Andreessen Horowitz Launches $2.2B Crypto Fund

Venture capital firm Andreessen Horowitz has announced a new $2.2 billion fund that will invest in crypto networks and the founders and teams currently building within the digital assets space.

The investment offering will be the third of its kind for the Silicon Valley-based firm, also known as a16z. The first fund, launched in 2018, raised $300 million while Andreessen’s second fund, created last year, raised $515 million. 

The fund will allow the firm to discover the next generation of visionary crypto founders and will invest in early seed-stage projects to fully developed, later-stage networks, according to a Thursday blog post by Andreessen general partners Chris Dixon, Katie Haun, and Ali Yahya.

The firm was looking to raise between $800 million and $1 billion, Financial Times reported in April, but far exceeded that target. 

“The size of this fund speaks to the size of the opportunity before us,” Dixon, Haun and Yahya wrote. “Crypto is not only the future of finance but, as with the internet in the early days, is poised to transform all aspects of our lives.”

Meltem Demirors, chief strategy officer at CoinShares, said that the new fund, which she noted is now the investment firm’s largest single vertical fund, is important validation that allocators want exposure to the crypto space. It comes as there is more allocation to crypto as an asset class, as evidenced by rising AUM in CoinShares ETPs, which she said has grown by 10 times.

“As more capital enters the ecosystem at later stages, company valuations get driven up and result in more allocators looking to enter the space, effectively creating a flywheel effect for capital and valuations,” she told Blockworks.

A harbinger of things to come

With $7 billion in venture deals announced year to date – excluding Bullish, which Demirors noted was infused with $10 billion of existing capital rather than new commitments – there is now more capital than ever looking to be allocated to areas like crypto startup equity, protocol tokens and debt financing, she explained.

“A $2.2 billion pool of capital means they could write a $5 million check every single day for a year and still have money left over,” Demirors said. “The sheer size is an indication of the growth potential of the space, and a harbinger of much larger financing rounds to come.”

Andreessen Horowitz, along with Polychain Capital, recently led a private token sale that raised $314 million for cryptocurrency startup Solana Labs. Solana said that the funding would in part be used to accelerate the deployment of market-ready applications focused on onboarding the next billion users into crypto.

The firm was one of the largest two investors of Coinbase, which went public in April, with a stake worth $11.2 billion when the crypto exchange’s shares began trading.

Andreessen also participated in the $80 million fundraising round in February of Anchorage, a crypto platform for institutions, as well as the seed and Series A rounds for decentralized derivatives exchange company dYdX in 2017 and 2018.

Adding talent 

With the new fund launch, the VC firm also announced it has expanded its team in an effort to bolster its regulatory and operational capabilities. The firm now includes experts in marketing, public relations, policy, regulatory affairs, recruiting and general startup management.

“As with any new computing movement, crypto has endured a variety of challenges and misconceptions,” according to the blog post. “That’s why we are also bringing together heavy-hitters across several functions to help translate crypto to the mainstream.”

Among the additions is Tomicah Tillemann, who joins as Andreessen’s global head of policy. He worked as a senior advisor to now-President Joe Biden and as Hillary Clinton’s speechwriter. Tillemann was also formerly chairman of the Global Blockchain Business Council and has held advisory roles with the United Nations, World Bank, World Economic Forum, and a number of blockchain companies.

The firm also promoted Anthony Albanese, who joined the firm last year from the New York Stock Exchange, to chief operating officer.