a16z: Making a $2 Billion Bet on the Next Dawn of Web3

Original Title: "The Hunter's Sense: a16z Bets $2 Billion on Web3's Next Dawn"

Original Author: Eric, Foresight News

While the entire crypto industry is still shivering in the cold winter, and numerous VC firms choose to stand idly by, the so-called "wildest VC in Silicon Valley," a16z, once again raised its hunting rifle.

According to Fortune magazine, a16z crypto is in the process of raising approximately $2 billion for its fifth fund, with plans to complete the fundraising in the first half of 2026. Although this number is only half of the $4.5 billion "monster" fund from 2022, it is still enough to make the entire industry take notice in the current market environment. VC Dragonfly, another key player in the Web3 industry, announced on February 17th that its fourth fund's size is only $650 million.

a16z's investment style in the Web3 industry is unique and has almost consistently anticipated all the popular trends. According to Fortune magazine, a16z's fundraising plan this time is very rushed, with only a 3-month fundraising window and a focus solely on blockchain-related projects.

We can't help but ask: What exactly do they see?

The Venture Capital Revolution of Two Programmers

To understand a16z's choices today, we must go back to that winter in 2009.

The gloom of the financial crisis had not yet dispersed, and the air in Silicon Valley was filled with a sense of pessimism. Two financially independent technologists, Marc Andreessen and Ben Horowitz, decided to establish a venture capital firm at this worst possible time. Their first fund aimed for $300 million, with the two of them personally committing $15 million.

How did the VC circle view this at the time? "This is a stupid idea, absolutely should not be done." This was how Ben Horowitz later recalled his peers' comments.

In addition to being seen as too aggressive with a $300 million target, a line in a16z's fundraising memo made their peers laugh out loud: "We believe that technical talent is the primary resource, so we will build a platform team to serve founders." At that time, peers believed that this move would increase expenses, drag down returns, and violate the traditional VC rule of "few and focused."

Today, almost all mainstream VCs are copying this "stupid idea," and that is the essence of a16z: daring to say "yes" when others say "no."

In 2009, a16z participated in the acquisition of Skype with $65 million. At that time, eBay was in a patent lawsuit with Skype's founders, and everyone said the risk was too great. In less than two years, Microsoft took over for $8.5 billion.

In 2010, Benchmark partner Matt Cohler mocked a16z for buying Facebook and Twitter shares in the secondary market as "selling pork belly futures." And the result? A $17.8 billion IPO for Groupon, a $104 billion IPO for Facebook, and a $3.1 billion IPO for Twitter.

In 2015, a New Yorker reporter relayed peer skepticism: for a16z to achieve 5-10x returns on the first four funds, the total portfolio valuation would need to reach several hundred billion dollars. Marc Andreessen made a disdainful gesture: "Nonsense. We are here to hunt elephants, chase the big ones!"

Today, the total portfolio value of a16z's first four funds has reached $853 billion, far exceeding the initial threshold. Hunting elephants later became one of the classic jokes in the VC industry, and a16z's two founders have continuously inspired entrepreneurs with their own experiences: Something truly innovative often looks stupid at first.

This is the elephant hunter's instinct.

Early Layout in the Crypto Track

In 2013, when most people still saw btc-42">Bitcoin as a "geek's toy," a16z had already led Coinbase's Series B funding. At that time, Ethereum had not even been born.

Eight years later, Coinbase went public on Nasdaq, with a market cap reaching $85.8 billion at one point. After cashing out $4.4 billion, a16z still holds a 7% stake.

This is not luck but foresight.

In 2018, amid the first major bear market in the cryptocurrency market, Bitcoin dropped from nearly $20,000 to just over $3,000. It was at this time that a16z officially launched its first crypto fund, Crypto Fund I, with a size of $300 million.

The same $300 million, but this time no one questioned their radicalism and model. The selection of this fund was enough to shut up those who doubted Web3. Between 2018 and 2021, projects invested in by a16z's crypto fund included: MakerDAO (now Sky), Compound, Uniswap, Solana, Avalanche, NEAR, dYdX, Dapper Labs, OpenSea, Axie Infinity.

According to DefiLlama data, the TVL of the three DeFi projects Sky, Compound, and Uniswap has exceeded $11.4 billion, accounting for nearly 12% of the total TVL of all DeFi projects. While many of the names we were familiar with four or five years ago have faded into the dust of history, you can't deny that their past glory still influences today's Web3 world.

The first fund's holdings at the end of 2021 had increased by 11 times compared to the initial fundraising amount, making it one of a16z's best-performing funds. Even after a 40% drop in 2022, investors still made significant profits.

The success of Crypto Fund I has made a16z one of the most outstanding players in crypto VC. In 2020, the second fund raised $515 million. In 2021, the third fund raised $2.2 billion. In 2022, the fourth fund raised $4.5 billion. With a total of over $7.6 billion in ammunition, a16z has become the world's largest crypto venture capital firm. Projects invested in later, such as Optimism, LayerZero, Lido, and EigenLayer, have also become leaders in their respective fields.

Of course, a16z also "chases hot trends" and has made investment mistakes. In the prediction market battle, a16z also heavily bet on Kalshi; in hindsight, there were some misjudgments in the investments in Celo, Chia, Dfinity, and Farcaster.

In this cycle, a16z has a somewhat negative attitude towards projects like Inscription and Meme, with its investments of tens of millions or hundreds of millions in "VC coins" facing unprecedented setbacks. However, L2, LSD, re-collateralization, and interoperability can indeed be said to be the only "Web3 Native" narratives, which were indeed all brought into a16z's fold.

You could say they have an elitist arrogance, but it's hard to say they are incompetent.

The Dual Life of the "Media Company"

a16z, almost revered in the Web3 field, has never been free from controversy.

In 2015, former a16z partner Benedict Evans jokingly said: a16z is a media company that makes money through venture capital. This statement later became a classic quote both inside and outside the industry for mocking a16z.

In 2021, a16z launched Future.com, a centralized media platform aiming to build a "content empire" in the tech space. However, this project was shut down after running for 18 months. The failure of Future.com did not deter a16z from its media strategy. Instead, they pivoted — shifting from building a centralized media platform to constructing a decentralized "media ecosystem."

In April 2025, a16z acquired Erik Torenberg's podcast network Turpentine. This was a typical acquisition + talent recruitment deal, where a16z expanded its media and network business through acquiring Turpentine, and Erik Torenberg joined a16z to oversee investments and lead the media team. Seven months later, a16z officially launched a16z New Media.

In the article "What is New Media?" on their website, a16z stated that the goal of the "New Media" team is to build the best turnkey media operation in the venture capital space, helping portfolio company founders win the narrative war and, more importantly, bypass traditional media.

In the AI era, the barrier to developing products has been nearly reduced to 0, but the ability to tell stories has unexpectedly gained priority. Giants like Anthropic, OpenAI, Netflix, Microsoft, and others have significantly expanded their comms/storytelling teams. If you've recently come across the viewpoint that if you don't use AI, you will be eliminated, it likely originated from the hands of these AI companies.

After all, in an era where a product can be created in a matter of hours, those who can sell products and services through storytelling are the ones who can survive.

Many have criticized a16z, saying they lack substance and often just help the companies they invest in tell stories, waiting for the next bidder to step in. Now, it seems that this storytelling ability has become a scarce commodity in the AI era. Perhaps a16z's ability to always foresee trends is a story told by a16z itself, but recently I heard a very interesting story:

a16z is a nerd-friendly VC that is very keen on finding those who are overlooked because they lack social skills. These individuals are usually not eloquent but have incredibly out-of-the-box ideas that most people consider nearly impossible to achieve or contradict mainstream beliefs. Their flaws make it difficult for them to stand out in the arena of human nature, but a16z has found them and brought them together.

When like-minded individuals come together, a strong chemical reaction occurs between them, allowing a16z's maverick stance to reap significant rewards.

The logic is simple: these people don't need to engage in the complexities of business warfare but rather serve as the strategists behind the generals leading the charge. Their sharp foresight and calm minds always enable them to think outside the box. More importantly, no one here would dismiss a peculiar idea right from the start because while outsiders might think they are crazy, internally, the team knows it could be the very best answer.

$2 Billion: Where Will It Go?

Since October 2024, the cryptocurrency market has seen a significant pullback, with the total market capitalization dropping by over $2 trillion. In such an environment, many crypto VCs chose to retreat.

But a16z's choice was to double down against the tide.

Chris Dixon has stated multiple times that a16z crypto's current holdings represent 95% of its historical investments. They believe that in venture capital, selling off high-quality assets too early is the worst decision. Dixon sees blockchain as the next internet infrastructure, with the crypto industry being in a long "foundational" period, akin to the 1943 neural network paper's relationship to today's AI, where true mainstreaming takes decades of groundwork.

"We are thinking in terms of centuries." said a16z partner Katherine Boyle.

From this perspective, the current market downturn is actually the best time to position oneself. Valuations are more reasonable, top projects are more accessible, and competition is relatively low. More importantly, a16z may see the next upcoming breakout track.

A report by Fortune magazine mentioned some key points, such as a16z's desire not to prolong fundraising and only invest in blockchain-related projects.

We can roughly speculate on the message behind this: a16z sees some new trends, wants to quickly establish a position, but a few billion dollars are not enough; they need at least $20 billion.

Many speculate that they will invest in stablecoins, RWA tokenization, payments, Crypto+AI, and other popular tracks we are familiar with. But the author wants to say that they must have seen something different. Unfortunately, we don't know what it is yet.

Although not explicitly stated, Chris Dixon hinted at some clues in a tweet on February 7.

We anticipated that financial applications would be the first to take off, so we invested in Coinbase, MakerDAO, Compound, Uniswap, and Morpho, but non-financial applications will catch up sooner or later;

Financial applications being the first was not accidental but a fundamental sequencing issue, only when enough people come in, new applications will emerge;

The long-standing lack of regulation and legislation in the crypto space has led the industry astray, once regulations are in place, the wheat will be separated from the chaff;

It was those chaotic years that paved the way for eventual glory, as it has always been with the internet and AI.

Perhaps a16z sees a new and even a series of new promising tracks, or maybe this $20 billion will not go into new tracks, maybe it will continue to invest in what we think is already dead-end projects, maybe, like a16z's early days, they will continue to aggressively collect chips in the secondary market.

a16z is there, continuing to do things that many people don't understand. But you in front of the screen, will you choose to believe this time?

The Power of Belief

Is a16z really a proponent of Web3, or a shrewd harvester?

Perhaps there is no definitive answer to this question.

In a sense, a16z did indeed reap huge returns from the rise of the crypto industry. An investment in Coinbase alone brought them over $7 billion in returns. But from another perspective, without institutions like a16z betting in the early stages, without them supporting seemingly crazy entrepreneurs with real money, could the Web3 industry have developed to its current scale?

Their post-investment services have helped numerous startups through their toughest times. Their lobbying efforts have fought for a more friendly regulatory environment in the industry. Their content output has educated generations of entrepreneurs and developers.

In this atypical cycle, we have seen the market's resistance to VCs. a16z once wielded a massive amount of UNI reserves, trying to make LayerZero the choice for Uniswap's cross-chain interoperability, but the market seemed to purely elevate Wormhole to oppose VCs.

At the end of 2021, Musk teased on X, "Have you guys seen Web3? Why can't I find it?" Jack Dorsey sarcastically replied, "It might be somewhere between A and Z."

Looking at it today, these two remarks hit the nail on the head. The concept of Web4.0 has already been put forward, while Web3 has not yet clarified itself. Many partners of large Crypto VCs have chosen to leave, many founders of Crypto projects have chosen to exit, and many investors have started paying attention to stocks and commodities markets.

a16z has chosen to believe in Web3.

In fact, in the past year or two, the author has often had moments of wavering, but in those tough moments, I always think of a lot of business successful people's inspirational stories: pay attention to what the smartest people in the world are doing, and just follow them.

Now, the smartest people in the world are definitely working on AI, but part of them are still openly sticking to crypto. Like you and me, the author cannot see any particularly obvious potential and hope. We seem to lack the ability to see the future. What we can do is to keep a close watch on the projects funded by the newly deployed $2 billion fund.

After all, over the past 15 years, this "elephant hunter" has proven one thing: while others are still debating whether the elephant exists, they have already pulled the trigger.

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