a16z, short for Andreessen Horowitz (abbreviated as a16z because there are 16 letters between the first letter 'a' and the last letter 'z'), was founded in 2009 by two founders, Marc Andreessen and Ben Horowitz. It gained prominence as a top venture capital firm in Silicon Valley alongside Sequoia and Benchmark Capital after investing in several well-known internet companies such as Facebook, Twitter, Github, Instagram, and Airbnb.

Currently, a16z manages over $35 billion in assets, with investments spanning artificial intelligence, biotechnology and healthcare, consumer, cryptocurrency, enterprise operations, fintech, gaming, and companies driving U.S. infrastructure. a16z has established specialized funds for different sectors, and this article will focus on a16z crypto, which is its dedicated fund for the cryptocurrency industry.

I. Entering the Cryptocurrency Field

a16z first ventured into cryptocurrency investments in 2013, when the crypto industry was still questioned by many traditional venture capitalists. a16z took the lead in a $25 million Series B funding round for Coinbase and subsequently made seven follow-on investments. The bet on Coinbase not only earned a16z substantial profits when Coinbase went public but also made it a star in the cryptocurrency investment field.

To better invest in the cryptocurrency sector, a16z established a dedicated venture fund, a16z crypto, in 2018. This fund has raised a total of five rounds, managing over $7.6 billion:

• The first fund was launched at its inception, with a size of approximately $300 million;
• The second fund was launched in April 2020, with a size of approximately $515 million;
• The third fund was launched in June 2021, with a size of approximately $2.2 billion, setting a record for fundraising in the crypto fund space at that time;
• In May 2022, the fourth fund was launched with a size of approximately $4.5 billion and a $600 million Web3 gaming fund.

It is reported that a16z is currently planning to raise about $3.4 billion for its next core early-stage and seed fund, primarily investing in the cryptocurrency sector, biotechnology, and new growth opportunities.

II. Team Structure

The investment team at a16z operates on a partner-only model, with no hierarchical structure. Each specialized fund recruits professionals as investment partners.

Chris Dixon is the founder of a16z crypto. Although he joined a16z in 2012, many significant investments in the crypto space (such as Ripple, Coinbase, and Dapper Labs) have been led by Chris Dixon. In 2022, he topped Forbes' list of "The World's Best Venture Capitalists."

Before joining a16z, Chris Dixon was an entrepreneur and investor, having previously founded the internet security company SiteAdvisor and the tech recommendation company Hunch. He also founded the venture fund Founder Collective and made numerous personal angel investments in various tech companies.

Undoubtedly, with the booming development of the cryptocurrency industry, Chris Dixon has become a key figure at a16z, alongside the company's iconic founders, Marc Andreessen and Ben Horowitz.

According to publicly available information on a16z's official website, the total number of employees is 546, with the largest group dedicated to the cryptocurrency sector, totaling 99, accounting for 18%. This distribution reflects a16z's emphasis on the cryptocurrency field. Continuing its tradition of valuing post-investment services, only 15 of these 99 individuals are specifically responsible for investments, while approximately 80% handle post-investment services such as marketing, recruitment, legal, and technical support.

III. Investment Characteristics

Founded in 2009, a16z has not only invested in numerous well-known internet companies in Web2, transforming into a top venture capital firm in Silicon Valley but has also invested in several high-value companies in Web3 (such as Coinbase, Opensea, Dapper Labs, Uniswap, dYdX, Lido, Yuga Labs), becoming a bellwether in the cryptocurrency investment field. How has a16z achieved such investment success in both sectors?

As a specialized fund of a16z, a16z crypto inherits the investment logic and style of a16z. Here are several investment characteristics of a16z crypto summarized by the author.

Adhering to "All-Weather" Investment

The so-called "all-weather" investment means maintaining continuous investment regardless of market conditions and cryptocurrency trends. a16z crypto has demonstrated this through its actions. From a distance, both of a16z crypto's first two funds were launched during the cryptocurrency bear market from 2018 to 2020, managing over $800 million in total. More recently, during this year's cryptocurrency winter, a16z has made over 30 investments in the past year, leading 11 of them, compared to the "tightening" investment approach of other crypto funds like Paradigm, according to Rootdata data.

High Ratio of Leading and Follow-On Investments

According to Rootdata, a16z crypto ranks first among cumulative leading investment institutions, with a historical record of 109 leading rounds.

From the well-known crypto projects a16z crypto has previously invested in, it is evident that a16z crypto also loves follow-on investments, showing a "determined" commitment to promising projects.

Generous Investments and Broad "Net" Casting

Since its establishment, a16z crypto has invested in over a hundred crypto projects, covering nearly all sectors of the cryptocurrency industry. a16z is known for its "generous" investments in Silicon Valley, with a typical example being the bidding war for Github in 2011, where a16z announced it would lead a $100 million investment, along with various post-investment benefits, leading Github to ultimately choose a16z.

Skilled in Media Promotion and Packaging

In 2010, The New York Times described a16z as follows: "A new generation of venture capitalists represented by a16z is trying to shake up an industry that needs change." This statement implies that a16z has pioneered a new operational model distinct from traditional venture capital firms, with one of its main features being the establishment of its own media channels for promotion and marketing.

When opening a16z's official website, one might feel as if they have entered a media platform, as the homepage features various reports and articles. a16z's founder, Marc Andreessen, has mandated that each investment partner establish their own media presence to share and disseminate investment philosophies publicly, facilitating the flow of industry information and cognitive education.

This practice has also been inherited by a16z crypto, with Chris Dixon frequently advocating for the cryptocurrency industry in various public forums. This year, he even wrote a book about Web3 titled "Read Write Own," which is scheduled for publication in January 2024, earning him the title of "the strongest evangelist for Web3."

Additionally, a16z places great importance on the branding of the projects it invests in, drawing from the operational model of Hollywood's top agency CAA to build a large and professional talent system, providing marketing, legal, lobbying, and other support for the companies it invests in. Therefore, a16z is also referred to as "a media company that profits through investment."

IV. Investment Landscape of Potential Projects

The betting capability of a16z crypto is evident. Below are potential projects filtered from a16z crypto's investment landscape, excluding those that have already issued tokens, rug pulls, projects with funding below $10 million, and those serving traditional industries (unlikely to issue tokens), for readers' reference (sorted by cumulative funding amount):

V. Conclusion

"Software is eating the world" is a16z's most well-known slogan, originating from Marc Andreessen's 2011 article in The Wall Street Journal titled "Why Software Is Eating the World," which solidified a16z's confidence in investing in internet companies for the following years.

After a16z invested in Web3 startups like Coinbase, facing confusion from peers and the media, Marc Andreessen wrote another famous article in The New York Times in 2014 titled "Why Bitcoin Matters," in which he regarded Bitcoin as an innovation as significant as the personal computer in 1975 and the internet in 1993. This effectively laid the foundation for a16z's long-term investment belief in the cryptocurrency industry and prompted many traditional venture capitalists to reassess the crypto sector.

From "software golden finger" to "crypto golden finger," a16z's transformation aligns with the times. As described on the homepage of a16z crypto, the internet has gone through three eras: the first era (1990-2005) had no a16z, while the second era (2005-2020) established a16z.

We are now in the third era, and a16z aims to continue its legacy.

References:
【1】a16z: A "Hollywood" Style Victory
【2】Legendary VC a16z's Approach to Cryptocurrency: A Visual Guide to Investment Landscape and Strategy
【3】Web3 VC a16z Crypto's 20,000-Word Research Report: Is it a VC or an Entrepreneurial Service Agency? A Comprehensive Analysis of Its Business Matrix, Investment Portfolio, Action Principles, and Future Trends
【4】RootData: Which Institutions Love Leading Investments? Which Institutions Have Made the Most Moves This Year?
【5】Having Invested in 86 Web3 Companies, Is a16z an Evangelist or a Big Talker?

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