Andreessen Horowitz Debuts $2.2 Billion Cryptocurrency Fund

Andreessen Horowitz launched a $2.2 billion cryptocurrency fund focused on blockchain and digital asset startups. The venture capital firm’s first crypto-focused fund was introduced three years ago, during the last bear market dubbed “crypto winter,” when cryptocurrency’s value plummeted 80 percent from a 2017 high. Andreessen Horowitz partners Katie Haun and Chris Dixon, who run the company’s cryptocurrency group, stated that they “believe that the next wave of computing innovation will be driven by crypto.”

CNBC reports that, “the latest fund also comes at another bearish moment for Bitcoin,” which has “lost roughly half its value since the high near $60,000 in April.” It adds that, this week, Bitcoin is “on track for a 20 percent loss.” Still Haun and Dixon said they are “radically optimistic about crypto’s potential.”

Andreessen Horowitz’s history in investing in digital assets dates to Coinbase in 2013 and Facebook-backed Libra, now known as Diem. The company also “has stakes in companies like OpenSea and Dapper Labs, powering the recent NFT boom” and said it plans to focus on decentralized finance (“defi”), “the term used to describe traditional finance applications, like lending or banking, built on the same technology that underlies Bitcoin.”

Haun, a former Justice Department prosecutor, and Dixon, who founded two startups, are now joined by “a wave of new hires for the fund, including former Securities and Exchange director Bill Hinman, who will join the firm as an advisory partner. Rachael Horwitz, who led communications at Twitter, Google and Facebook, joined as an operating partner.”

Wired reports that Andreessen Horowitz led the $25 million funding round for Coinbase in 2013, making that company “the best-funded crypto company in the world.” When Coinbase went public in 2021, the first crypto company to do so, it “closed its first day of trading at $328.28 a share, putting its value at $85.8 billion,” which was “Andreessen Horowitz’s biggest exit yet.” Coinbase currently trades at $226.01 per share.

Its latest $2.2 billion investment is Crypto Fund III, “among the largest capital commitments to the crypto ecosystem in history, and about four times the size of the firm’s second cryptocurrency fund a year ago.”

According to Bloomberg, venture capitalists have invested about $17 billion in crypto companies this year already, with companies such as Union Square Ventures, another early investor, reserving 30 percent of its $251 million fund for crypto companies. PayPal and Visa joined Blockchain Capital’s recent $300 million fund. But Wired notes that, “the fate of these startups is largely tied to the prices of Bitcoin and other mainstream cryptocurrencies … And those prices can be volatile.”

To keep an eye on that, Andreessen Horowitz hired Tomicah Tillemann, the former chair of the Global Blockchain Business Council and White House advisor as global head of policy.

Related:
Mining Bitcoin Could Be About to Get a Whole Lot Easier After China’s Crypto Crackdown, CNBC, 6/24/21
Here’s How Much Bitcoin Is Worth, Says JPMorgan, as Crypto Faces This Summer Headwind, MarketWatch, 6/24/21
China Is Actually ‘All In’ on Crypto – But Only a Brand It Can Control, Andreessen Horowitz Partner Says, CNBC, 6/24/21
A TikTok Influencer Brings Cryptocurrency Trading to the Masses, The Washington Post, 6/24/21