When it comes to venture capital in the crypto space, there is no bigger name than Andreessen Horowitz's A16z. The crypto venture fund has tipped billions into some of the fastest-growing projects within the industry. Yet, remarkably, the fund will be doubling down with a further $4.5 billion.
The ambitious lump of financial firepower is not without its naysayers though, with many crypto investors still licking their wounds following the collapse of Terra (CRYPTO: LUNA).
If anything, round 4 of the crypto fund illustrates the esteemed investor's conviction for the Web3 world. Since rounding the bend into 2022, the entire cryptocurrency market has erased 45% of its former value. So, where might this $4.5 billion injection be destined for?
A16z wants in on the golden era of Web3
While the blood is still fresh in the streets of the crypto market, venture capital firm a16z is priming its bank account for another splash of crypto backing. The $4.5 billion round will take the firm's total blockchain-based funding to $7.6 billion.
Onlookers might be wondering what the rationale is behind another dip into the unforgiving crypto waters. As the saying goes, "fool me once, shame on you. Fool me twice, shame on me.' Well it's now a16z's fourth time at it, and they believe the investments are anything but foolish (with a lower case 'F').
A16z partner Chris Dixon explained the enticement for the venture capital firm to come back for its fourth helping, stating:
We think we are now entering the golden era of web3. Programmable blockchains are sufficiently advanced, and a diverse range of apps have reached tens of millions of users.
More importantly, a massive wave of world-class talent has entered web3 over the last year. They are brilliant and passionate and want to build a better internet.
Where will the funding be heading?
Although there were no mentions of specific projects or crypto start-ups nominated for funding in the announcement, there were some indications. According to the press release, the team at a16z is excited about areas including:
- Web3 games
- Decentralised Finance (DeFi)
- Decentralised social media
- self-sovereign identity
- Decentralised Autonomous Organisations (DAOs); and
- Non-fungible token (NFT) communities
Out of the total $4.5 billion of funding, $1.5 billion will be cornered off for seed investments. This type of investment is reserved for the initial cash injection to get an idea off the ground. Whereas, the remaining $3 billion is pegged for venture backing — those are projects/companies with an already established business.
