Andreessen Horowitz Raises $4.5 Billion Crypto Fund in Falling Market
Andreessen Horowitz plans to invest billions of dollars in crypto start-ups as digital asset markets are in a rut.
The Silicon Valley company on Wednesday announced a new $4.5 billion fund to support crypto and blockchain companies. This is Andreessen’s fourth fund for the asset class and brings its total raised for crypto and blockchain investments to $7.6 billion. The company plans to invest in both the cryptocurrencies behind the projects and the company’s equity.
Andreessen’s first crypto-focused fund was launched four years ago, during a downturn now known as “crypto winter.”
“Bear markets are often where the best opportunities arise, when people are actually able to focus on building technology rather than being distracted by short-term price activity,” Arianna told CNBC. Simpson, general partner at Andreessen Horowitz, in a phone interview.
Cryptocurrencies have slipped significantly from their all-time highs, with bitcoin down more than 50% since its peak in November, and they remain closely correlated to higher-growth tech stocks, which suffered a major drop this year. Earlier in May, the crash of the stablecoin TerraUSD rattled investor sentiment and caught the attention of regulators.
But Simpson said investors shouldn’t worry about the company’s bets.
“Technical due diligence and other types of due diligence that we perform are a key part of making sure projects meet our bar,” she said. “While our pace of investment has been high, we continue to only really invest in the top echelon of founders.”
Simpson and his partner Chris Dixon liken the long-term opportunity of crypto to the next major computing cycle, after PCs in the 1980s, the Internet in the 1990s, and mobile computing in the early 2000s.
Andreessen Horowitz is known for his early bets on Instagram, Lyft, Pinterest, and Slack, and made his first major crypto investment with Coinbase in 2013. Since then, the company has backed various crypto start-ups and the NFT, including Alchemy, Avalanche. , Dapper Labs, OpenSea, Solana and Yuga Labs. Earlier this week, he invested in Flowcarbon, a blockchain carbon credit trading platform also backed by controversial WeWork founder Adam Neumann.
While cryptocurrencies may be struggling to regain momentum, the money flowing into private companies is at an all time high. According to recent data from CB Insights, blockchain startups brought in a record $25 billion in venture capital last year. This figure is multiplied by eight compared to the previous year.
The flood of investment in so-called “Web3” start-ups trying to build businesses on blockchain technology has inspired scorn from some tech luminaries. Two of the world’s best-known tech billionaires, Tesla CEO Elon Musk and Twitter co-founder Jack Dorsey, have been among those questioning “Web3.” Dorsey argues that the VCs and their backers are the ones who will eventually own Web3 and that it will “never escape their inducements,” he tweeted, calling it a “centralized entity with a different label.”
“People who are skeptical aren’t where we are, which again is in the prime position of being able to talk to these brilliant builders all day,” Simpson said. “The other thing I would add is that a lot of the skeptics are the titans of Web 2.0 – they’ve been quite able to take advantage and benefit from closed platforms.”