In announcing the new fund, a16z said it envisions a “golden era of Web3” technology in which blockchains will play a role as central to the internet as app stores do today. The firm maintains that crypto prices go in cycles that, over the long term, tend to drive adoption of blockchain technology despite short-term booms and busts.
Stormy conditions have not deterred a16z’s bullish view, which was vindicated last year with mammoth returns from Coinbase, an early crypto bet.
Since Coinbase went public, a16z sold or distributed to LPs more than half its stake in the company, according to regulatory filings. The value of those sales and transfers at the time they were made totaled around $5 billion, the documents show. A representative for the firm declined to comment.
Coinbase’s shares have cratered more than 70% this year, faring even worse than mainstream cryptocurrencies like bitcoin and ethereum. Meanwhile, hordes of speculators are finding that few buyers want their NFT art and Axie Infinity, one of a16z’s star crypto holdings, suffered a hack that cost more than $600 million.
Following the recent sell-off, a16z’s remaining stake in Coinbase—14 million shares as of March 31—is worth around $953 million.
The trading platform’s direct listing last year was a watershed moment for the crypto industry, offering proof of the public market’s appetite. Direct listings avoid the lockup rules that typically restrict insiders from selling shares for three to six months following an IPO. A16z began selling and distributing its stake shortly after Coinbase went public.
The fourth crypto fund brings a16z’s total assets under management to $7.5 billion in the sector. Of the new cash, $1.5 billion will go to seed investments and the remaining $3 billion to later venture stages.
A16z raised $9 billion across three funds earlier this year at a frenzied time for supersized VC funds. Last week, the firm closed a $600 million fund dedicated to gaming.
Related read: After a crash, what comes next for NFTs?
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