A16z’s $4.5-billion bet: 5 things to know about the largest crypto fund

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Andreessen Horowitz (a16z), a Silicon Valley-based venture capital firm, has raised $4.5 billion for a new crypto fund in the midst of a downturn in the crypto market.

Crypto Fund 4, the firm’s fourth and biggest so far, doubles the size of a16z’s previous crypto fund raised in June last year, demonstrating that despite the ongoing turmoil, partners at Andreessen Horowitz are looking to get more exposure to promising Web3 startups.

“We think we are now entering the golden era of web3. Programmable blockchains are sufficiently advanced, and a diverse range of apps have reached tens of millions of users,” a16z partner Chris Dixon said in a post. He added that a massive wave of world-class talent has entered web3 over the last year.

“They are brilliant and passionate and want to build a better internet,” he said.

Of the $4.5 billion raised, $1.5 billion will go towards seed investments and the rest will be set aside for venture investments.

The funds will be invested in promising web3 startups at every stage in sectors including games, decentralised finance (DeFi), decentralised social media, NFT communities, privacy, creator monetisation, regenerative finance (ReFi), and decentralised content and story creation.

The firm’s current crypto portfolio includes Alchemy, Avalanche, Celo, Dapper Labs, Phantom Wallet, OpenSea, Solana, and Yuga Labs. Earlier this week, the firm invested in Flowcarbon, a blockchain-based carbon-credit trading platform, set up by a group including WeWork founder Adam Neumann.

Earlier this month, Andreessen Horowitz announced the launch of GAMES FUND ONE, which will invest $600 million across the gaming industry.

Andreessen Horowitz partner Ariana Simpson, in an interview with CNBC, assured investors that the company is confident about its bets.

“Bear markets are often when the best opportunities come about, when people are actually able to focus on building technology rather than getting distracted by short-term price activity,” Simpson said. “The technical diligence and the other kinds of diligence that we do are a key part of making sure that projects meet our bar.”