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 in 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 company said it is targeting founders who are building practical applications on crypto infrastructure, particularly in areas such as payments, financial services and decentralized systems.
The firm’s partners see the current crypto market as an opportunity to invest in founders who are building “sustainable” projects that last even when the hype cycle subsides.
“We are currently experiencing one of the calmest times. And the signal reaching us is one of the most encouraging in years,” according to a blog from the company’s partners, published Tuesday.
“The founders we are supporting with this $2.2 billion fund are working on the part of the cycle that gets less attention and produces more lasting value: turning new infrastructure into products people use every day,” according to the blog.
What the fund invests in
The fund will focus on sectors where these capabilities translate into tangible and sustainable products.
One area where a16z is seeing this trend is in stablecoins. The digital dollar market, whose market capitalization recently reached $320 billion, has seen adoption continue to grow despite downturns, with users using it for cross-border payments, savings and everyday transactions. This is especially true compared to existing systems, which are “slow, expensive and unreliable,” a16z said.
Other areas seeing “significant 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 a boom in AI funding. Recent industry trends show that general investors are shifting capital toward AI startups, forcing crypto-focused funds to refine their positioning.
And this is where a16z sees leveraging crypto’s role as a financial and coordination layer for AI systems as more important than ever.
“Software is becoming increasingly complex and difficult to trust. AI systems are powerful and largely opaque. The infrastructure on which the Internet runs is more consolidated than ever. In this environment, the properties that crypto networks were designed to provide become more valuable, not less,” the blog states.
Although the new fund is almost half the size of its fourth fund, which raised $4.5 billion in 2023, it is still larger than the recent $1 billion raised by Huan Ventures (founded by a former a16z partner) and the $650 million raised by another major crypto-VC firm, Dragonfly Capital.
These recent rises are likely signs that while sentiment is not as high as during the 2021 bull market, there is a gap between the hype and the underlying activity.
“We believe that while sentiment is weak, the fundamentals of the crypto industry are at an all-time high,” the spokesperson said.
