Why a16z is slow to deploy $4.5bn crypto fund raised three years ago

Andreessen Horowitz, the Silicon Valley venture capital giant, is in an unusual spot — it’s flush with cash but struggling to deploy billions of “dry powder” in promising crypto startups.

The firm’s a16z crypto unit raised a whopping $4.5 billion in its fourth fund in 2022, taking its total to $7.6 billion.

Yet when it comes to investing from that fund, the VC firm has kept its checkbook closed for the most part, said Robert Le, a senior analyst at Pitchbook, a venture capital research firm.

The reason: it’s hard to invest big sums in startups.

“They can’t go around writing $10 million checks,” Le told DL News. “Imagine, with a $4.5 billion fund, that’s all they would do.”

Burned

The other reason — taking care not to pick too many losers, even in a bullish market.

“VCs got badly burned last cycle so now they are much more diligent,” Le said.

Indeed, other firms are also being quite conservative as memories of the 2022 crash remain fresh.

“A lot of mega funds that were raised in 2022 to 2023 are still fully capitalised,” Le told DL News.

To be sure, venture capitalists operate on what’s known as the one-out-of-10 rule.

If 10% of their portfolio companies become blockbusters, the VCs and their investing clients will be very happy, especially if those blockbusters deliver expected 10x returns.

Yet during the boom in 2021 known as DeFi Summer through to the web3 surge and NFT rally in 2022, VCs were eager to stake a claim in the burgeoning crypto market.

Perhaps no firm was as aggressive as a16z, which was co-founded by Valley legend Marc Andreessen and Ben Horowitz in 2009.

Its portfolio features more than two-dozen companies, including Coinbase, dYdX, and OpenSea.

A16z did not immediately respond to requests for comment.

‘VCs don’t want to be investing in whitepapers anymore.'

Robert Le, Pitchbook

Even though the crypto market’s value has almost quadrupled to $2.8 trillion since those dark days in 2023, a16z’s continued caution signals growing pains for the crypto ecosystem.

Le said even the most bullish crypto VCs are being much more selective in how they allocate their clients’ money.

For one thing, VCs may be waiting to see what happens in Washington. A number of important bills are winding their way through Congress, including stablecoin legislation.

In addition, the Trump administration is conducting reviews of crypto regulation, and is has adopted a relaxed approach by dropping or postponing enforcement actions against Coinbase, Binance, and other players.

No more whitepapers

Even as a16z and its ilk sift through a volatile crypto market for diamonds in the rough, more capital is on the way.

Venture capitalists are on course to plough more than $18 billion into the sector this year, which is double the rate in 2024, according to PitchBook.

A lot has changed since the 2022 investing cycle. In those gaudy times, investors were happy to put millions to work in ventures that were little more than whitepapers.

Unsurprisingly, many outfits didn’t survive the bear market.

“VCs don’t want to be investing in whitepapers anymore,” Le said. “There was just so much hype last time, and a lot of VCs got burned.”

Another big change is the rediscovery of Bitcoin.

For years VCs opted for DeFi platforms while Bitcoin-only ventures attracted a tiny 0.6% of total VC investments in the sector, according to a 2024 Bitcoin ecosystem report by the venture firm Epoch.

With the top cryptocurrency’s dominance holding at 59% and new ETFs attracting more investors, Bitcoin-focused projects may be more attractive to VCs.

“A lot of investment should be for Bitcoin’s infrastructure,” Le said.

‘New era’

In any event, VCs take the long view so the selloff in recent weeks isn’t likely to deter them.

In 2025, Sequoia Capital and Paradigm among others have already invested $1.2 billion in 79 crypto startups, a 63% increase from January 2024, according to DefiLlama.

“It’s a new era for crypto, and VCs are excited by the next generation of startups being founded in the space,” Justin Barlow, venture partner at Faction VC and an angel investor, previously told DL News.

Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.