Investing in Aleo

From the beginning, our core thesis has been that the best way to think of a modern blockchain is as a new class of computer that has the ability to run a special kind of program. These programs are sometimes called smart contracts, and they’re different from ordinary programs in that they have a life of their own. They are independent, and once written, they obediently execute themselves subject to nobody’s authority. Because of this property, smart contracts are uniquely capable of earning trust. 

But smart contracts today have two big limitations: (1) they are fully transparent by design and therefore don’t allow for privacy (2) they don’t scale to millions (let alone billions) of users. These limitations exist because trust requires verification. Transactions on a blockchain need to be transparent so that everyone can verify that they are correct. And, they tend not to scale because it takes time and energy for all computers on the network to perform that verification.

But research in a cutting edge area of cryptography called zero-knowledge proofs promises to unlock an elegant solution to the privacy and scalability problems. We spent a great deal of time looking at various approaches and teams working on this. Aleo’s solution is both elegant and pragmatic.

Enter Aleo

We first met Howard Wu, Aleo’s founder, back in 2018. We were immediately impressed by the depth of his knowledge in cryptography and distributed systems, and by his vision for crypto’s potential. He was collaborating closely with a number of prominent academics from Berkeley, Cornell and other institutions on Zero-Knowledge Proof research. Later that year, Howard published a seminal paper in this space with many of those same collaborators titled Zexe: Enabling Decentralized Private Computation.” It describes how it’s possible to change the way that transactions on a blockchain are verified so that it can be done privately and more efficiently. The trick lies in the use of a cryptographic primitive that allows any participant in the network to create a short mathematical proof that a transaction was processed correctly, but that doesn’t reveal any details about the transaction itself. The magical primitive that makes this possible is called a zero-knowledge proof (or zk-proof). The result with Zexe is a template for a blockchain that is entirely private and that scales far beyond most blockchains that are live today.

The implications of this idea are more profound than they might seem at first. Privacy is important as a feature, not just because it protects users’ personal data, but also because it fundamentally extends the design space for applications. There are things that can be built with a private smart contract that are simply impossible to build with a transparent one. For example, a simple game that hands out cards face-down to different players would need some way to make sure that those cards aren’t immediately visible to everyone playing. Building such a game on today’s blockchains is simply not possible — it’s too easy for the players to cheat by inspecting the blockchain and looking at each other’s cards. With Aleo, on the other hand, building a game like this will be straightforward. Of course, that’s just a toy example, but the point is that a blockchain like Aleo unlocks a whole new realm of possible applications.

When we reconnected with Howard and team a couple months ago, it became immediately clear that the team he’d brought together is world class. Their pace of execution is one of the most impressive we’ve seen, even by crypto standards. Not only do they now have a live testnet of their protocol, but they have also built a full programming language for Aleo called Leo and a development environment called Aleo Studio; both of these together make for a great developer experience. We are also very excited that our former partner, Alex Pruden, is now Aleo’s COO.  

Given the breakthrough technology, the huge idea, and this team, we are thrilled to announce that we’re leading Aleo’s Series A, partnering with Howard and the team to help make their vision a reality.

* * *

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see for additional important information.

Our crypto newsletter is coming soon

Sign up to be the first to get it.