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How is a16z crypto’s crypto investment golden finger made?

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From "software cheats" to "encryption cheats", a16z's transformation is in line with the times.

Original Title: "How did a16z crypto, the investment giant in the crypto industry, come to be?"

Original Author: Jian Shu

Original Source: Foresight News

a16z, short for Andreessen Horowitz (abbreviated as a16z because there are 16 letters between the first letter "a" and the last letter "z"), was founded by two founders, Marc Andreessen and Ben Horowitz, in 2009. Later, it became one of the top venture capital firms in Silicon Valley, alongside big names such as Sequoia Capital and Benchmark Capital, due to its investments in well-known internet companies such as Facebook, Twitter, Github, Instagram, and Airbnb.

a16z currently manages assets of over $35 billion, with investment areas covering artificial intelligence, biotech and healthcare, consumer, cryptocurrency, enterprise operations, fintech, gaming, and companies that drive American construction. a16z has set up special funds for different fields, and a16z crypto, which this article will focus on, is a special fund set up for the cryptocurrency industry.

One, Entering the Cryptography Field

a16z first entered the cryptocurrency investment field in 2013, when the cryptocurrency industry was still being questioned by many traditional venture capitalists. a16z took the lead in leading Coinbase's $25 million Series B financing, and subsequently made 7 follow-up investments. The bet on Coinbase not only made a16z earn a lot of money when Coinbase went public, but also made it a star in the cryptocurrency investment field.

In order to better invest in the field of encryption, a16z established a dedicated venture capital fund for the encryption field in 2018 called a16z crypto. Currently, this fund has raised a total of 5 rounds of funding, managing funds exceeding $7.6 billion.

·The first fund was launched with a size of approximately $300 million at the time of establishment;

·In April 2020, the second fund was launched with a size of approximately $515 million.

·In June 2021, the third fund was launched with a size of approximately 2.2 billion US dollars, breaking the record for fundraising scale of the encryption fund at that time;

·In May 2022, the fourth fund with a scale of approximately $4.5 billion and the Web3 game fund with a scale of $600 million were launched.

It is reported that a16z is currently planning to raise approximately $3.4 billion for its next core early-stage and seed-stage fund, mainly investing in the fields of cryptography, biotechnology, and emerging growth opportunities.

二、团队情况

Translation:

2. Team Situation

a16z investment team operates on a fully collaborative partnership model without any hierarchical structure. Each specialized fund recruits professional individuals as investment partners.

Chris Dixon is the founder of a16z crypto. Despite joining a16z in 2012, many of a16z's significant investments in the crypto field, such as Ripple, Coinbase, and Dapper Labs, were led by Chris Dixon. In 2022, he ranked first on Forbes' "Global Best Venture Capitalist" list.

Before joining a16z, Chris Dixon was an entrepreneur and investor. He previously founded the internet security company SiteAdvisor and the technology recommendation company Hunch. He also founded the venture capital firm Founder Collective and made several personal angel investments in various technology companies.

Undoubtedly, with the booming development of the encryption industry, Chris Dixon has become a key figure at a16z, just like the iconic founders Marc Andreessen and Ben Horowitz of the company.

According to public information on the a16z official website, the total number of employees is 546, with the largest number of people working in the encryption field, totaling 99, accounting for 18% of the total. This also shows a16z's emphasis on the encryption field from the perspective of the number of employees. At the same time, a16z continues to focus on post-investment services, with only 15 of the 99 people specializing in investment, while the remaining 80% are responsible for post-investment work such as marketing, recruitment, legal, and technology services for the company.

Three, Investment Characteristics

Founded only in 2009, a16z has not only invested in multiple well-known internet companies during the Web2 era, but has also transformed into a top-tier venture capital firm in Silicon Valley. In the Web3 era, a16z has invested in multiple high-value enterprises such as Coinbase, Opensea, Dapper Labs, Uniswap, dYdX, Lido, and Yuga Labs, becoming a guiding light in the field of cryptocurrency investment. How has a16z been able to achieve such impressive investment results in both of these industries?

a16z crypto, as a specialized fund of a16z, inherits the investment logic and style of a16z. Here are several investment characteristics of a16z crypto summarized by the author.

Stick to "all-weather" investment

The so-called "all-weather" investment means that regardless of market conditions and cryptocurrency trends, it will continue to invest. a16z crypto has also proven this with practical actions. From a distance, the first two funds of a16z crypto were launched during the cryptocurrency bear market from 2018 to 2020, with a total management of over 800 million US dollars. To put it more recently, in this year's cryptocurrency winter, compared to the "tightening of belts" investment of cryptocurrency funds such as Paradigm, according to Rootdata, a16z has made more than 30 moves in the past year, including leading 11 times.

High proportion of lead investment and follow-up investment

According to Rootdata, a16z crypto ranks first in the cumulative lead investment institutions, with a historical lead investment round of 109 rounds.

At the same time, it can be seen from the well-known encrypted projects previously invested by a16z crypto that a16z Crypto also loves to follow up on investments and demonstrates a "no turning back" determination for projects it believes in.

Generous moves, "casting nets" widely

Since its establishment, a16z crypto has invested in hundreds of cryptocurrency projects, covering almost all tracks in the industry. a16z is known for its generous investments in Silicon Valley, with the most typical example being the 2011 Silicon Valley bidding war for Github, in which a16z announced that it would lead a $100 million investment and provide various post-investment benefits. Eventually, Github chose a16z.

Skilled in media promotion and packaging

In 2010, The New York Times described a16z as follows: "Representing a new generation of venture capitalists, a16z is trying to shake up an industry that needs change." The implication of this statement is that a16z has pioneered a new operating model that is different from traditional venture capital firms, with one of its main features being the use of self-built media channels for promotion and marketing.

When you open the official website of a16z, you may feel like you have opened a media platform because the homepage is filled with various reports and articles. The founder of a16z, Marc Andreessen, once stipulated that each investment partner must establish their own media platform to share and output investment concepts in public, promoting industry information flow and cognitive education.