Upon opening its first overseas office in London last Thursday, a16z made its first U.K. investment announcement today.
The venture capital firm has led a $4.2 million seed round in Pimlico. Based in London — as one could surmise from its name borrowed from the city’s charming area — the startup is building the infrastructure for developers to make more user-friendly decentralized applications or dApps.
“With Pimlico just a few weeks old, [its CEO] Kristof participated in our Spring 2023 cohort of Crypto Startup School in Los Angeles. Within weeks, we were blown away by the velocity at which Kristof and team shipped product and closed significant, early partnerships for Pimlico,” Sriram Krishnan, general partner at a16z focusing on crypto, wrote in a blog.
While a16z continues to invest globally, Pimlico’s team in London will have a particular focus on U.K. founders and startups, the investor told TechCrunch.
“The combination of incredible universities creating the next generation of talent, a deep capital market, the sophistication of financial regulators and the potential for clear and practical regulation all point to the U.K.’s potential to become a hub for tech startups — but notably web3 startups,” said Pimlico’s founder and CEO Kristof Gazso, adding that his team will work closely with the Crypto Startup School, which will be hosted in London this coming spring.
With five employees spread across the world, Gazso is moving everyone to London following the funding round. Explaining the decision, the founder said: “Despite the magnetic force that you’ll see in places like Silicon Valley, and New York, London is really establishing itself as the new crypto hub in the world.”
Smart accounts for mass adoption
Despite the market downturn and unfulfilled promises of the crypto industry, a sizable number of developers remain passionately committed. That’s in part why a considerable portion of funding for the industry is currently directed toward highly technical solutions. Pimlico is one such startup.
Pimlico’s founder and CEO Kristof Gazso. Image Credits: Kristof Gazso
To understand its mission, it’s necessary to mention ERC-4337, a critical technical upgrade implemented recently by Ethereum, which has the most active developers among all blockchain networks.
ERC-4337 standardizes how “smart accounts” and related pieces of infrastructure interact with each other, making it much simpler for developers to enable features such as email recovery, social logins and so-called gas fee sponsorship. For those unfamiliar with crypto, gas fees have been a major inconvenience for users who need to pay transaction fees in a network’s native tokens — Pimlico is essentially removing that hurdle for the end users.
As a result of these technical improvements, dApp developers are finally able to program functionalities that have long been standard for Web 2 user accounts, which the industry sees as a crucial step toward the mass adoption of self-custodial wallets. This is important because, following the implosion of FTX, which exposed the risks associated with centralized finance, there’s been a wave of users moving away from centralized exchanges towards self-sovereignty over their own assets.
Having co-authored ERC-4337 with Ethereum founder Vitalik Buterin and others, Gazso realized that to fully utilize the new standard, developers still needed to overcome many friction points, so he decided to build a set of toolings that would allow developers to easily embed account abstraction functionality. In the founder’s words, his goal is to “easily build and scale their smart accounts by relieving them of the burden of building out their own relaying and sponsoring infrastructure.”
Taking a rough Web 2 analogy, Pimlico strives to do what Stripe does to the digital payments industry. “You’ve had a bunch of people who wanted to allow for payments on the internet, which is one of the early promises, but there was no one out there who actually built out a very easy-to-use, very easy plug-in payments network,” the founder said.
The article was updated on November 9, 2023, to clarify that the investment in Pimlico was the first funding announcement a16z made after opening its U.K. office.