One of the biggest names in venture capital, Andreessen Horowitz (also known as a16z), is reportedly raising capital between $800M and $1B for their latest cryptocurrency fund.
Third Time’s A Charm
The firm has raised capital for two previous funds centered around cryptocurrency investments, including an initial $300M fund in 2018 and a roughly $500M fund just last year. However, this report represents unprecedented size financially for the company with regards to a cryptocurrency fund. Andreessen Horowitz was a notable investor in Coinbase at many different times throughout the past eight years as well, which recently went public and carries roughly a $60B valuation. The company reportedly held roughly $11B worth of Coinbase based on the valuation at the time of IPO.
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Coinbase aside, Andreessen Horowitz has invested in a multitude of successful companies, including Facebook and Twitter, as well as a variety of different crypto projects, such as Ripple, BitClout, and Aleo, among others.
How Big Is This Really?
As the initial report released by the Financial Times aptly notes, there have been a number of venture capital firms raising a substantial amount of capital for cryptocurrency funds in recent years, including Paradigm, Pantera, and Sequoia Capital China. Despite increased inflows recently, only Paradigm has reached the realm of the $1B mark in terms of establishing a dedicated crypto fund, making the potential size of the Andreessen Horowitz fund particularly relevant. Paradigm is a crypto-focused investment firm which, like Andreessen Horowitz, is based in Silicon Valley.
Nonetheless, crypto investment at a major scale continues it’s ramp up, be it from venture capital or from institutional investors. It was just last month when Fidelity filed for a Bitcoin ETF with the SEC, and company stock tokens like Apple, Microsoft, and Tesla are increasingly hitting the market on exchanges like Binance.
The crypto industry is worth over $2 trillion and growing | Source: TOTAL-CRYPTOCAP on TradingView.com
Cryptocurrency Fund: Let’s Talk Thesis
Andreessen Horowitz has a crypto team of over two dozen individuals dedicated towards the company vertical, and describes crypto in their investment thesis as “purely a software movement” that is “developing very rapidly”.
There is more in the a16z crypto investment thesis that is worth soaking in; the firm breaks down a number of different buckets that they see as main drivers behind their involvement in the space, including next gen payments, DeFi, store of value, creator engagement, and Web 3.0. Digital goods in video games, in-app payment structures, and the potential around open source code are some of the main driving features that Andreessen Horowitz calls out with regards to impact in the aforementioned buckets.
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Beyond the broad thesis, the company is also working on offering a crypto-focused newsletter and already offers a bevy of free materials as part of their “Crypto Startup School”, focused on content delivery around how to build a crypto-based startup company.
Andreessen Horowitz has not commented on the released reports regarding the new fund as of yet.
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