The cryptocurrency investment journey of a well-known venture capital firm in Silicon Valley

Andreessen Horowitz (abbreviated as a16z) was founded by Marc Andreessen and Ben Horowitz in 2009. With successful investments in several well-known internet companies, it quickly rose to the top tier of venture capital firms in Silicon Valley. Currently, a16z manages assets exceeding $35 billion, with investment areas covering artificial intelligence, biotechnology, consumer goods, encryption, enterprise operations, fintech, and more.

Entering the encryption field

a16z began investing in the encryption space as early as 2013. At that time, many traditional venture capitalists were skeptical about this emerging field, but a16z led a $25 million Series B funding round for a well-known cryptocurrency trading platform and subsequently made multiple follow-on investments. This decision not only brought substantial returns to a16z but also established its leading position in the encryption investment sector.

To focus more on investments in the encryption field, a16z established a dedicated encryption fund in 2018. To date, the fund has completed five rounds of fundraising, managing over $7.6 billion.

• 2018: The first fund was approximately $300 million
• April 2020: The second fund is approximately $515 million
• June 2021: The third fund raised approximately $2.2 billion, setting a record for the fundraising scale of encryption funds at that time.
• May 2022: The fourth fund is approximately $4.5 billion, along with the launch of a $600 million Web3 gaming fund.

It is reported that a16z is planning its next core early-stage and seed fund, expected to be around $3.4 billion, focusing on investments in the encryption field, biotechnology, and emerging growth areas.

Team Composition

a16z adopts a full partner system, and each specialized fund recruits professionals from relevant fields to serve as investment partners.

In the encryption field, Chris Dixon is the founder and key figure of a16z crypto. Although he joined a16z in 2012, he has led several important encryption investments. Before joining a16z, Chris Dixon was already a successful entrepreneur and investor, having founded an internet security company and a technology recommendation company, as well as establishing his own venture fund.

According to public information, a16z currently has 546 employees, of which 99 focus on the encryption field, accounting for 18%. Among these 99 people, 15 are responsible for investment work, while the remaining staff mainly provide post-investment services such as marketing, recruitment, legal, and technical support.

Investment Characteristics

a16z has achieved outstanding investment results in both the Web2 and Web3 fields, and its encryption investment arm a16z crypto inherits the investment style of its parent company, mainly reflected in the following aspects:

1. Adhere to "always-on" investment: Regardless of the market environment, a16z maintains continuous investment. For example, during the crypto bear market from 2018 to 2020, it launched its first two funds, managing over $800 million in total. Even in the current crypto winter, a16z has made more than 30 investments in the past year, with 11 of them as the leading investor.

2. High proportion of leading and follow-on investments: Data shows that a16z crypto has led a total of 109 rounds historically, ranking first among all leading investment institutions. At the same time, for promising projects, a16z often makes multiple follow-on investments.

3. Large investment amount and wide coverage: Since its establishment, a16z crypto has invested in hundreds of encryption projects, almost covering all encryption tracks. a16z is known for its large investment amounts and has demonstrated a "big spender" style in the financing of multiple projects.

4. Good at media promotion and project packaging: a16z values promotion and marketing through self-built media channels. The company's official website resembles a media platform, filled with various reports and articles. Investment partners are also required to establish their own media outlets to share investment philosophies. In addition, a16z provides comprehensive support for the projects it invests in, including marketing, legal, and lobbying.

Potential Project Investment

a16z crypto's investment vision is widely recognized. Here are some potential projects worth noting (excluding issued tokens, failures, small financing, and traditional industry projects):

1. Yuga Labs: NFT and metaverse platform, raised $450 million
2. Aptos: Layer 1 public chain, raised $350 million.
3. Worldcoin: A decentralized identity and financial network, raised $257 million.
4. Helium: Decentralized wireless network, raised $211 million
5. Phantom: Web3 wallet, raised $118 million
6. Mysten Labs: Web3 infrastructure, raised $300 million
7. Aztec: Layer 2 encryption privacy protection protocol, raised 100 million USD
8. Syndicate: A decentralized investment protocol that raised $59 million.
9. Arweave: A decentralized storage network that raised $55.5 million.
10. Goldfinch: Decentralized credit protocol, raised $52.5 million

Conclusion

The transition of a16z from "software golden finger" to "encryption golden finger" reflects its keen insight into the trends of the times. As described by a16z crypto, there are three eras of the internet: the first era from 1990 to 2005, the second era from 2005 to 2020, and now we are in the third era. a16z hopes to continue writing brilliance in this new era and contribute to the development of the encryption and Web3 industry.