Here is How A lot a16z’ Largest Crypto Fund Is Down: WSJ

Enterprise capital large Andreessen Horowitz, also referred to as a16z, has been affected by the continuing crypto winter, with the corporate’s flagship cryptocurrency fund dropping practically half of its worth within the first six months of 2022.

The declining efficiency is an enormous distinction from the good points skilled final yr when the corporate’s investments grew over 1,000%.

A16z Not Resistant to Crypto Winter

According to the Wall Road Journal on Wednesday (October 26, 2022), a16z’s flagship crypto fund, launched in 2018, has seen a pointy drop in worth at 40%, as revealed by nameless sources. The decline is important in comparison with different enterprise funds, which shed between 10% and 20%.

Beforehand, the VC’s first crypto fund noticed its preliminary funding develop virtually 11-fold as of the top of 2021. Following the success of its crypto bets, Andreessen Horowitz went forward to create extra funds, launching a third one value $2.2 billion in June 2021 and the latest in Could 2022.

The lower is a results of the continuing market downturn, a decline in client demand for a number of the a16z-backed crypto firms, and elevated regulatory scrutiny on startups backed by a number of the funds. Consequently, the VC has diminished its involvement in cryptocurrency offers. In Q3 2022, a16z participated in 9 crypto startup offers, in comparison with 26 offers in This fall 2021.

Additionally, the bear market adversely affected the corporate’s cryptocurrency investments. In June 2021, a16z, together with Polychain Capital, led Solana’s personal token sale, which raised over $314 million.

Nevertheless, Solana has seen an 80% drop in its worth because the begin of the yr. Andreessen Horowitz’s guess on Coinbase appears to have additionally gone awry, with the VC dropping practically $three billion of its remaining stake within the main crypto alternate following the collapse of the alternate’s inventory worth.

However a16z normal companion Chris Dixon, who has been a crypto proponent, appears unfazed by the present market situation, stating that it’s as a substitute a possibility to proceed investing in cryptocurrency startups.

“What I have a look at just isn’t costs. I have a look at the entrepreneur and developer exercise. That’s the core metric.” – Dixon added.

2022’s Harsh Crypto Winter

This yr is under no circumstances crypto’s first bear market. Nevertheless, the market is bigger right this moment than it was over the last bear winter that lasted between 2018 and 2020.

The costs of main crypto belongings comparable to bitcoin and ether tanked considerably in 2022 after reaching all-time highs in November 2021. This year-long downtrend has precipitated firms within the business to downsize, cut back spending, and even file for chapter.

Additionally, amid the tough market situation, there was a rise within the variety of high executives leaving their firms. As beforehand reported by CryptoPotato, Alex Hoeptner, BitMEX CEO, stepped down from his place. Crypto’s revolving door within the C-suite has impacted quite a few firms and is even the topic of regulatory scrutiny in the US.