Andreessen Horowitz, commonly known as a16z, is one of Silicon Valley's most prominent venture capital firms. It has made waves in recent years with its aggressive push into cryptocurrencies and Web3. Founded in 2009 by Marc Andreessen and Ben Horowitz, a16z is a private American venture capital firm that invests in startups. a16z has established itself as a powerhouse in the tech industry with $35B US assets under management, backing successful companies like Airbnb, Facebook, Lyft, Twitter, Slack, and Stripe. However, it's the firm's big bets on crypto that have put it in the spotlight lately.

First Crypto Venture Capital Funds

a16z launched its first crypto-focused fund in 2018 with $350 million during the early days of the crypto boom at a time when the industry was still nascent.

It followed up with a second $515 million crypto-focused fund in 2020.

In May 2022, in the midst of a crypto market downturn, a16z announced a massive $4.5 billion fund dedicated to blockchain projects.

This brought the firm's total crypto venture capital holdings to a staggering $7.6 billion, cementing its position as the crypto industry's largest investor.

The $4.5 billion fund raised in 2022 was split between a $1.5 billion seed fund and a $3 billion venture fund. In the announcement, a16z stated its belief that "the next wave of computing innovation will be driven by crypto". This conviction in the long-term potential of blockchain technology, even amidst a bear market, exemplifies the firm's high-risk, high-reward approach.

Raising $7.2 Billion in 2024

Fast forward to April 2024, and a16z has once again flexed its fundraising muscles, closing a total of $7.2 billion for its newest set of funds.

Notably, the firm has shifted away from capital earmarked specifically for seed or early-stage funds, instead splitting the capital across different sectors:

• $3.75 billion for its Growth fund, investing in late-stage tech companies
• $1.25 billion for AI infrastructure
• $1 billion for AI apps (consumer, enterprise, fintech)
• $600 million for its second gaming-focused fund
• $600 million for an "American Dynamism" fund focused on U.S. sectors like aerospace, defense, education

Interestingly, a16z's crypto fund did not receive any additional capital in this latest raise. However, with $4.5 billion already committed, it remains one of the largest pools of capital dedicated to the sector.

Shaping the Future of Crypto

a16z's influence on the crypto industry goes beyond just writing big checks. The firm has actively worked to shape the narrative and direction of the space.

In May 2022, it released its inaugural "State of Crypto" report, painting an optimistic picture of the industry's future despite the market downturn. The 2023 edition doubled down on this outlook, highlighting ongoing improvements in blockchain infrastructure and the potential of zero-knowledge proofs.

a16z has also flexed its policy muscles, hiring former regulators and donating to crypto-friendly politicians to advocate for the industry in Washington. As regulatory scrutiny on crypto increases, having an ally like a16z in its corner could prove invaluable.

Picking Winners in the Crypto Economy

Of course, a16z's ultimate goal is to back the companies that will define the future of crypto and Web3. Its portfolio reads like a who's who of the industry:

• Coinbase - leading U.S. crypto exchange
• OpenSea - dominant NFT marketplace
• Alchemy - blockchain infrastructure provider
• Avalanche, Solana, Polkadot, Ethereum - major Layer 1 protocols
• Uniswap - decentralized exchange
• Dapper Labs - creator of CryptoKitties and NBA Top Shot
• Yuga Labs - creator of Bored Ape Yacht Club
• Ripple - blockchain payments company
• Stripe - payments infrastructure, now accepting crypto again
• Worldcoin - privacy-focused cryptocurrency project

More recently, a16z has made headlines with a $100 million investment in EigenLayer, a startup facilitating "restaking" on Ethereum. It also led a $30 million funding round for Voldex, a blockchain gaming company. And it invested in Angle Protocol, a stablecoin project backed by U.S. treasuries.

Looking ahead, a16z appears particularly bullish on the intersection of gaming and Web3. In a post on X announcing the $600 million gaming fund, general partner Andrew Chen wrote that the firm is "excited to invest this new fund across many stages and sectors, from inception to Series A/B. From AI/infra, web3 games, VR/AR, 3D tooling, gamified apps, game studios, and much more. The fund targets a $300B+ industry that has spawned incredible companies over the past decade, and it's great to be able to build."

The a16z Advantage

a16z's edge in crypto investing stems from a few key factors. First, its sheer size allows it to make big bets and support projects for the long haul. Second, its network and reputation help attract top entrepreneurs to its fold. Finally, the firm employs a hands-on, "services" model where it embeds with founders to help them build.

This combination of deep pockets, prestige, and support has made a16z the go-to VC for ambitious crypto founders. As the industry matures, expect the firm to continue playing a leading role in shaping its future. a16z will keep swinging for the fences in crypto. With $7.6 billion in dry powder and a long-term mindset, the firm is well-positioned to weather near-term volatility and back the next generation of Web3 giants. As crypto enters a new phase, all eyes will be on a16z to see where it places its bets next.