Andreessen Horowitz, a venture capital firm that controls trillions of dollars of combined company value, recently announced its decision to create a crypto market-based fund worth $300 million USD. The fund has been a long-time coming ordeal for the company that already has a history with investing into crypto related start-ups.
Andreessen Horowitz (aka A16Z) has financially supported various up-and-coming startups since its inception in 2009. Projects like $10 billion Coinbase, $31 billion AirBnB, $576 billion Facebook, $7.5 billion GitHub, and $72 billion Uber are just some of the biggest startups that make up the A16Z portfolio.
A16Z has previously successfully dabbled with investing into crypto, as its backing of Coinbase back in 2013 has paid off quite handsomely. They also invested in crypto-specific funds like Polychain Capital and in various cryptocurrency ICOs. And now they are looking to expand their crypto experiences even further; they’ve set aside the mentioned $300 million USD to create a fund that will support up-and-coming crypto start-ups, hoping that they will see their investments pay off in the long run.
The move was “phoned in” months ago when A16Z published a series of ads which said how the firm is hiring staff to work on a “separately managed fund focusing on cryptocurrencies”, as per a report posted on recode.net. The official launch happened on Monday, when it was confirmed that the a16z crypto fund will exist.
The fund will be co-led by Kathryn Haun, company’s first ever female investment partner.
Prior to her appointment, Andreessen Horowitz picked up some heat for their alleged “male-centric” business environment; the company quickly dispelled these claims by producing evidence that their employment structure currently consists of 52.5% female workers and that they are working hard on communicating and with the underrepresented minorities. In a strong response to critics, perhaps looking to dispel thoughts of their latest partner being a “diversity hire”, Andreessen Horowitz said it had no gender-based or race-based hiring criteria:
“We hold the firm accountable to a fair and inclusive process rather than specific numbers or quota”
Chris Dixon, the company’s longtime crypto-focused investor (responsible for the Conbase and Polychain deals) will be the other person in charge of this fund. Both investors are also general partners at Andreessen Horowitz.
The company communicated their intention to keep their investment constant and long-term, regardless of the market situation:
“We have an “all weather” fund. We plan to invest consistently over time, regardless of market conditions. If there is another “crypto winter,” we’ll keep investing aggressively.”
Chris Dixon confirmed this notion by saying:
“We’ve experienced ups and downs in the cryptocurrency market, and expect there will be many more. There’s potential in the technology, and some of the downturns can be the best investments.”
The investment will also be spread out across various start-ups in various stages of development. The fund will be geographically agnostic, with each partner being allowed to invest as broadly as they wish. Haun commented on this:
“We want to maintain our flexibility. We both share the view that this is evolving and in early days. A lot of what we are investing in hasn’t been invented yet.”
The ultimate goal is to invest into non-speculative, real-use-case cryptocurrencies that will eventually become adopted by millions of people.
The question on everyone’s mind is, why now? After all, we are experiencing a pretty significant bear market right now. The answer to this is pretty simple. A16Z is using the “buy low, sell high” approach that anyone who wants to succeed in any market will have to use.
Right now, Bitcoin alone is down 70%, with other currencies going into 90’s with the percentages of their deviations from their ATH’s. However, experts agree that the sellers are losing steam and that the bear market bottom is near. As such, this could be as good of a time as any to take your money and invest it into a crypto project.
Usually, when a bull run starts, the market will look to break through the previously set ATH values. If any future run turns out to be similar to the previous ones the market experienced, we could be looking at the total market cap valuations of multiple trillions of dollars.
A company like Andreessen Horowitz knows this, and them entering the market at this moment might signal that a turn in fortunes is around the corner for the cryptosphere. The amount is not humongous per se, however, psychological and credibility effects are also in play when a reputed company enters nascent industry like crypto. Overall, this information will be another positive signal in the plethora of bull signals coming from technology and regulation fronts.