When others are fearful, be greedy. Consensus is expensive. There are many cliches when it comes to making money, and many investing koans deal with doing the opposite of what the mass is doing at any given point.
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In startup land, the logic works to a degree. The web3 crew has adapted the Web 2.0 chestnut that great companies are founded in hard times. Money pours into the sector when prices go up. The regular and painful downturns are called the "building periods" in the web3 world.
What is more important than sloganeering? Capital flows. Despite all the well-worn wisdom that investing when markets are cracking and the public is scared, we are seeing venture capital totals slow around the world.
Heading into today, it seemed likely that the falling pace of venture investment that we’ve observed in recent months would persist as crypto hibernated between price events. And then Andreessen Horowitz announced this morning that it has raised a $4.5 billion crypto-focused fund. As our own Lucas Matney put it, that’s a “whopper” of a fund size.
It is not always very adventurous with venture capital. During the last decade or so, venture investing was metricized and figured out. It seemed that the path to recurring software revenue nirvana was absorbing so much market oxygen that most VCs looked more like mini crossover funds.
As the stock market takes body blows and market sentiment about growth versus profitability swings away from the former, even those bets are pulling back.
a16z’s new $2.2B fund won’t just bet on the crypto future, it will defend it
A16z is quadrupling down on the web3 market with its largest fund to date, precisely as its competitors tighten up their purse strings. A16z knows what it means to be greedy when others are afraid. Matney looked at the new fund.
Crypto Fund IV continues to be helmed by longtime GP Chris Dixon, who has seemed to up his public persona in recent months, particularly on Twitter, where he breathlessly defends the web3 space from its detractors, getting into occasional spats with figures like Block’s Jack Dorsey and Box’s Aaron Levie. The continued skepticism among plenty of investors and entrepreneurs has grown louder in recent weeks following the particularly ugly collapse of the Terra ecosystem and its stablecoin UST, which imploded seemingly overnight, evaporating tens of billions in value while renewing calls among federal lawmakers to fast-track legislation aimed at reining in the industry.
When asked whether the market’s cooling will scare traditional firms away from continuing their crypto bets, a16z’s Arianna Simpson told TechCrunch that “it’s likely other firms will pull back,” but that “the size of our new fund speaks to the level of excitement and belief we have in this category.”
Yes.
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