Andreessen Horowitz Raises $4.5 Billion Crypto Fund Amidst Market Volatility

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KEY POINTS

  • Andreessen Horowitz is planning to invest $4.5 billion in crypto with its fourth crypto-focused fund.
  • Fund leaders liken the long-term opportunity in crypto to "the next major computing cycle."
  • Andreessen's strategy and track record rely on investments made during bear markets in founders who show a high degree of skill.


Andreessen Horowitz bets big on crypto.

Billions, not millions, spell the investment Andreessen Horowitz is making in the metaverse. Today, Andreessen Horowitz announced its plan to invest $4.5 billion in the crypto market. This venture marks the firm's fourth fund within the digital asset class. This fund brings Andreessen's total raised for crypto and blockchain projects to $7.6 billion. The firm plans to invest in both the cryptocurrencies behind projects and in company equity with this new fund.

Why is Andreessen eager to invest in crypto?

If you follow crypto news, it's no secret that the market has seen a massive downturn within the last few weeks. The crypto market as a whole lost $2 trillion in value with key crypto players reeling from the bloodbath.

However, the sluggish market has not deterred Andreessen investors, as general partner at the firm, Arianna Simpson, told CNBC in a phone interview, "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."

Part of Andreessen's winning strategy relies on heavy market research and analysis in addition to investing in top-notch founders as Simpson went on to say that, "The technical diligence and the other kinds of diligence that we do are a key part of making sure that projects meet our bar. While our pace of investment has been high, we continue to invest really in only the top echelon of founders."

Simpson and Andreessen partner Chris Dixon are eager to compare the long-term opportunity in crypto to the next major computing cycle, such as PCs in the 1980s, the internet in the 1990s, and mobile computing in the early 2000s.

Andreessen's favorable track record of tech investment

Andreessen has backed many successful digitally disruptive projects in the past. It is perhaps best known for early bets on Lyft, Pinterest, and Slack. In addition to these more "traditional" digital investments, the firm was also an early crypto believer when it made its first major crypto investment with Coinbase in 2013. 

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Building on this early crypto endeavor, the firm has since backed a variety of start-ups in the crypto and NFT space, including Alchemy, Avalanche, Dapper Labs, OpenSea, Solana and Yuga Labs.

The bottom line

Even with cryptocurrencies working to regain critical ground, investment in private deFi companies remains consistent. Even though the market is bearish right now, Andreessen is keeping the long-term data in mind. For instance, Blockchain start-ups brought in a record $25 billion in venture capital dollars last year which is up eightfold from the year prior. While crypto-skeptics may focus on the recent losses, the longer-term data tells a story of a growing community.

If you want to explore the best ways to get into crypto in the bear market, check out our list of the best cryptocurrency exchanges and apps here.

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