Original source: Financial Association
Original source: Financial Association
Silicon Valley venture capital firm Andreessen Horowitz (a16z for short) is one of the most active investors in the crypto space on the market.
In 2021, a16z accelerated its layout and invested in a total of 43 projects in 9 countries in the blockchain field. Looking back at a16z’s more than 50 investments in the encryption field in recent years, it not only makes a lot of money, but also prefers to lead investors, and pays close attention to start-up companies, and almost all the tracks in the field are “smooth”.
image description
Since 2017, a16z's investment "landscape" (Source: CB Insights)
"Blockchain Daily" summarized a16z's four investment styles and concepts, trying to explain how it became a legend in the cryptocurrency venture capital circle.
Four funds raised a total of US$7.515 billion
In 2013, a16z, which was established only four years ago, led the investment in a start-up company called Coinbase, buying shares at a price of $1 per share.
This is the first investment made by a16z in the field of cryptocurrency.
Eight years later, in April 2021, Coinbase, which has become the largest cryptocurrency exchange in the United States, was listed on Nasdaq. Although the closing price on the first day of listing fell nearly 14% from the opening price of US$381 per share, its total market value of US$85.8 billion on that day was more than 4,000 times higher than the 25 million B round of financing led by a16z.
a16z's bet and interest in the encryption field has continued to increase since this investment.
In 2018, known as the "crypto winter", when the price of cryptocurrencies such as Bitcoin fell by more than 50%, a16z launched its first cryptocurrency fund and successfully raised $300 million.
The fund was co-founded and led by a16z partner Chris Dixon and former US Department of Justice prosecutor Katie Haun.
In April 2020, a16z's second crypto fund raised $515 million. The fund has invested in startups including Aleo, which helps build decentralized applications, and Goldfinch, a platform that backs collateral-free crypto lending, among others.
Since then, a16z has made great strides all the way. In June 2021, the firm launched its third cryptocurrency fund, raising $2.2 billion, a record for a cryptocurrency fund at the time until it was overtaken by Paradigm’s $2.5 billion fund in November 2021 .
According to foreign media reports, a16z's third fund has basically completed its deployment in December 2021.
With the doubling of the fund size and “expansion”, the shortening of the time between raising new funds, and the rapid deployment of funds, a16z not only showed the outside world the speed at which it has accelerated its investment in the industry, but also demonstrated the frenzy of the blockchain industry.
If a16z can successfully raise the $4.5 billion mentioned in the opening article, it will once again break the industry's largest cryptocurrency fund raising record, and the total raised amount of a16z's four funds will be as high as $7.515 billion.
However, one of the world's most famous crypto investors, Katie Haun, who helped a16z raise and deploy a crypto currency fund, has left a16z to create another crypto and Web3.0 investment fund.
On December 16, 2021, Haun recalled the idea of joining a16z and establishing a crypto fund on Twitter. She called it "a moonshot experiment" in 2018; however, with the hard work of many people, " It exceeded both my wildest expectations and Chris's."
"Media-based investment institution"
Zheng Yushan, founding partner of Waterdrip Capital, told the "Blockchain Daily" reporter: "a16z is more like a media-based investment institution."
he thinks,he thinks,
The advantage of a16z's marketing strategy is that it can increase the influence of the institution. With the blessing of fame, it has the advantage of low-cost publicity for the projects it invests in. However, he pointed out that this also has disadvantages - making the industry more impetuous.
"If institutions and GPs are keen to speak out in the media, it will inevitably reduce the time for independent thinking and doing things, and the energy for resource docking and business analysis on the front line will be more limited."
In 2021, a16z will also launch Future, a technology media publication.
In addition, the two founders of a16z are also KOLs in the encryption field on Twitter. Last month, Marc Andreessen, one of the founders, exchanged views on Web 3.0 issues with Jack Dorsey, former CEO of Twitter and current CEO of Block, on Twitter.
Dorsey questioned that although Web3.0 claims to be decentralized, venture capital firms are the actual owners. Subsequently, these remarks aroused the dissatisfaction of a16z, the largest investment institution in this field, and Andreessen blocked Dorsey.
Invested in 43 projects in 9 countries
A report released by the research firm CB Insights at the end of last year pointed out that 2021 is a milestone year for a16z, with 43 companies in the portfolio appearing in the form of listing (IPO) and acquisition (M&A). The blockchain and cryptocurrency category became the cornerstone of a16z's investment strategy.
The reporter combed and found that a16z’s current investment in blockchain-related projects has spanned exchanges, NFT, DeFi, GameFi, stablecoins, Web3.0, DAO and other fields, including Coinbase, OpenSea, Solana, Uniswap and other star projects.Sun Yulin, a senior researcher at the Okey Cloud Chain Research Institute, told reporters that a16z’s “rain and dew” investment method in the encryption industry subdivision track said,
"Its extensive layout in the field is supported by its core investment philosophy. a16z believes that blockchain is the next-generation computing model, so it is actually investing in the next-generation computing model and new applications based on the next-generation computing model."A person in the investment circle who did not want to be named expressed a different view. In his view, a16z mainly relies on information asymmetry and influence to invest. "So it must be wet with rain and dew",
He further explained, "a16z's approach is useful in almost every industry. It first helps the project side earn traffic, and in turn gets the status of the lead investor, and then continues to help the project side further expand its influence."
In addition, a16z is not limited to investing in local encryption targets in the United States, but also continues to expand the global market and expand venture funds to more countries. The above report mentioned that a16z's 43 blockchain transactions in 2021 spanned 9 countries.
In October 2021, a16z completed its first investment in India, and together with Coinbase, led a US$260 million investment in CoinSwitch Kuber, an Indian cryptocurrency trading startup. This is also the largest deal a16z will back in 2021.
At the beginning of 2022, a16z took another shot at Carry1st, Africa's largest mobile and Web 3.0 game publisher, and appeared as the lead investor in its $20 million Series A round of financing. This is a16z's first investment in a startup on the African continent.
a16z's investment style
One of a16z's investment styles is that it is keen to lead the investment and spend a lot of money.
It can be seen from the three encryption funds that have been established so far that their investment in the encryption field continues to increase. In the financing of many platforms and projects such as OpenSea and Axie Infinity, a16z participated as the lead investor.Sun Yulin pointed out to the "Blockchain Daily" reporter,
In the field of venture capital, leading investment institutions can be regarded as a bridge between start-up companies and investors. In addition to accounting for a large proportion of the investment amount, leading investment institutions also take a leading role in related transactional work.
Second, a16z prefers startups in the blockchain field. In 2021 alone, dozens of startups will receive investment from a16z. For example, NFT music copyright startup Royal received a $55 million investment led by a16z; privacy computing startup Nym Technology raised $13 million in a financing led by a16z in November 2021.
a16z has also extended its "tentacles" to start-up companies in subdivided tracks such as stablecoins and GameFi.
Marc Andreessen, co-founder of a16z, once said that supporting startups in emerging markets is "very attractive." a16z reportedly invested close to $50 million in bitcoin-related startups in January 2014.
The third investment style of a16z is that once it notices that a certain project has growth potential, it will continue to increase the amount and continue to invest funds.
Coinbase and OpenSea are typical examples. Until 2020, a16z has invested in Coinbase 8 times, and even before Coinbase went public, it was its largest institutional investor.
a16z has reportedly returned more than $7 billion in net profit on its bet on Coinbase.
The same is true for OpenSea, which accounts for 95% of the NFT market. In March 2021, OpenSea raised US$23 million in Series A financing led by a16z; four months later, it raised US$100 million in Series B financing led by a16z.
Recently, OpenSea announced the completion of a $300 million Series C round of financing. However, a16z did not participate this time, but the investment fund founded by its former partner Katie Haun participated in the investment.
In addition, a16z has added no less than three times to the decentralized exchange dYdX and the mobile encryption payment platform Celo.
Another well-known investment philosophy of a16z is long-term investment, which is also clarified on its official website: "We are long-term and patient investors with a solid capital base and are expected to hold investments for more than 10 years."As for whether the project party is under the pressure of return on investment, she replied: "My judgment is that the investor has not given too much pressure."
IOS
Android