According to the Financial Times, after successfully investing in Coinbase, a16z (Andreessen Horowitz), one of Silicon Valley’s most well-known venture capital firms, is seeking to raise up to $1 billion in funds to invest in cryptocurrencies and crypto start-ups.
a16z was founded in 2009 by Marc Andreessen and Ben Horowitz and is headquartered in Silicon Valley.
According to four people familiar with the matter, this is a16z’s third new fund focused on cryptocurrency investment, with the goal of raising US$800 million to US$1 billion from investors. This will make it one of the largest cryptocurrency funding pools, possibly twice the size of its predecessor. Regarding this news, the company declined to comment.
According to previous reports from BitTweet, the company’s first crypto fund raised US$300 million in 2018, and in April 2020 it raised US$515 million for its second crypto fund.
At the same time, driven by the soaring market of Bitcoin, Ethereum and other digital assets, and influenced by the a16z fund, other cryptocurrency investors are also raising huge sums of money.
Cryptocurrency venture capitalists have begun to profit from the digital currency exchange Coinbase, which was listed earlier this month, and the direct investment in virtual currencies that have soared in value over the past 12 months. Coinbase’s current valuation is close to $60 billion.
These proceeds will encourage institutional investors such as donations and foundations to reinvest in emerging technologies, even though most areas of the market face an uncertain regulatory environment.
Capital is one of the earliest cryptocurrency investment companies. The company stated that it plans to raise $600 million for a new blockchain fund that will combine investments in private companies and tradable tokens. Pantera’s latest venture capital fund raised $175 million in 2018, and its website shows that the value of the fund so far is 3.8 times that of the fund in January.
Last month, investors including Sequoia Capital China pledged to inject $225 million into the second cryptocurrency fund raised by Dragonfly Capital, more than twice the amount raised when Dragonfly first issued cryptocurrency in 2018 .
The scale of a16z’s fundraising is comparable to the cryptocurrency investment company Paradigm founded in 2018 by Coinbase co-founder Fred Ehrsam and former partner of Sequoia Capital Matt Huang.
According to Pitchbook data, Paradigm has raised a total of $1 billion from investors including endowments from Harvard and Yale University. The company uses an open-end fund structure to invest, which means it does not need to return capital before a fixed date.
Coinbase’s direct listing on NASDAQ this month has brought windfalls to early investors and employees, who hope to reinvest the proceeds in new businesses. The company’s market value reached $75.9 billion in early trading, but as private shareholders reduced their shares, the company’s stock price has fallen by about 20%.
a16z became an early investor in cryptocurrency groups Coinbase and Ripple through its traditional fund. Holding shares in Coinbase is also one of the company’s biggest successes, and is valued at $11.2 billion based on Coinbase’s initial transaction price. Regulatory documents show that since Coinbase went public, the company has sold nearly $120 million in stock.
After raising the first fund dedicated to cryptocurrency in 2018, a16z became a major investor in the so-called decentralized financial project and one of the founding members of the Libra project (now known as Diem) supported by Facebook.
a16z was transformed into a registered investment advisor in 2019. This regulatory difference allows it to more flexibly invest in cryptocurrencies and other assets that are generally prohibited from holding venture capital. A filing document shows that as of the end of last year, the company managed $35.8 billion in regulatory assets.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.