Why a16z is slow to deploy $4.5bn crypto fund raised three years ago

Andreessen Horowitz, the Silicon Valley task superior giant, is successful an antithetic spot — it’s flush with currency but struggling to deploy billions of “dry powder” successful promising crypto startups.

The firm’s a16z crypto portion raised a whopping $4.5 cardinal successful its 4th money successful 2022, taking its full to $7.6 billion.

Yet erstwhile it comes to investing from that fund, the VC steadfast has kept its checkbook closed for the astir part, said Robert Le, a elder expert astatine Pitchbook, a task superior probe firm.

The reason: it’s hard to put large sums successful startups.

“They can’t spell astir penning $10 cardinal checks,” Le told DL News. “Imagine, with a $4.5 cardinal fund, that’s each they would do.”

Burned

The different crushed — taking attraction not to prime excessively galore losers, adjacent successful a bullish market.

“VCs got severely burned past rhythm truthful present they are overmuch much diligent,” Le said.

Indeed, different firms are besides being rather blimpish arsenic memories of the 2022 clang stay fresh.

“A batch of mega funds that were raised successful 2022 to 2023 are inactive afloat capitalised,” Le told DL News.

To beryllium sure, task capitalists run connected what’s known arsenic the one-out-of-10 rule.

If 10% of their portfolio companies go blockbusters, the VCs and their investing clients volition beryllium precise happy, particularly if those blockbusters present expected 10x returns.

Yet during the roar successful 2021 known arsenic DeFi Summer done to the web3 surge and NFT rally successful 2022, VCs were anxious to involvement a assertion successful the burgeoning crypto market.

Perhaps nary steadfast was arsenic assertive arsenic a16z, which was co-founded by Valley fable Marc Andreessen and Ben Horowitz successful 2009.

Its portfolio features much than two-dozen companies, including Coinbase, dYdX, and OpenSea.

A16z did not instantly respond to requests for comment.

‘VCs don’t privation to beryllium investing successful whitepapers anymore.'

Even though the crypto market’s worth has astir quadrupled to $2.8 trillion since those acheronian days successful 2023, a16z’s continued caution signals increasing pains for the crypto ecosystem.

Le said adjacent the astir bullish crypto VCs are being overmuch much selective successful however they allocate their clients’ money.

For 1 thing, VCs whitethorn beryllium waiting to spot what happens successful Washington. A fig of important bills are winding their mode done Congress, including stablecoin legislation.

In addition, the Trump medication is conducting reviews of crypto regulation, and is has adopted a relaxed attack by dropping oregon postponing enforcement actions against Coinbase, Binance, and different players.

No much whitepapers

Even arsenic a16z and its ilk sift done a volatile crypto marketplace for diamonds successful the rough, much superior is connected the way.

Venture capitalists are connected people to plough much than $18 billion into the assemblage this year, which is treble the complaint successful 2024, according to PitchBook.

A batch has changed since the 2022 investing cycle. In those gaudy times, investors were blessed to enactment millions to enactment successful ventures that were small much than whitepapers.

Unsurprisingly, galore outfits didn’t past the carnivore market.

“VCs don’t privation to beryllium investing successful whitepapers anymore,” Le said. “There was conscionable truthful overmuch hype past time, and a batch of VCs got burned.”

Another large alteration is the rediscovery of Bitcoin.

For years VCs opted for DeFi platforms portion Bitcoin-only ventures attracted a tiny 0.6% of full VC investments successful the sector, according to a 2024 Bitcoin ecosystem report by the task steadfast Epoch.

With the apical cryptocurrency’s dominance holding astatine 59% and caller ETFs attracting much investors, Bitcoin-focused projects whitethorn beryllium much charismatic to VCs.

“A batch of concern should beryllium for Bitcoin’s infrastructure,” Le said.

‘New era’

In immoderate event, VCs instrumentality the agelong presumption truthful the selloff successful caller weeks isn’t apt to deter them.

In 2025, Sequoia Capital and Paradigm among others person already invested $1.2 cardinal successful 79 crypto startups, a 63% summation from January 2024, according to DefiLlama.

“It’s a caller epoch for crypto, and VCs are excited by the adjacent procreation of startups being founded successful the space,” Justin Barlow, task spouse astatine Faction VC and an angel investor, antecedently told DL News.

Pedro Solimano is simply a markets analogous based successful Buenos Aires. Got a tip? Email him astatine [email protected].