Andreessen Horowitz’s web3 arm – a16z crypto – has raised $4.5 billion (£3.6bn) for its fourth crypto fund, setting a new record for venture capital (VC) in spite of the market’s turbulence.
Last June, a16z crypto announced its third fund whilst the market’s total capitalisation sat at an all too familiar $1.35 trillion (£1.05tn).
Back then, the firm brought $2.2 billion (£1.75bn) to the table for what it saw as the “next wave of computing innovation”.
In spite of recent events with TerraUSD and the market fear it has ushered in, a16z is doubling down in terms of both cash and rhetoric.
Chris Dixon, a16z’s crypto starboy, believes the world is entering a “golden era of web3” comparable to the rise of mobile apps like Uber, Instagram, and Snapchat in the early 2010s.
Dixon, who topped Forbes’ 2022 Midas List as the best-performing venture capital investor, elaborated:
“Programmable blockchains are sufficiently advanced, and a diverse range of apps have reached tens of millions of users. More importantly, a massive wave of world-class talent has entered web3 over the last year. They are brilliant and passionate and want to build a better internet. That’s why we decided to go big.”
The fund, which brings a16z’s total raised in crypto to more than $7.6 billion (£6bn), will allocate $1.5bn (£1.2bn) to seed investments in web3 and the remaining $3 billion (£2.4bn) to traditional start-up investments.
Better three hours too soon than a minute too late is a16z’s philosophy, and the company seems set to endure the ongoing bear market with the kind of omniscient optimism reserved only for web3 VCs.
After all, the firm argued earlier this month with its inaugural “State of Crypto” report that hardship in the crypto markets is necessary to drive innovation and usher in eras of renewed vigour.
And it’s not only the wider market that has taken a gloomy turn in 2022, a16z has had to deal with its fare share of stormy weather.
Back in March, a16z crypto’s former co-lead, Katie Haun, revealed a $1.5 billion (£1.2bn) fund for her new firm, Haun Ventures.
This was off the back of rival VC Paradigm announcing its then unmatched $2.5 billion (£1.98bn) crypto fund in November to challenge a16z’s dominance.
Amidst the growing competition, a16z’s record-setting fund will be used to invest in key areas such as web3 games, decentralised social media, regenerative finance, and layer 1 and 2 infrastructure.
Funds will also be used to expand the company in terms of research, engineering, marketing, and partnerships to sustain its ever-growing investment portfolio.
When a16z announced its third fund last summer, the crypto markets revived from a slow year to push Bitcoin and Ethereum to new all-time-highs in November.
In 2022, factors like the 24 percent year-to-date collapse of the Nasdaq along with an increasingly hawkish Federal Reserve leaves optimism a touch further out of reach. However, if one thing is for sure, a16z isn’t giving up on web3 any time soon.
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