Andreessen Horowitz, the Silicon Valley venture capital firm famed for placing successful bets on early-stage tech companies that grew to rule the world, is staking its next claim in the land of cryptocurrency.
Earlier today, it revealed a $2.2 billion fund for investments in crypto networks. “We believe that the next wave of computing innovation will be driven by crypto,” reads a blog post from a trio of partners at Andreessen Horowitz—one of them being Chris Dixon, a leading voice in the angel investing sphere. “We are radically optimistic about crypto’s potential to restore trust and enable new kinds of governance where communities collectively make important decisions about how networks evolve, what behaviors are permitted, and how economic benefits are distributed.” According to them, crypto, “as with the internet in the early days, is poised to transform all aspects of our lives.”
The radical optimism isn’t new: The fund marks a16z’s third foray into the crypto landscape. It raised a first fund of $300 million in 2018, during the thick of what’s now called “crypto winter”—a period when cryptocurrency values plunged roughly 80% after heating up to record highs the year before. At the time, Dixon called the war chest an “all-weather” fund, pledging to invest aggressively through digital currency’s volatile highs and lows.
But this time, Andreessen Horowitz’s fund will launch in the midst of a cryptocurrency gold rush. According to Bloomberg, venture capital firms have pumped $17 billion into the industry this year. Investments are also trending toward the mainstream, as traditional money-management companies like PayPal and Visa dip their toes by taking stakes in crypto VC Blockchain Capital’s recent fifth fund.
But with its latest, largest crypto fund yet, Andreessen Horowitz is diving deep. It has said it plans to invest in digital asset startups with a focus on “decentralized finance,” a term that encompasses systems built on blockchain technology. Its current holdings include OpenSea, a blockchain-based marketplace for digital items, and Dapper Labs, makers of the NBA’s Top Shot store for so-called crypto collectibles.
It’s also assembled a team of advisors including several with policy experience, hoping to navigate potential cryptocurrency regulations that could be on the horizon as calls for federal involvement intensify.
The firm’s resume includes early bets on Facebook, Instagram, Lyft, Skype, and Stripe—as well as Coinbase, a cryptocurrency trading platform that netted the firm $11.2 billion when it debuted on the Nasdaq earlier this year. However, Coinbase’s stock has since dropped nearly 50% as the crypto fervor has died down in recent weeks, with token values buffeted by bitcoin mining restrictions in China and Elon Musk’s erratic tweets.