Crypto venture capital firms have been investing at unprecedented rates recently, and Andreessen Horowitz (a16z) is one of the industry’s leaders making huge returns on their investments.
Andreessen Horowitz general partner Chris Dixon has topped the Forbes “Midas List” of the world’s best venture capital investors in 2022.
Seldom does a crypto or Web3 funding round finalize without a16z being involved somehow. According to a Tuesday report, Dixon turned the $350 million Crypto Fund I into realized and unrealized gains of $6 billion in 2021. That equates to an eye-watering 17.7x gain, according to “sources with knowledge of the fund’s financials.”
Jack Dorsey may not want to give him props. But @cdixon and a16z's $350M first crypto fund closed 2021 up 17.7x, a source tells @Forbes. @bhorowitz predicts in 10 years, he'll be considered "the best investor of his generation." pic.twitter.com/XdqwDWEcZ2— Alex Konrad (@alexrkonrad) April 12, 2022
By comparison, the overall cryptocurrency market itself only managed a 200% gain from $780 billion on January 1, 2021, to $2.3 trillion by the end of December 2021.
A16z got into crypto early, leading a $25 million funding round into Coinbase in 2013. By the time Coinbase went public in April 2021, the firm had held a 15% stake following 14 more funding rounds. The shares were worth $10 billion on the first day of trading, resulting in a 60x return for the company. However, this was several years before Dixon’s crypto fund was launched in June 2018, with $300 million raised in total at the time, according to Crunchbase.
There have been other notable investments by a16z including decentralized exchange Uniswap, the Avalanche blockchain, nonfungible token (NFT) creator Dapper Labs and Ethereum staking platform Lido, all of which have surged in valuation or collateral since.
Dixon, who rarely appears for interviews, told Forbes:
“My job is not to predict the future. My job is to be smart enough to know who the smart people are who will.”
The company is currently raising funds for the world’s largest crypto fund, worth a whopping $4.5 billion. In January, the firm said it planned to raise $3.5 billion for the fund, in addition to another $1 billion for Web3 seed investments.
Journalist Alex Konrad said that a16z “plans to roll back its crypto fund into the firm — making crypto core to its main funds, akin to cloud or the internet.”
Concerns have been raised by some crypto industry observers that too much venture capital involvement and investment in a project may erode its decentralization. A16z’s holdings of the UNI tokens and sway in governance votes for has been a particular issue. But, either way, the crypto industry’s most prominent VC firm is still hunting for new investment opportunities in the sector.