Andreessen Horowitz Doubles Down on Crypto Investments With New $515M Fund

Andreessen Horowitz’s (a16z) second crypto fund shows the venture capital firm is targeting specific areas to invest in the cryptocurrency space.

The company said Thursday it had raised a total of $515 million – more than the original $450 million target – for a second fund called "Crypto Fund II," dedicated to cryptocurrency and blockchain projects. It's also more than the $300 million raised for the VC's first crypto fund, which launched back in the summer of 2018.

In the blog post announcing the new fund, a16z says it is looking into projects touching next-generation payments, decentralized finance (DeFi), new monetization models and Web3 (the concept of a decentralized internet).

On DeFi, where total value passed the billion-dollar milestone earlier this year, a16z said it saw high potential in the composability of assets. "DeFi opens the components of finance to the same recombination and experimentation that makes open-source software so powerful," it said.

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This marks a contrast to a16z's first crypto fund. In its initial investment thesis, the VC mentioned a handful of what it saw as interesting use cases, including stablecoins, financial inclusion and the tokenization of real-world assets.

However, it included the caveat that "we are still early in the crypto movement. The infrastructure needs to be improved and the applications are difficult for non-early adopters to use. Many crypto applications still get dismissed as toys."

Thursday's blog post suggests a16z now considers the industry may have reached critical mass.