Despite a gloomy outlook for crypto markets based on the past few weeks of token turbulence, venture capitalists looking to spend their way into a web3 future aren't taking their foot off of the gas.
Andreessen Horowitz, which underwent a bit of a transformation over the past few years scaling its headcount to scale its deals, has closed on its latest crypto fund -- and it's a whopper. The new $4.5 billion fund doubles the size of its last crypto fund and showcases the widening interest among the firm's limited partners in increasing their exposure to crypto startups. The firm specifies that one-third of the new mega-fund will be earmarked for seed deals exclusively.
It's been less than one year since a16z announced its $2.2 billion Crypto Fund III, and the firm has endured just as many changes as the broader crypto market during that time. Recent months have seen the further ascent of crypto-native firms like Paradigm and Electric Capital, which have raised mega-funds to challenge a16z's dominance. The firm also endured the exit of its crypto co-lead, Katie Haun, who split off from a16z, taking a number of colleagues with her to launch Haun Capital with $1.5 billion spread across two funds.
Crypto Fund IV continues to be helmed by longtime GP Chris Dixon, who has seemed to up his public persona in recent months, particularly on Twitter, where he breathlessly defends the web3 space from its detractors, getting into occasional spats with figures like Block's Jack Dorsey and Box's Aaron Levie. The continued skepticism among plenty of investors and entrepreneurs has grown louder in recent weeks following the particularly ugly collapse of the Terra ecosystem and its stablecoin UST, which imploded seemingly overnight, evaporating tens of billions in value while renewing calls among federal lawmakers to fast-track legislation aimed at reining in the industry.
When asked whether the market's cooling will scare traditional firms away from continuing their crypto bets, a16z's Arianna Simpson told TechCrunch that "it's likely other firms will pull back," but that "the size of our new fund speaks to the level of excitement and belief we have in this category."
When a16z announced its last blockchain fund, crypto markets had recently crashed but would soon mount an impressive comeback, pushing the Bitcoin and Ethereum cryptocurrencies to new all-time highs. The outlook among crypto investors seems a bit less rosy these days as public tech stocks continue to get hammered -- Robinhood and Coinbase are both down over 75% from their debuts -- and watchers forecast turbulent times ahead, not only for crypto but the tech industry generally.
Andreessen Horowitz's crypto arm is well positioned with a hefty war chest of fresh capital to keep scaling operations, but uncertain times ahead have left plenty of new founders concerned about the availability of capital during another potential "crypto winter."
"We can’t predict the future state of the market," Simpson told TechCrunch. "But we work with our companies to make sure they’re well capitalized to handle the storms."