Andreessen Horowitz announces $4.5 billion web3 fund to exploit bargains in crypto winter

By: Micheal Wilson

May 27, 2022 5:34 AM

The Silicon Valley company announced a new $4.5 billion fund for supporting crypto and blockchain companies on Wednesday. It marks Andreessen’s fourth fund for the asset class and brings its total raised for crypto and blockchain investments to $7.6 billion. The company plans to invest in both the cryptocurrencies behind projects and in the firm equity.

Andreessen’s initial crypto- focused fund was launched four years ago, during a downturn now understood as “ crypto winter. ”

 
In a phone interview with CNBC, Arianna Simpson a general partner at Andreessen Horowitz said “ Bear markets are often when the best openings come about, when people are truly able to concentrate on building technology rather than getting distracted by short- term price activity. ”

Cryptocurrencies have slipped significantly from their all- time highs, with bitcoin down more than 50 since its November high, and they remain tightly connected to advanced growth tech stocks, which have experienced a major slide this year. Earlier in May, the crash of stablecoin TerraUSD shook investor emotion and captured the attention of regulators.

 
 
Simpson and partner Chris Dixon liken the long- term opportunity in crypto to the coming major computing cycle, after PCs in the 1980s, the internet in the 1990s and mobile computing in the early 2000s.

Andreessen Horowitz has great track record and is known for its early bets on Pinterest, Slack and Lyft, and made its first major crypto investment with Coinbase in 2013. The company has since backed a variety of start- ups in the crypto and NFT industry, which includes Alchemy, Avalanche, OpenSea, Solana, Dapper Labs and Yuga Labs. Earlier this week it invested in Flowcarbon, a carbon- credit trading platform on the blockchain also backed by the controversial WeWork founder Adam Neumann.

 
 
While cryptocurrencies may be floundering to recapture momentum, money flowing into private companies is at all- time highs. Blockchain start- ups brought in a record$ 25 billion in venture capital dollars last year, according to recent data from CB Perceptivity. That figure is up eightfold from a time before.

The flood of investment into so- called “ Web3 ” start- ups trying to build companies on blockchain technology has encouraged despisement from some tech stars. Two of the world’s best- known tech billionaires, Tesla CEO Elon Musk and Twitter co-founder Jack Dorsey, have been among those challenging “ Web3. ” Dorsey argues VCs and their limited partners are the ones who'll eventually end up possessing Web3 and it “ will never escape their incentives, ” he tweeted, calling it a “ centralized entity with a different tag.”

 
 
“The people who are questioning aren't where we are, which is again in the fortunate position of being able to speak to these brilliant builders all day, ” Simpson added that most of their critics are big players of web 2.0 who has profited greatly from the closed platform.