Andreessen Horowitz seeks $4.5bn for new crypto investments

Andreessen Horowitz plans to raise up to $4.5bn for a new set of cryptocurrency funds, aiming to more than double the amount it raised less than one year ago in a sign of the growing frenzy surrounding digital assets.

The Silicon Valley-based venture capital firm told investors last week it planned to raise up to $3.5bn for its latest cryptocurrency venture fund and up to $1bn for a separate fund focused on seed investments in digital asset start-ups, said people briefed on the discussions.

Andreessen plans to finalise the new funds by March, one of the people said. The firm declined to comment.

Andreessen is known as one of the leading VC firms in Silicon Valley, having previously been an early investor in Facebook, Twitter, Airbnb, Stripe, Coinbase and a host of other leading technology groups.

If successful, Andreessen’s haul would easily surpass any other funds raised to make early bets on cryptocurrency start-ups.

The move signals how top VC firms are increasingly piling into crypto, fuelling a boom that has spawned hundreds of projects aiming to displace traditional finance.

Investors normally balk at VC firms that try to raise money so quickly and in such large quantities, preferring funds to remain small and focus on performance.

However, Andreessen and other tech investors have recently had little trouble raising billions of dollars from large institutions for bets on cryptocurrency projects, flooding the sector with unprecedented sums.

Paradigm, a firm led by former Sequoia Capital partner Matt Huang and Coinbase co-founder Fred Ehrsam, raised $2.5bn in November for what was then the largest cryptocurrency venture fund.

Global VC firms raised $10.7bn for funds focused on cryptocurrencies in 2021, compared with $5.2bn raised the previous year, according to PitchBook data.

Andreessen’s cryptocurrency arm, led by Chris Dixon and two other investing partners, previously raised $2.2bn for its most recent fund in June, more than doubling its initial target. The firm has already invested most of that fund.

A $1bn fund for cryptocurrency seed investments would be twice as big as the next largest fund for similar investments of any kind, a $500m fund raised by Greylock Partners in September. At the time, Greylock called it the “industry’s largest pool of venture capital dedicated to backing founders at day one”.

Investors ploughed $31.6bn into cryptocurrency start-up deals last year, an almost sevenfold increase from 2020, according to PitchBook, as hedge funds and other non-traditional backers sought to profit from the rapid growth in digital asset projects.

Andreessen was one of the most active cryptocurrency investors last year, striking large deals in the gaming start-up Sky Mavis, blockchain developer Solana Labs and non-fungible token marketplace OpenSea.

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The firm’s fundraising push follows the departure of one of its top partners, Katie Haun, who left to start her own investment group. Haun plans to raise at least $900m for two separate cryptocurrency funds. Andreessen has committed to invest $50m in the funds.

This month, Andreessen said it had raised $9bn for its latest biotech, venture and growth equity funds, bringing the firm’s assets under management to more than $28bn.

Andreessen told investors last week it also planned to raise up to $500m for a new fund focused on gaming investments, people briefed on the discussions said.