fromTechcrunch, original author: Lucas Matney

Odaily Translator |

Odaily Translator |

In the past few weeks, the cryptocurrency market has experienced huge shocks, the UST/LUNA crash, the bleak outlook of DeFi, and the plunge of BTC seem to make it difficult to see the prospects of this emerging industry. However, for venture capitalists who are optimistic about the future of Web3, their footsteps have not stopped.

So, why did a16z form a Web3 investment "big mac" during the bear market? There could be two reasons -

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1. The market position of a16z is challenged

About a year ago, a16z announced the launch of Crypto Fund III, an encryption fund with a size of approximately $2.2 billion at the time. In terms of size, the new fund launched this time is double the size of the previous crypto fund, which reflects the growing interest of a16z LPs in expanding investment exposure to crypto startups.

But in fact, in the past year, the encryption market has undergone tremendous changes, and a16z has also experienced many unexpected challenges. Especially in recent months, crypto-native institutions such as Paradigm and Electric Capital have further risen, and they have raised large amounts of funds to challenge a16z's market dominance.

Not only that, but a16z has to endure the dilemma of staff turnover. In January of this year, a16z partner Katie Haun announced her withdrawal and took away a group of colleagues to form Haun Ventures. The fund successfully raised 1.5 billion US dollars, 500 million US dollars was used for early investment (direct investment in equity and Token), $1 billion for "accelerator" funds.

Chris Dixon is very optimistic about the development of Web3. He once said that ownership and control in Web3 are decentralized, and users and builders can "own" Internet services by owning NFT and FT. NFT gives users property rights, that is: the ability to "own" a part of the Internet. Web 3 offers a new approach that combines the best of previous eras, and now is the early stages of this movement and a great time to get involved.

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2. Help crypto startups get enough capital to weather the storm in a bear market

The collapse of the Terra ecosystem and its UST stablecoin has had a huge impact on the entire crypto market in recent weeks, and the skepticism of many investors and entrepreneurs about this nascent industry has grown even stronger. As UST evaporated tens of billions of dollars in market value almost overnight, many people called on US federal lawmakers to speed up the compliance process of the encryption industry.

On the other hand, the global cryptocurrency market value has fallen from a high of nearly 3 trillion US dollars to 1.3 trillion US dollars. Many people are puzzled by a16z launching a huge Web3 fund during this market downturn. After all, market cooling usually scares away traditional companies. Keep betting on cryptocurrencies. However, a16z Crypto Partner Arianna Simpson explained:

"Other investment companies are likely to withdraw, but we will not. From the scale of a16z's new fund of US$4.5 billion, we can see that we are full of excitement for this industry and firmly believe that there will be good development in the future."

In fact, due to the recent heavy losses in global stock markets (Robinhood and Coinbase both fell by more than 75% since their debut), many crypto investors believe that the industry's outlook is not so optimistic. Observers predict that the era of global financial turmoil is coming, and not only the encryption industry, but other financial fields will also encounter problems.

What's "interesting" is that when a16z launched the last blockchain fund, the encryption market was also on the verge of collapse, but when a16z entered the market, it soon recovered, and even pushed the prices of Bitcoin and Ethereum to record highs. Frankly, during a market downturn, many new entrepreneurs feel uncertain about the future and worry that there will not be enough funds available during the "crypto winter". In this regard, a16z obviously has a very big advantage, because this "veteran venture capital" has a large amount of capital, which in turn can help its portfolio continue to expand its business scale.

As Arianna Simpson puts it: