Andreessen Horowitz announces $4.5B fund for Web3 and crypto investments

Venture capital firm Andreessen Horowitz, also known as a16z, announced recently that it plans a new $4.5 billion fundraising round to support startup projects related to blockchain and Web3 technology.

Record-breaking Fund for Cryptocurrency and Web3 Startups

A16z’s latest funding effort would be the largest amount ever raised for new crypto-related projects, and more than double the $2.2 billion it raised for its Crypto Fund III in June 2021.

Of the total, $1 billion is to be earmarked for new Web3 projects, while $3.5 billion will be allocated to its crypto venture fund. Full plans will be announced in March.

The Silicon Valley VC firm has been an early and leading investor in numerous cutting-edge technology projects. Crypto-related investments have included Coinbase, OpenSea, Solana Labs and Uniswap.

Founded in 2009, a16z currently manages more than $28 billion in assets in multiple funds across several sectors, launching its first crypto fund in 2018 for $300 million.

Venture Capital Firms Eager to Embrace Crypto and Web3

The recent announcement is indicative of increasing venture capital movement into the digital asset space, enabling a wave of innovative projects aimed at disrupting traditional financial institutions.

A16z and others have had little trouble raising substantial funds from major institutions eager to get involved. According to PitchBook, VC firms provided over $31 billion in crypto investments in 2021, more than all previous years combined and nearly four times the previous 2018 record of $8 billion.

A16z is deeply committed to the development of Web3. Their October 2021 report titled The Web3 Landscape stated: “We are now in the early stages of developing web3, in which communities are incentivized and rewarded for maintaining and developing core infrastructure… Decentralized networks are an important counter to the fragility of centralized applications… [and] can also neutralize the unilateral control exerted by centralized platforms.”

A16z appears to be competing with cryptocurrency investment firm Paradigm. In April 2021, a16z announced the formation of a $1 billion crypto venture fund. When this was increased to $2.2 billion in June, it became the largest such fund ever created.

Then in November, Paradigm upped the ante with its $2.5 billion crypto New Venture Fund. Although the firm declined to specify areas of investment, it has historically supported projects utilizing Web3.

This latest announcement by a16z is certainly not the end of the rivalry. Paradigm CEO Fred Ehrsam tweeted last November that “Crypto/Web3 is the most exciting frontier in technology” and that the company was “just getting started.” Meanwhile, Singapore-based Blockchain Founders Fund recently launched BFF II, a $75 million fund intended to support new cryptocurrency, Metaverse and Web3 projects.