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Andreessen Horowitz raises $4.5 billion crypto fund in down market

Chris Dixon, Common Associate at Andreessen Horowitz, discusses cryptocurrency through the TechCrunch Disrupt discussion board in San Francisco, October 2, 2019.

Kate Munsch | Reuters

Andreessen Horowitz plans to plow billions of {dollars} into crypto start-ups whereas digital asset markets are in a rut.

The Silicon Valley agency introduced a brand new $4.5 billion fund for backing crypto and blockchain firms on Wednesday. It marks Andreessen’s fourth fund for the asset class and brings its complete raised for crypto and blockchain investments to $7.6 billion. The agency plans to spend money on each the cryptocurrencies behind tasks and in firm fairness.

Andreessen’s first crypto-focused fund was launched 4 years in the past, throughout a downturn now generally known as “crypto winter.”

“Bear markets are sometimes when one of the best alternatives come about, when persons are really in a position to concentrate on constructing expertise slightly than getting distracted by short-term value exercise,” Arianna Simpson, a basic associate at Andreessen Horowitz informed CNBC in a cellphone interview.

Cryptocurrencies have slid considerably from their all-time highs, with bitcoin down greater than 50% since its November peak, they usually stay tightly correlated to larger development tech shares, which have undergone a serious slide this 12 months. Earlier in Could, the crash of stablecoin TerraUSD shook investor sentiment and caught the eye of regulators.

However Simpson mentioned traders should not fear in regards to the agency’s bets.

“The technical diligence and the opposite sorts of diligence that we do are a key a part of ensuring that tasks meet our bar,” she mentioned. “Whereas our tempo of funding has been excessive, we proceed to speculate actually in solely the highest echelon of founders.”

Simpson and associate Chris Dixon just like the long-term alternative in crypto to the subsequent main computing cycle, after PCs within the Nineteen Eighties, the web within the Nineteen Nineties and cellular computing within the early 2000s.

Andreessen Horowitz is understood for early bets on Lyft, Pinterest and Slack, and made his first main crypto funding with Coinbase in 2013. The agency has since backed quite a lot of start-ups within the crypto and NFT area, together with Alchemy, Avalanche, Dapper Labs, OpenSea, Solana and Yuga Labs. Earlier this week it invested in Flowcarbon, a carbon-credit buying and selling platform on the blockchain additionally backed by controversial WeWork founder Adam Neumann.

Whereas cryptocurrencies could also be struggling to regain momentum, cash flowing into non-public firms is at all-time highs. Blockchain start-ups introduced in a report $25 billion in enterprise capital {dollars} final 12 months, in keeping with current knowledge from CB Insights. That determine is up eightfold from a 12 months earlier.

The flood of funding into so-called “Web3” start-ups making an attempt to construct companies on blockchain expertise has impressed scorn from some tech luminaries. Two of the world’s best-known tech billionaires, Tesla CEO Elon Musk and Twitter co-founder Jack Dorsey, have been amongst these questioning “Web3.” Dorsey argues VCs and their restricted companions are those who will finally find yourself proudly owning Web3 and it “won’t ever escape their incentives,” he tweeted, calling it a “centralized entity with a distinct label.”

“The people who find themselves skeptical should not the place we’re, which is once more within the lucky place of with the ability to speak to those sensible builders all day,” Simpson mentioned. “The opposite factor I’d add is that most of the skeptics are the titans of Internet 2.0 — they’ve been very a lot able to revenue from and profit from the closed platforms.”

Clarification: Whereas Andreessen Horowitz was a seed investor in Brbn, the corporate that later pivoted to grow to be photo-sharing platform referred to as Instagram, it handed on the possibility to spend money on Instagram itself.

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