Alongside, a crypto index-focused platform, has closed an $11 million seed round led by Andreessen Horowitz (a16z), the company exclusively told TechCrunch.
“At a high level, we’re building what I describe as an on-chain Vanguard,” Austin Diamond, CEO and co-founder of Alongside, said to TechCrunch. “The goal is low-fee index products designed to enable total market exposure to crypto as a whole.”
Investors in the round include Coinbase Ventures, Franklin Templeton Investments, Village Global and Not Boring Capital, as well as angel investors. The startup was co-founded by Diamond and Jun Ho Hong, its head of engineering; Gauthier Le Meur, its COO; and Rai Sur, its CTO.
“In a lot of ways we want to be a bridge for new people to access this space,” Diamond said. “Historically speaking, a lot of people have been building products for other people in crypto and it’s not necessarily inclusive of a broader audience and our cap table is reflective of that as well.”
Alongside’s name derives from a wordplay on mutual funds, “where everyone invests alongside each other,” Diamond said. The platform aims to build products for investors to diversify through passive indices.
Last month, the startup launched its first product, the Alongside Crypto Market Index ($AMKT), which gives people broad exposure to the entire crypto asset market through a single token.
The token is “fully collateralized by the top 25 assets in crypto,” weighted by market capitalization, Diamond said. However, the top 25 excludes stablecoins and crypto assets with “questionable security status,” Diamond added. “Some assets in the space are under regulatory scrutiny; we can’t include those because we want to be compliant.”
All the assets are backed 1:1 by the underlying index components and “securely custodied by Coinbase,” Diamond said. The index was capped at top 25 due to liquidity, he added. “If you go further out, there’s not liquidity depth for those assets, but the top 25 has enough liquidity.”
The token is available on some global exchanges, crypto wallets, custodians, onramps, and Ethereum scaling solutions, including Polygon, Uniswap, SushiSwap, Gate.io, Rainbow and BitGo, to name a few.
The biggest difference between this index product and traditional equity indices is the exposure to crypto assets, Diamond noted. “Traditional equity indices or ETFs are indexing equity products. But in our case, we want to give direct exposure to crypto assets as a whole; that’s one of the biggest distinctions.”
In the future, Alongside will consider launching different products centered around DeFi as a category or layer-2 blockchains as a category, Diamond said. “In the beginning we just wanted to remain really simple.”
Over a 10-year horizon, the idea for a total market for crypto assets will look very different, Diamond said. “It won’t look the way it does now.”
“As the market matures and other asset classes live on-chain, we’ll be able to build products that look different than what we have today.”