a16z Crypto Raises $2.2bn Fund To Back Blockchain Startups

Andreessen Horowitz (a16z) is a venture capital firm founded in 2009 by Marc Andreessen and Ben Horowitz that oversees more than $100bn in assets. Its crypto arm has raised nearly $10bn in capital across five funds.

The new fund, dubbed "Crypto Fund 5," will focus on areas such as payments, decentralized finance (DeFi) and tokenization. The firm said in a blog post that it is looking to back companies building products people actually use, rather than projects tied mainly to token trading.

"The founders we're backing with this $2.2bn fund are working on the part of the cycle that gets less attention and we believe produces more of the lasting value: turning new infrastructure into products people use every day," the post reads. "That is how every important computing platform has eventually mattered, and it is how crypto will too."

A cooling market

In the post, authored by four partners at a16z crypto, the firm noted that crypto activity has cooled from previous highs, but some parts of the market are still growing. 

The post cited stablecoins as a huge example of a growing sector, even when the broader crypto market is down. Stablecoins refer to digital currencies that are often pegged 1:1 to fiat currencies, such as the US dollar. 

Currently, the stablecoin sector has a market cap of $322.5bn, up sharply from $222bn last May. According to DefiLlama data, Tether's USDT stablecoin dominates the sector with a 58.7% market share. 

"Trading volumes go up and down with the market, but stablecoin usage has kept climbing even through downturns," the post reads. "People are using them to save, to send money across borders, and to pay for things, often exposing just how slow, expensive, and unreliable the alternatives are."

The next phase

The new fund underscores how crypto-focused firms are positioning for the next phase of the market, even amid volatility. It also highlights that companies are still investing in crypto and DeFi despite the current market downturn.

Currently, Bitcoin (BTC) is trading at $81,500, up 7% on the week, but still down 14% from this time last year. Meanwhile, total value locked (TVL) in DeFi has fallen to $88bn, down from $111bn last May.

The fund will be led by managing partner Chris Dixon and general partners Ali Yahya, Guy Wuollet and Eddy Lazzarin, who was recently promoted to general partner.