Chris Dixon, general partner at Andreessen Horowitz, discusses cryptocurrency during the TechCrunch Disrupt forum in San Francisco, October 2, 2019.
Kate Munch | Reuters
Andreesen Horowitz plans to invest billions of dollars in crypto startups while digital asset markets are on track.
The Silicon Valley firm announced a new $ 4.5 billion fund to support crypto and blockchain companies on Wednesday. This is Andreessen’s fourth asset class fund and brings its total crypto and blockchain investment to $ 7.6 billion. The company plans to invest both in the cryptocurrencies behind the projects and in the company’s equity.
Andreessen’s first crypto-focused fund was launched four years ago, during a downturn now known as Crypto Winter.
“Bear markets are often when the best opportunities arise, when people can actually focus on building technology instead of being distracted by short-term price activity,” Ariana Simpson, general partner at Andreessen Horowitz, told CNBC. telephone interview.
Cryptocurrencies have fallen significantly from their all-time highs, with bitcoin falling more than 50 percent from its peak in November and remaining closely linked to stocks of higher-growth technologies, which have fallen sharply this year. Earlier in May, the collapse of the TerraUSD stablecoin shook investor sentiment and drew the attention of regulators.
But Simpson said investors should not worry about the company’s bets.
“The technical care and other diligence we do is a key part of ensuring that the projects meet our standards,” she said. “While our rate of investment is high, we continue to really invest only in the highest echelon of founders.”
Simpson and partner Chris Dixon likened the long-term cryptocurrency to the next major computer cycle after computers in the 1980s, the Internet in the 1990s and mobile computers in the early 2000s.
Andreessen Horowitz is known for his early bets on Instagram, Lyft, Pinterest and Slack and made his first major crypto investment with Coinbase in 2013. Since then, the company has supported various startups in the crypto and NFT space, including Alchemy, Avalanche, Dapper Labs, OpenSea. Solana and Yuga Labs. Earlier this week, he invested in Flowcarbon, a blockchain carbon credit trading platform also backed by controversial WeWork founder Adam Neumann.
While cryptocurrencies may struggle to regain momentum, money flowing into private companies is at its highest level ever. According to the latest data from CB Insights, start-up blockchain companies brought in a record $ 25 billion in venture capital last year. That figure has increased eightfold from a year earlier.
The flow of investment in so-called “Web3” startups, which are trying to build a business on blockchain technology, has inspired contempt from some technology luminaries. Two of the world’s most famous technology billionaires, Tesla CEO Elon Musk and Twitter co-founder Jack Dorsey, are among those questioning Web3. Dorsey argues that venture capital and their limited partners are the ones who will eventually own Web3, and he “will never run away from their incentives,” he tweeted, calling it a “centralized entity with a different label.”
“People who are skeptical are not where we are, which is again in the happy position of being able to talk to these brilliant builders all day,” Simpson said. “The other thing I would add is that many of the skeptics are the titans of Web 2.0 – they’ve been able to make money and take advantage of closed platforms.”
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