mass adoption
Despite the market downturn and the unfulfilled promises of the crypto industry, a sizable number of developers remain passionately engaged. This is partly why a significant portion of funding for the industry is currently directed at highly technical solutions. Pimlico is one such startup.
Pimlico founder and CEO Kristof Gazso. Image Credits: Christophe Gazeau
To understand its mission, it is necessary to mention ERC-4337, a critical technical upgrade recently implemented by Ethereum, which has the most active developers among all blockchain networks.
ERC-4337 standardizes how “smart accounts” and related infrastructure interact with each other, making it much simpler for developers to enable features such as email retrieval, social networking connections, and so-called gas fee sponsorship. For those unfamiliar with crypto, gas fees have been a major hassle for users who have to pay transaction fees on a network’s native tokens — Pimlico essentially removes that barrier for end users.
As a result of these technical improvements, dApp developers are finally able to program functionality that has long been standard for Web 2 user accounts, which the industry sees as a critical step toward mass adoption of self-service wallets. This is important because, after the collapse of FTX, which exposed the risks associated with centralized financing, there was a wave of users moving away from centralized exchanges to self-governance of their own assets.
Having co-signed ERC-4337 with Ethereum founder Vitalik Buterin and others, Gazso realized that to fully utilize the new standard, developers still had to overcome many friction points, so he decided to create a set of tools that would allow developers to easily integrate account removal function. In the founder’s words, his goal is to “make it easy to create and scale their smart accounts, freeing them from the burden of building their own rebroadcast and sponsorship infrastructure.”
Taking a rough Web 2 analogy, Pimlico is trying to do what Stripe is doing in the digital payments industry. “You had a lot of people who wanted to enable online payments, which is one of the early promises, but there was nobody out there building a very easy-to-use, very easy plug-in to the payments network,” the founder said.
The article was updated on 9 November 2023 to clarify that the investment in Pimlico was the first funding announcement made by a16z since opening its UK office.
