The flagship crypto fund of a16z recorded a loss of 40% in the first half of 2022.
Fund Manager Chris Dixon remains undeterred by the market downturn.
The VC firm has poured millions into multiple funding rounds in the crypto industry this month despite the crypto winter.
Dixon had stated earlier that the crypto bear market is “more appealing” for web3 investments.
The crypto bear market seems to have caught up to the popular venture capital firm Andreessen Horowitz (a16z).
As per a report published by The Wall Street Journal, a16z’s flagship crypto fund recorded a loss of around 40% during the first half of 2022. The loss has prompted the firm, known for its bullish stance on crypto, to slow down investments in the sector. Data from Pitchbook shows that the third quarter of this year saw the VC involved in just 9 crypto startup deals as compared to the 26 deals it made during Q4 of 2021.
In addition to limiting investments, the firm has adjusted the valuation of Crypto Fund II and Crypto Fund III in line with the current market outlook. A16z had raised $515 million and $2.7 billion for these funds respectively.
Crypto ventures by a16z
Andreessen Horowitz is a well-known venture capital firm in Silicon Valley which has backed popular names like Twitter and Meta (formerly Facebook). In 2018, crypto maximalist Chris Dixon convinced the firm’s founders to set up a dedicated fund that would invest exclusively in blockchain-related projects. This led to the creation of the a16z’s initial crypto fund with a war chest worth $350 million. Since then, the firm has raised $7.6 billion for crypto-related investments.
Despite seeing a market-wide selloff in May this year, a16z doubled down on their crypto gamble and announced their latest fund, dubbed the Crypto Fund 4, which raised a record $4.5 billion.
The crypto market has only gotten worse since then, but Dixon continues to pour millions into crypto projects. The fund manager told WSJ that he is playing the long game and that mass adoption for blockchain services is yet to come.
What I look at is not prices. I look at the entrepreneur and developer activity, that’s the core metric.” Dixon said.
This month alone has seen the firm participating in several funding rounds. The fund led the Series B funding round of web3 data startup Golden, which raised $40 million. The fund participated in the latest funding round of DeFi exchange UniSwap as well, which raised $165 million. A16z also led a $14 million funding round for web3 commerce startup Rye.
Earlier this year in August, Chris Dixon participated in a podcast hosted by the Financial Times where he stated that he looked at the market downturn as an opportunity to invest. According to Dixon, the downturn had “made Web3 investments more appealing.”