Andreessen Horowitz increases crypto bets with new $2.2bn fund

Andreessen Horowitz, the venture capital firm that has backed Facebook and crypto exchange Coinbase, raised $2.2bn for its third fund focused on digital assets, more than doubling its initial target in a sign of strong demand from institutional investors.

The Silicon Valley group will set up a third fund focused on finding “the next generation of visionary crypto founders”, it said on Thursday. Its latest fund will dwarf its previous two funds, of $350m and $515m.

Andreessen originally sought to raise $800m to $1bn for the new fund, the Financial Times first reported.

The launch is a vote of confidence in an industry that is facing increasing scrutiny from regulators as interest from fund managers, banks and retail investors climbs. It also comes as cryptocurrency prices remain under pressure, with bitcoin falling almost 50 per cent from all-time highs hit in April due to concerns about increased regulation and a crackdown in China.

“We believe that the next wave of computing innovation will be driven by crypto,” the fund’s partners Chris Dixon, Katie Haun, and Ali Yahya wrote in a blog post. “The size of this fund speaks to the size of the opportunity before us: crypto is not only the future of finance but . . . is poised to transform all aspects of our lives.”

The investments will be made through Andreessen’s cryptocurrency investment arm. Two previous funds, raised in 2018 and last year, have invested in emerging companies such as decentralised exchange Uniswap and Solana, the blockchain provider.

Andreessen also announced several new appointments in marketing, public and government relations and recruitment to help get its message across. “As with any new computing movement, crypto has endured a variety of challenges and misconceptions,” it said.

Prominent hires include Anthony Albanese, former chief regulatory officer of the New York Stock Exchange, and Bill Hinman, Tomicah Tillemann and Brent McIntosh, who all served at US regulatory agencies.

Regulators and central banks’ desire for greater influence over the market has tempered appetite for digital assets, according to CryptoCompare, a data provider. It said average weekly asset inflows in June across all leading digital asset investment providers had fallen 215 per cent since May.

In spite of the wobble in cryptocurrency prices, traditional Wall Street companies have continued to explore the nascent market.

Hedge fund BlockTower is launching a fund that aims to generate profits by riding out volatile months when prices buckle. The Miami-based fund has recently acquired investment specialist Gamma Point Capital, which runs a market neutral strategy that BlockTower hopes to scale into a vehicle of as much as $100m.

“The prospect of generating consistent and persistent returns regardless of which direction bitcoin, ethereum, or the market in general is moving . . . is potentially very powerful,” said Matthew Goetz, chief executive of BlockTower. “It’s an interesting time to be deploying these kinds of strategies, too, as I think we’re in something like the seventh inning of this crypto bull market.”

In a separate move, Virtu Financial, one of the US’s biggest market makers, said on Thursday it would join the Pyth network to explore using market data in a decentralised finance, or DeFi, network. Pyth is built on the Andreessen-backed Solana blockchain.