As crypto markets crash and other funds make plans to hold off, Andreeessen Horowitz is leaning into Web3 with billions in new cash for its crypto investments.
This morning, Andreessen Horowitz (or a16z), said it had closed its anticipated $4.5 billion fund—now the largest traditional VC fund focused entirely on crypto in the market. Andreessen Horowitz started fundraising for the fund earlier this year, according to general partner Arianna Simpson. She declined to specify when it had officially closed.
Here’s the thing: This isn’t 2021 anymore. And now that the fund is raised, a16z will likely be deploying its capital at a time when prices—even for earliest stage projects—are on the decline. Sequoia Capital issued one of its infamous dire warnings last week in the shape of a 52-slide deck, as reported by The Information. Crypto funds are laying out plans to scale back their go-to-market efforts to focus more attention on helping pre-existing portfolio companies survive.
“Fund managers are experiencing sticker shock and realizing they may have gotten too aggressive in their deployment schedule,”says a recent letter from an early-stage crypto fund sent to its LPs that was shared with Fortune. The letter mentions that a project the firm had passed on at a $80 million valuation had circled back to the fund, that time with a valuation it had more than slashed in half: $30 million.
“We are re-evaluating our current deal pipeline and holding off on investments where valuations have not reset commensurate with public market comparables,” the crypto fund’s letter reads.
In a blog post, general partner Chris Dixon said that Andreessen Horowitz believes the industry has entered into the “golden era” of Web3. Andreessen’s new fund will set aside $1.5 billion for seed investments, and $3 billion for venture investments—meaning that two-thirds of the capital will be going towards later-stage or growth stage investments, whether they be new or pre-existing portfolio companies, according to Simpson. She declined to comment on whether a16z would have raised so much capital should the firm have begun the fundraising process now, rather than earlier this year.
“We feel very lucky to have very supportive partners who understand the potential of this space and are very much focused on the long term potential and the technology that’s being built here—you know, irrespective of what might be happening at any given moment, from a short-term price perspective,” she says.
So what exactly is going on in crypto, anyway? First off, crypto is tanking—to the tune of $200 billion in value disappearing in a single day in mid-May and investor sentiment at its lowest levels since March 2020. Part of that may stem from rising inflation, interest rate hikes, and geopolitical instability from the Ukraine war. That and the tumble of the broader markets. Supposed safe havens like TerraUSD (UST) or Luna—stablecoins that were supposed to offer safety to investors—lost their pegs to the dollar, and investors have rushed to withdraw their holdings as major crypto exchanges delisted the coins. (Andreessen said its fund had no exposure to either stablecoin)
Meanwhile crypto giant Coinbase, which became a Fortune 500-listed company as of this week, had a troublesome quarter to start off this year. The company rolled back its hiring plans and reported a 35% year-over-year decline in revenue. Simpson declined to comment on Coinbase’s performance (A16z is currently the third-largest shareholder in the company).
Interestingly, many crypto funds have much more direct insight into their performance than a typical VC fund, as they hold tradable crypto tokens alongside equity. Funds can see at least some of their performance on a real-time, instantaneous basis.
So how is a16z’s portfolio faring exactly? Simpson declined to comment.
To be sure, there have been plenty of crypto winters before. Will Dixon and the fund’s other GPs be able to weather it with $4.5 billion to deploy?
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
- Semperis, a Hoboken, N.J.-based cybersecurity company, raised over $200 million in Series C funding led by KKR and was joined by investors including Ten Eleven Ventures, Paladin Capital Group, Atrium Health Strategic Fund, Tech Pioneers Fund, and Insight Partners.
- Clear Street, a New York-based infrastructure builder for capital markets, raised $165 million in Series B funding led by Prysm Capital and was joined by investors including NextGen Venture Partners, Walleye Capital, Belvedere, NEAR Foundation, McLaren Strategic Ventures, Validus Growth Investors, and other angels.
- Cribl, a San Francisco-based open observability platform, raised $150 million in Series D funding led by Tiger Global Management and was joined by investors including CRV, IVP, Redpoint Ventures, Sequoia, and Greylock Partners.
- Firework, a San Mateo, Calif.-based livestreaming commerce and digital transformation platform, raised $150 million in Series B funding led by SoftBank Vision Fund 2 and was joined by Amex Ventures.
- MainSpring, a Menlo Park, Calif.-based power generation provider, raised $150 million in Series E funding led by Lightrock and was joined by investors including Khosla Ventures, Bill Gates, Fine Structure Ventures, Fidelity Investments, Princeville Capital, and Lineage Ventures.
- Monte Carlo, a San Francisco-based data reliability company, raised $135 million in Series D funding from investors including IVP, Accel, GGV Capital, Redpoint Ventures, ICONIQ Growth, and GIC Singapore.
- FINN, a New York-based car subscription platform, raised $110 million in Series B funding led by Korelya Capital and was joined by investors including Keen Venture Partners, Climb Ventures, Greentrail Capital, Waterfall Asset Management, White Star Capital, HV Capital, Heartcore Capital, UVC Partners, and Picus Capital.
- Tidelift, a Boston-based open source software supply chain health and security management company, raised $27 million in Series C funding led by Dorilton Ventures and was joined by investors including Kaiser Permanente, Atlassian Ventures, General Catalyst, and Foundry Group.
- Point2 Technology, a San Jose-based connectivity solutions provider for cloud and 5G infrastructures, raised $22 million in Series B funding led by GU Equity Partners and was joined by investors including Molex Ventures, Samsung Securities, Shinhan Capital, Tigris Investment, K2 Investments, Korea Omega Investment, Timefolio Investment, Nautilus Venture Partners, Quantum Ventures Korea, and Walden International.
- Urban Jungle, a London-based consumer insurtech business, raised £16.5 million ($20.68 million) in a Series A funding led by Intact Ventures and Ingka Investments and was joined by investors including Eka Ventures and Mundi Ventures.
- Circles, a New York-based online group emotional support platform, raised $16.5 million in Series A funding led by Zeev Ventures and was joined by investors including Uber Freight head Lior Ron, NFX, Flint Capital, and Sir Ronald Cohen.
- Galley Solutions, a San Diego-based foodtech software platform, raised $14.2 million in Series A funding led by Astanor Ventures and was joined by Zetta Venture Partners.
- Neara, a Sydney-based power line design software company, raised $14 million in Series B funding led by Skip Capital and was joined by investors including Square Peg Capital and OIF.
- Lunar Outpost, a Golden, Colo.-based commercial space robotics company, raised $12 million in seed funding led by Explorer 1 Fund and was joined by investors including Promus Ventures, Space Capital, Type One Ventures, and Cathexis Ventures.
- Greyparrot, a London-based analytics platform for recycling and waste analysis, raised $11 million in Series A funding led by Una Terra and was joined by investors including Closed Loop Partners, Unreasonable Collective, and Speedinvest.
- ShardSecure, a New York-based cloud-based data security and privacy company, raised $11 million in Series A funding led by Grotech Ventures and was joined by investors including Gula Tech Adventures, KPMG, Tom Noonan, EPIC Ventures, and Industrifonden.
- buywith, a New York and Tel Aviv-based livestream shopping platform startup, raised $9.5 million in seed funding led by igniteXL Ventures and was joined by investors including Fab Co-Creation Studio Ventures, Regah Ventures, Irani CVC, True Global Ventures, and other angels.
- Preql, a New York-based no-code data transformation platform, raised $7 million in seed funding led by Bessemer Venture Partners and was joined by investors including Felicis and other angels.
- Red Access, a Tel Aviv-based web application protection platform, raised $6 million in seed funding co-led by led by Elron Ventures and Ten Eleven Ventures.
- LimaCharlie, a Walnut, Calif.-based security infrastructure services provider, raised $5.45 million in seed funding led by Susa Ventures and was joined by investors including Xerox Ventures, CoFound Partners, Long Journey Ventures, Sands Capital, StoneMill Ventures, Lytical Ventures, and others.
- Aklivity, a Palo Alto-based streaming API management company, raised $4.1 million in seed funding led by 468 Capital and was joined by investors including Pear VC, Alumni Ventures, and other angels.
- Learnfully, a Redwood City, Calif.-based personalized learning platform, raised $2 million in seed funding from Learn Capital, Goodwater Capital, Divergent Investments, Incite.org, Figure 8 Investments, and others.
- Natrion, a Champaign, Ill. and Binghamton, N.Y.-based EV battery component manufacturer, raised $2 million in seed funding led by TechNexus Venture Collaborative and was joined by investors including Mark Cuban and Tamarack Global.
- Alithea Genomics, a Lausanne, Switzerland-based RNA sequencing and transcriptomics analysis company, raised CHF $1 million ($1.04 million) in seed funding led by the Novalis Biotech Acceleration fund and was joined by other angels.
- Astound, a Birmingham, Ala.-based research funding marketplace, raised $1 million in seed funding from Mark Two Ventures.
PRIVATE EQUITY
- Development Partners International acquired a minority stake in Groupe Cofina, a Abidjan, Côte d’Ivoire-based financial services company, for €60 million ($64.46 million).
- Central Medical Supply Group, a portfolio company of Osceola Capital, acquired Helping Hands Medical Equipment, an Allentown, Pa.-based medical equipment management solutions provider to hospice agencies, the hospice assets of Consolidated Medical Surgical Supply, a New Windsor, N.Y.-based medical equipment management solutions provider to hospice agencies, and PPD Homecare, a Mantua, N.J.-based respiratory equipment and services provider. Financial terms were not disclosed.
- DBHCAP and Tides Capital acquired Salvo Technologies, a Largo, Fla.-based photonics products developer and manufacturer. Financial terms were not disclosed.
- Lab Logistics Management, a portfolio company of Atlantic Street Capital, acquired The Allied Group, a Cranston, R.I.-based printing, kitting, and mailing services provider to healthcare and life science organizations. Financial terms were not disclosed.
EXITS
- Moove, a portfolio company of Cosan, acquired PetroChoice Lubrication Solutions, a King of Prussia, Pa.-based lubricant solutions distributor and manufacturer, from Golden Gate Capital for $479 million.
- IK Partners agreed to acquire a majority stake in MÜPRO Group, a Wiesbaden, Germany-based pipe fixing technology solutions provider, from Perusa Partners.
OTHER
- Candle Media acquired Exile Content Studio, a Los Angeles-based entertainment company for Spanish speakers. Financial terms were not disclosed.
- Quantum Computing agreed to acquire QPhoton, a Hoboken, N.J.-based quantum photonics company. Financial terms were not disclosed.
IPOS
- Babycare, a Hangzhou, China-based product maker for children, is weighing an initial public offering that could raise between $300 million and $500 million in Hong Kong, according to Bloomberg. CDH Investments and Huaxing Growth Capital back the company.
FUNDS + FUNDS OF FUNDS
- Advent International, a Boston-based private equity firm, raised $25 billion for a fund focused on companies in the financial services, health care, industrial, retail, consumer, leisure, and technology sectors.
PEOPLE
- Ara Partners, a Boston, Dublin, and Houston-based private equity firm, hired Alyssa Hooper as principal. Formerly, she was with Global Infrastructure Partners.
- Luminate Capital Partners, a San Francisco-based private equity firm, hired Amy Hsiao as a vice president. Formerly, she was with Sixth Street Partners.
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