Despite gloomy crypto markets over the past few weeks of tokes volatilities, VCs are looking to spend their way into the future of Web 3.0. Andreessen Horowitz, for instance, has closed on its latest crypto fund with a whopping 4.5 billion USD.
Announcing our fourth crypto fund, totaling $4.5B, to invest in promising web3 startups at every stage. This brings our total crypto/web3 funds raised to over $7.6B.
General Partner @cdixon shares more on https://t.co/xIezLlyDiC. https://t.co/Xc696Fu8UT
— a16z (@a16z) May 25, 2022
Over the past few years, the organization underwent a transformation scaling its headcount to expand its deals. The latest fund, double the size of its last crypto fund, showcases its widening interest in increasing its exposure to crypto startups. Andreessen Horowitz specifies that one-third of the new mega-fund is marked exclusively for seed deals.
It has been less than one year since a16z announced its Crypto Fund III, worth 2.2 billion USD, and it has endured as many changes as the broader crypto ecosystem during the same period. Recent months have witnessed a further expansion of crypto-native businesses like Electric Capital and Paradigm, which have raised funds to challenge a16z’s dominance in the market.
Also, the company endured the exit of its crypto co-lead, Katie Haun, who slit off from the company, taking several colleagues with her to launch Haun Capital with over 1.5 billion USD spread across two funds.
Andreessen Horowitz’s Crypto Fund IV
Longtime GP Chris Dixon, who has been ramping up his public presence recently, particularly on Twitter, continues to lead Crypto Fund IV. In recent months, he has vehemently defended the web3 industry from critics on social media, occasionally sparring with heavyweights like Block’s Jack Dorsey and Box’s Aaron Levie.
When asked if the market’s cooling will discourage traditional firms from continuing their crypto investments, a16z’s Arianna Simpson told TechCrunch that “other companies are likely to step back” but that “the scale of our new fund testifies to the level of excitement and confidence we have in this sector.”
“We believe we have arrived in the golden age of web3. Programmable blockchains have grown to the point where a broad range of apps has millions of users. More importantly, web3 has seen a massive influx of world-class talent over the last year. They are clever and zealous in their pursuit of a better internet,” wrote the company in its blogpost.
Crypto Turmoil
Crypto markets had also plummeted when a16z unveiled its previous blockchain fund, but they soon mounted a spectacular return, pushing Bitcoin and Ethereum to new all-time highs.
However, this time, the outlook among crypto investors seems less sunny. It is no surprise if we consider the recent plummet of tech stocks. Both Robinhood and Coinbase are down more than 75% since their IPOs. In addition, analysts’ predictions of tumultuous times ahead, not only for crypto but also for the whole tech industry, have fueled the fire.
Andreessen Horowitz’s crypto business is well-positioned with a sizable war chest of new funding to keep expanding operations. However, uncertain times have left many new founders apprehensive about capital availability during another potential “crypto winter.”
“We can’t foretell what would happen to the general market in the future,” Simpson added. “However, we work with our businesses to ensure that they are well-capitalized to weather the storms.”
The post added that it is why a16z has decided to go big. The company has been investing in crypto since 2013. The announcement of its fourth crypto fund, totaling 4.5 billion USD, out of which about 1.5 billion USD is dedicated to seed investments and 3 billion USD ot venture investments. It brings the company’s total crypto and Web 3.0 investments to over 7.6 billion USD.
The company announced that it would use these funds to invest in promising Web 3.0 startups at every investment stage. The company is particularly excited about developments in DeFi, Web 3.0 gaming, decentralized social media, DAOs, NFTs, creators’ monetization, governance and communities, regenerative finance, new applications, privacy, and others.
