Andreessen Horowitz has launched a $4.5bn cryptocurrency fund, making its biggest bet yet on the future of blockchain technology despite the dramatic market crash.
The Silicon Valley-based venture capital firm said on Wednesday that it will allocate around $1.5bn to seed investments while the remaining $3bn will be earmarked for venture investments — the largest crypto fund to date.
The new fund is the fourth, and largest, from Andreessen to focus on cryptocurrency investments, taking its total investment into the space to more than $7.6bn.
The Financial Times first reported Andreessen’s plans in January, as VC firms increasingly piled into crypto amid a frenzy in the markets over rising prices and new applications of blockchain technology such as non-fungible tokens, dubbed the “web3” movement.
However, the speculative boom has since soured, as recent interest rate rises prompted investors to flee the riskiest corners of global financial markets. The sell-off has hit crypto tokens such as bitcoin, as well as those providing the underlying infrastructure such as crypto exchanges and lenders.
Despite the so-called “crypto winter”, Chris Dixon, managing partner and founder of Andreessen’s crypto arm, said that the group believes the space is reaching a new “golden era” in which “new talent, viable infrastructure, and community knowledge” spurs rapid innovation.
“We believe blockchains will power the next major computing cycle,” he said. “That’s why we’ve decided to go big.”
Web3 advocates such as Dixon typically seek to wield distributed ledger technology to allow users more control and ownership over their data. They also seek to disintermediate the Big Tech groups that monetise data as part of their ad-based business models — and which have typically been the recipients of VC funding in the past.
Dixon said that the firm was targeting start-ups of all stages in areas such as decentralised social media, and decentralised autonomous organisations, which aim to be governed by code. He also cited NFT communities, creator monetisation and decentralised finance, among others.
The company can invest in companies as it would for regular start-ups, or invest in the tokens or coins that a particular project generates.
Addressing the bear market, Arianna Simpson, general partner at Andreesen, said: “What we’ve seen is that many of the best protocols and companies are actually built during periods of market instability or downturns. Because it really allows people to focus on the technology and building rather than being distracted by short term price fluctuations.”
She added that the firm was focused on “the 5-, 10-year horizon and beyond”.
Last week, Andreesen announced that it had raised $600mn for the creation of its first ever gaming-focused fund, with an emphasis on investing in gaming apps, studios and infrastructure to support the building of a virtual world known as the metaverse.