January 20, 2022
Happy Thursday, Fintech Deals readers!
Situational awareness: Today we're hosting an Axios Pro virtual kickoff event at 12:30 ET. Ryan will interview Affirm CEO Max Levchin and ask about the company’s first year in the public markets and Max's outlook for the BNPL industry as a whole. Register here.
A minor correction: Yesterday, we said you could slide into Ryan's DMs but gave you a dead link to his Twitter profile. Apologies! You can read his bad sports takes here.
1 big thing: A16z's eye-watering crypto cash
Andreessen Horowitz is raising even more money to invest in crypto startups, this time seeking $4.5 billion across two new funds.
- According to a report in the FT, the firm told investors that it planned to raise $3.5 billion for its latest crypto venture fund and another $1 billion for a fund focused on seed investments in digital asset startups. (A16z declined to comment on the report.)
Why it matters: A16z was already at the forefront of Silicon Valley VCs in terms of investing in crypto and web3 startups, but the influx of capital would put it well ahead of its peers — even without key partner Katie Haun.
- The amount the firm is raising underscores a16z's belief that it is getting on the ground floor of a new world order.
- With $1 billion earmarked just for seed investments in the sector, that fund is not only one of the largest dedicated to crypto — it's likely the biggest seed commitment of all by a wide margin.
- Greylock raised $500 million for a dedicated seed fund in September that it dubbed the industry's largest focused at that stage.
Context: A16z raising more cash for crypto shouldn't be a surprise, as Axios' Dan Primack reported last month that Fund III was already fully deployed at the time Haun left to launch her own fund. What's surprising is the amount being raised and the velocity with which the firm is deploying crypto capital.
- These would be a16z's fourth and fifth dedicated crypto funds. They follow a $300 million Fund I launched in 2018, a $515 million Fund II in early 2020, and a $2.2 billion Fund III announced just last July.
- Haun has a potential $900 million fund, Paradigm has a $2.5 billion fund, and Pantera Capital is said the be raising a potential $1 billion fund. Not to mention, a third of Europe-focused Blossom Capital's most recent $432 million fund is dedicated to crypto startups.
Be smart: It's not just about GP conviction. Seeing the massive potential returns, limited partners have also gladly piled into crypto funds at volumes unseen in years past. The belief in crypto is going up the chain.