Andreessen Horowitz (a16z) is one of the biggest and most popular venture capital firms in Silicon Valley. When the company starts to make moves into crypto, the world should definitely listen.
Many are aware of how Andressen Horowitz works. The company makes huge investments in ventures that it believes in, and crypto isn’t any different. Last week, Andreessen Horowitz announced its Crypto Fund III launch - the biggest crypto venture fund ever, valued at $2.2 billion.
The Silicon Valley giant confirmed that the Crypto Fund III will be led by Katie Haun and Chris Dixon, two of its managing partners. It will focus on financing cryptocurrency teams and networks and blockchain technology projects that are focusing on building the new decentralized economy.
a16z explained that the fund will help it to discover and finance the next generation of tech founders. It will also not be discriminatory. Companies in different development stages - from early pre-seed to fully developed networks - can get part of its $2.2 billion available funds.
In their blog post, Dixon and Huan, who both run a16z’s crypto group, explained: “The size of this fund speaks to the size of the opportunity before us: 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.”
A Long History Between Crypto and Andreessen Horowitz
Andreessen Horowitz has made a name for being one of the most visionary venture capital firms in Silicon Valley. The company began making inroads into crypto a few years back when it invested in Coinbase. Of course, that investment has paid off as Coinbase has gone public and currently holds a valuation above $100 billion.
Following the Coinbase investment, a16z took its venture capital skills into the crypto industry as it launched its first crypto fund. Following the crypto winter and pullback that the market saw in 2018, a16z raised $300 million for crypto investments.
At the time, Dixon told CNBC that the company understood the volatility in cryptocurrencies and was ready to navigate the market. Dixon added that ups and downs are a part of the market, and a16z expects that there will be more. However, they believe that there is a lot of potential in cryptocurrency technology, and they would like to take advantage of it nonetheless.
The Crypto Fund II came last year, with a16z raising $515 million to fund crypto businesses and networks. Amongst other things, the Crypto Fund II focused on funding projects in payments, monetization, Web 3.0, and decentralized finance (DeFi).
Now that the venture capital firm has launched its third crypto fund, its investments in the space look to be consolidating. a16z has continued to make waves, and the company’s crypto portfolio now spans 34 companies.
a16z Waxes Stronger
Even after announcing Fund III, a16z hasn’t relented. The VC company has joined other compatriots to fund Nansen - a blockchain analytics platform that focuses more on DeFi. According to a press release, the $12 million funding round included firms like imToken Ventures, Mechanism Capital, QCP Capital, Coinbase Ventures, and Skyfall Ventures.
Nansen explained that the funding will be used to expand and increase its staff. The company will also invest in bolstering its analytics platform and providing additional services like the Binance Smart Chain and Polygon.
Nansen has shown significant promise, analyzing the activity of over 90 million wallets on the Ethereum blockchain. It also integrates huge data sets and translates them into comprehensible dashboards that allow users to access important insights into DeFi. Speaking on the value of Nansen to the DeFi and broader crypto, Dixon explained:
"As participation in the first truly open global financial markets grows, traders and collectors of all kinds — retail novices, institutional professionals, independent experts, and more — will want to understand what the smart money is doing across all blockchains.”
Implications for Crypto Investment
It is worth noting that Andreessen Horowitz’s crypto entry isn’t a new thing. However, it continues to solidify crypto as a legitimate industry that anyone can enter. Of course, several other venture capital firms have made crypto plays - including Sequoia Capital, Kleiner Perkins, and more.
Silicon Valley has always innovated and embraced innovation. Crypto remains an innovation in its nascent stages, and there is a lot of room for game changers. Now that a16z has solidified its presence in the crypto space, there are a lot of opportunities for companies to also grow and be better. The big bucks are coming into the crypto space now, and it’s good times everywhere.