a16z Announces Record-Breaking $4.5 Billion Crypto Fund

VC goliath Andreessen Horowitz (a16z) announced its fourth, and largest, crypto fund today — they hope to capitalize on discounts in the marketplace as the “golden era of web3” ramps up.

a16z’s newest crypto fund is more than double the size of its last one, which it raised last June. At $4.5 billion, it will be not just a16z’s biggest crypto fund, but the biggest one that the world of web3/blockchain/crypto has ever seen. It will take the crown from the Paradigm One Fund, which announced it pooled a total of $2.5 billion in November 2021.

a16z says it will allocate $3 billion to venture investments, which refers to investments in established protocols, blockchains, DAOs, and businesses. The remaining $1.5 billion will be allotted to seed investments, which means new or emerging firms. 

Their criteria for investing? Well, quite broad. It’s everything under the crypto sun:

“We are excited about developments in web3 games, DeFi, decentralized social media, self-sovereign identity, layer 1 and layer 2 infrastructure, bridges, DAOs & governance, NFT communities, privacy, creator monetization, regenerative finance, new applications of ZK proofs, decentralized content & story creation, and many other areas.”

In tandem with their beefy checks, a16z also claims it provides operational resources to protocols and businesses it invests in. That broadly includes engineering, security, talent, regulatory, and marketing resources.

The firm’s latest fundraise comes at a trying time for the broader crypto market, which took a trillion dollar haircut after the collapse of the Terra blockchain and its troubled stablecoin, TerraUSD. However, a16z’s new fund shows that Terra and TerraUSD didn’t kill crypto — it simply offered a new, more desirable, entry point for the wealthy’s billions of dollars.

All Eyes on PE 🔎 KKR Raises $5 Billion for New Fund

KKR & Co is an NYC-based investment company that just unveiled plans for its first fund ever investing exclusively in mid-size companies. KKR is trying to raise $5 billion for the new fund. 💰

KKR, formerly known as Kohlberg Kravis Roberts & Co, is a private equity GIANT. We’re talking roughly 280 private equity investments worth $545 billion. The firm’s new fund for mid-size companies, called ‘Ascendant,’ will target a variety of sectors, including financial services, healthcare, industrials, consumer, technology, media and telecommunications. 

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The Early-Stage Explosion 💣

The startup space was hot in 2021 🔥 — over the last year, capital has been flowing into seed-stage and early-stage startups. As a matter of fact, a record of $93 billion was invested in early-stage companies last year. But could that trend backfire soon?? 

From web3 to edtech, capital from VC firms flooded a variety of sectors in 2021. During and after the pandemic, tech-based startups provided a plethora of early-stage investing opportunities so innovative and enticing to investors that the median valuation of most seed or early-stage startups ballooned last year. 🎈 💣 In 2021, the median valuation of an early-stage U.S. startup was $26 million — in 2020, that median valuation was $16 million.

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Just How Cool Have Funding Markets Gotten?

Last week Pitchbook released its Q2 2022 U.S. VC Valuations Report, which had some interesting stats about the current environment. 📝

Early-stage valuations are beginning to reflect broader economic uncertainty, as quarter-over-quarter median pre-money valuations saw their first decline in ten quarters. The median pre-money valuation for early-stage VC was $52 million, down 16.1% YoY.

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