Flagship A16z Crypto Fund Lost 40% in First Half of 2022: WSJ

Venture funding in the crypto space has been on the decline this year compared to 2021, according to a second quarter 2022 report

article-image

A16Z’S CHRIS DIXON | Source: MIKE LAWRENCE

share

key takeaways

  • The report comes months after the firm announced the biggest crypto venture fund in history
  • Before this year’s drop in performance, Crypto Fund I had been one of a16z’s highest-performing investments

Crypto-friendly venture capital firm Andreessen Horowitz’s digital asset investments may be struggling more than the industry initially believed, according to a new report from the Wall Street Journal. 

The firm’s flagship crypto fund, Crypto Fund I, which launched in 2018 with $350 million, lost around 40% in the first six months of 2022, the Wall Street Journal reported Wednesday. 

Crypto Fund I was revolutionary for bringing traditional firms into the developing crypto space. The firm launched its second crypto fund in 2020 with $515 million. 

Before this year’s drop in performance, Crypto Fund I had been one of a16z’s highest-performing investments.

The crypto fund ended 2021 more than ten times its original amount. Andreessen Horowitz’s first-ever venture fund, launched in 2009, saw 7x returns at the end of 2021. 

Andreessen Horowitz — also known as a16z — has adjusted its crypto portfolio in the second half of the year, though, according to data provider PitchBook.

In the third quarter of 2022, the firm sealed nine crypto startup deals, down from its record 26 startup deals in the fourth quarter of 2021.

Venture funding has been on the decline this year compared to 2021, according to a second quarter 2022 report. In 2021, 999 venture funds launched, compared with 415 in 2022 as of June 30. 

These 415 funds have collectively brought in more than $121 billion, largely driven by a16z’s fund. This marks 2022 as the second-highest crypto venture funding year on record. 

The firm’s crypto portfolio holds several dozen companies, including big names such as Dapper Labs, OpenSea, Solana and Uniswap. 

Andreessen Horowitz bullish on crypto builders

Five months into 2022, as crypto token prices were continuing their downfall, the firm released its inaugural “State of Crypto” research report. 

Bitcoin’s total market capitalization sat at around $570 billion at the time, down more than 50% from its November 2021 high of about $1.2 trillion. 

Crypto follows a “price innovation cycle,” the report noted. Talent is drawn to the space when prices are high, Chris Dixon, general partner at Andreessen Horowitz, said at the Permissionless conference in Palm Beach in May 2022 following the release of the report. 

“Not to minimize the bad stuff that’s going on,” Dixon said. “But I do think if you step back and look at the broader trends, it’s promising.”

A16z launched its fourth crypto fund in May 2022. At $4.5 billion, it is the largest-ever crypto venture fund and brings the firm’s total crypto venture capital holdings to $7.6 billion.  “Our frequent conversations with builders have given us the confidence to go big, and we’re grateful to be your partner,” Dixon wrote in a blog post about the latest fund.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?

article-image

Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month

article-image

It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet

article-image

Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend

article-image

Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million