Andreessen Horowitz raises $2.2 billion in a new fund, saying crypto fundamentals are at an 'all-time high'

The new fund arrives as firms like Haun Ventures raise $1 billion and VC firms adapt to an AI-driven shift in capital.

What to know:

• Andreessen Horowitz has launched a $2.2 billion “Crypto Fund 5” to back crypto startups at all stages over the next decade, even as much of venture capital shifts toward artificial intelligence.
• The fund will focus on practical applications built on crypto infrastructure, including stablecoins, payments, financial services, decentralized systems and areas such as perpetual futures, lending, prediction markets and tokenized assets.
• While smaller than the firm’s $4.5 billion fourth crypto fund, the new vehicle remains one of the largest in the sector and reflects a16z’s view that crypto fundamentals are strong despite subdued market sentiment and an AI funding boom.

Venture capital heavyweight Andreessen Horowitz (a16z) has launched a $2.2 billion crypto fund, doubling down on blockchain startups amid a surge in venture capital into artificial intelligence.

The new vehicle, called "Crypto Fund 5," will invest in crypto entrepreneurs at all stages, with capital deployed over a decade, according to a company spokesperson. The firm said it is targeting founders building practical applications on crypto infrastructure, especially in areas like payments, financial services and decentralized systems.

The firm's partners see the current crypto market as an opportunity to invest in founders building projects that are "durable" and lasting even when the hype cycle dies down.

"We're at one of those quieter moments now. And the signal coming through is one of the most encouraging it has been in years," according to a blog by the firm's partners, published on Tuesday.

"The founders we're backing with this $2.2 billion fund are working on the part of the cycle that gets less attention and produces more of the lasting value: turning new infrastructure into products people use every day," according to the blog.

What the fund is investing in

The fund will focus on sectors where these capabilities translate into tangible and lasting products.

One of the areas where a16z is seeing that pattern is stablecoins. The digital dollar market, which recently surged to $320 billion in market cap, has seen its adoption continue to grow through downturns, with users relying on it for cross-border payments, savings, and everyday transactions. This is particularly true when compared to legacy systems, which are "slow, expensive, and unreliable," a16z said.

Other areas that are seeing "meaningful growth" include perpetual futures, blockchain-based lending, prediction markets and tokenized assets.

The new fund is launching at a time when venture capital firms are recalibrating their strategies amid an AI funding boom. Recent industry trends show generalist investors shifting capital toward AI startups, forcing crypto-focused funds to sharpen their positioning.

And this is where a16z is seeing the use of crypto's role as a financial and coordination layer for AI systems, more important than ever.

"Software is getting more complex and harder to trust. AI systems are powerful and largely opaque. The infrastructure the internet runs on is more consolidated than ever. In that environment, the properties that crypto networks were designed to provide become more valuable, not less," the blog said.

While the new fund is almost half the size of its fourth fund, which raised $4.5 billion in 2023, it's still larger than the recent $1 billion raised by Huan Ventures (founded by a former a16z partner) and $650 million raised by another prominent crypto VC firm, Dragonfly Capital.

These recent raises are likely signs that, while sentiment is not running as high as it did in the 2021 bull market, there is a gap between the hype and underlying activity.

"We believe while sentiment may be low, the fundamentals of the crypto industry are at an all-time high," according to the spokesperson.

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