Andreessen Horowitz Flagship Crypto Fund Down 40% This Year
Venture giant Andreessen Horowitz’s (a16z) flagship crypto fund has fallen 40% in the first half of this year alone, after it was set up as the crypto market peaked, according to a new report.
The 40% fall for the crypto-focused venture fund is much larger than the 10% to 20% drops seen in other venture funds this year. Most venture funds have tended to stay away from crypto investments, which are seen by traditional investors as risky and in a regulatory grey area.
The major decline for the crypto fund was first reported by the Wall Street Journal, which cited “people familiar with the matter.”
Andreessen Horowitz has been one of the largest players from the world of traditional venture capital to take major steps into crypto, helped in large part by Chris Dixon, a partner at the firm who has long been a blockchain evangelist.
In May this year, Dixon announced the formation of a $4.5bn crypto fund, the largest such fund to ever exist in the crypto industry. According to the Wall Street Journal, it is this fund that is now down around 40%.
Despite the massive size of a16z’s flagship crypto fund, the team managing it has slowed the pace of its crypto investments this year, the Wall Street Journal said. It also noted that Dixon has been busy convincing investors that crypto investments have been right for the fund, despite the large losses, while some have warned that the fund’s crypto focus is too big.
“They’ve just pushed it so far with crypto that I’m not sure they can rebalance,” Ben Narasin, general partner at the VC firm Tenacity Venture Capital, was quoted as saying in the article.
According to Dixon, however, Web3 and the crypto economy in general will recover given some more time.
Crypto “is about the political and governing structure of the internet […] We have a very long-term horizon,” he told the Wall Street Journal.
Controversial venture capitalists
Late last year, Chris Dixon found himself at the center of a controversy in the crypto community over who actually benefits from “Web3” – users or venture capitalists.
The discussion started after Twitter founder and well-known Bitcoin (BTC) proponent Jack Dorsey tweeted “You don’t own “web3.” The VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label.”
However, Dixon did not agree, arguing instead that Web3 is completely open source:
In web3, all the code, data, and ownership is open source. Read it and decide for yourself. VCs (including a16z) own very little of it. https://t.co/DGCrYmsQYI— cdixon.eth (@cdixon) December 21, 2021
That take was then followed up on by Tesla chief and Dogecoin (DOGE) fan Elon Musk, who asked “Has anyone seen web3? I can’t find it.”
To this, Dorsey replied “It’s somewhere between a and z.”