Can Andreessen Horowitz prevent the next crypto winter? – Tech Crunch


Hi everyone, and welcome to Chain reaction.

Last week we talked about the tough road ahead for Coinbase. This week we talk a bit about Andreessen Horowitz’s multi-billion dollar bet on the continued viability of Web3. Read on to find out about the latest episode of the Chain Reaction Podcast as well.

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$4,500,000,000

May has not been the nicest month for crypto. Consecutive weeks of dips have left whispers of the “buy the dip” cooling as industry players prepare for winter.

A brief moment of heat came this week, when Andreessen Horowitz (a16z) announced that he had raised $4.5 billion for his fourth crypto fund, more than doubling the size of his last fund. It’s the largest institutional crypto company to date and comes at an interesting time…

While venture capital firms around the world have been urging their portfolio companies to lower burn rates and prepare for bad times, many crypto founders were already prepared for this moment, having raised stupid sums from VC only for the purpose of not having to raise cash later. While tech has generally not suffered a prolonged recession since the early 2000s, crypto startups have endured much tighter booms and busts. While many coffers are full, it’s fair to assume that a crypto winter will put many corporate-backed startups on ice.

A16z didn’t drop too many details on their exact plans for this fund, but they did make it interestingly clear that they plan to spend at least $1.5 billion of the fund on seed deals. That’s an awful lot of seed deals — probably hundreds of them — from a single fund.

The question is whether the rest of the venture capital ecosystem around crypto persists. Many hedge funds entering the markets have been burned and other traditional venture capitalists seemed to be timidly putting their heads in this cycle and may already be close to the door.

For a market that’s been bubbling with dumb money for the past few years, any kind of pullback is going to leave startups stranded, and a16z’s focus on young companies with their new fund may be difficult for companies looking for dollars from growth.


neumann, new man?

Now that Lucas has given you the breakdown on a16z, it’s Anita here to update you on the latest episode of the Chain Reaction podcast, where we unpack the latest web3 news, block by block for the crypto-curious.

We talked a lot about Andreessen Horowitz, who really said “what slowdown?” this week, announcing the largest dedicated crypto venture fund ever. Granted, a lot of that capital was likely raised before the crypto markets started crashing, but we’ve unpacked the legendary company’s strategy and discussed a somewhat questionable investment that it comes from. to do in a well-known scammer’s new blockchain startup (hint: he looks a bit like Jared Leto).

For our guest, investor Grace Isford joined us from Lux Capital to talk about the infrastructure that works behind the scenes to keep Web3 technology running smoothly.

Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to follow us weekly.


follow the money

Where startup money is moving in the crypto world:

  1. Singapore-based metaverse app BUD closed $36.8 million in a Series B round led by Sequoia Capital India.
  2. NFT-based social platform Primitives raised a $4 million seed round with Redpoint as lead investor.
  3. NFT Fraud Detection Startup Double scored $5 million in seed funding led by FTX Ventures.
  4. DAO community management platform Common raised $20 million from Spark Capital, Polychain and others.
  5. Carbon credit tokenization protocol Flowcarbon raised $70 million through a Series A led by a16z as well as a private token sale.
  6. blockchain infrastructure provider starware closed a $100 million Series D led by Greenoaks Capital and Coatue.
  7. DeFi personal finance app Pebble raised a $6.2 million seed round led by Y Combinator.
  8. Digital Asset Manager Babel Finance scored $80 million in a Series B round from Jeneration Capital, 10T Holdings, Dragonfly Capital and others.
  9. NFT Social Market bubble house secured $9 million in seed capital from the Cassius family, SV Angel, angel investors Steve Aoki and David Guetta and others.
  10. ZenLedger Crypto Statement Preparation Software nabbed $15 million in a Series B run by Parafi.

the week in web3

Everyone is talking about a cooldown in the crypto markets, but as journalists covering the space, we felt as busy as ever. It looks like venture capitalists are also busy, trying to put massive amounts of capital to work that they raised much of before the markets turned sour.

As for the firms currently raising new funds, they seem to be convinced that there is still lucrative opportunities in the world of crypto startups, and that this downturn will simply separate the winners from the losers. (They hope their wallets already contain the winners.)

  • A16z’s whopper from a web3 fund demonstrates their commitment to the space, even as other companies pull out, investor Arianna Simpson told Lucas in an interview.
  • Soona Amhaz’s Volt Capital has announced a $50 million crypto fund, just over a year after launching its $10 million vehicle. Marc Andreessen and Chris Dixon are among the familiar faces supporting Amhaz. Lucas has the details here.
  • Anita wrote about Twitter drama that unfolded this week as fintech startup founder Eco took to the platform to accuse the founders of Y Combinator-backed Pebble of copy-pasting its business model . The battle between startups, both of which use stablecoins to provide yield, has caused some to question the investment approach taken by accelerators like YC.

TC+ analysis

Curated analysis that you can read on our TC+ subscription service (written by TC’s Jacquelyn Melinek):

Terra community adopts proposal to revive LUNA cryptocurrency after stablecoin-led implosion
Nine days ago, Terraform Labs (TFL) founder Do Kwon shared a plan to revive the Terra ecosystem after his stablecoin and cryptocurrency plunged earlier this month and sent prices plummeting. crypto markets with him. Now the plan has been approved by the Terra community for a new Terra 2.0, which not everyone is sure will succeed. Will history repeat itself?

StarkWare quadruples its valuation to $8 billion in 6 months, closing a choppy market
Crypto markets may be choppy right now, but big players continue to raise capital as demand for scalable blockchain infrastructure remains strong. The most recent example of this is StarkWare Industries, which just raised $100 million at an $8 billion valuation, the company announced Wednesday. The new capital came just six months after the unicorn closed a $50 million Series C round, quadrupling its valuation from $2 billion to $8 billion.

Mastercard exec bullish on crypto, sees mass adoption ‘as soon as possible’
Businesses big and small are maintaining their crypto optimism despite the recent market correction in the developing tech space. According to Mastercard’s Vice President of New Product Development and Innovation, Harold Bossé, the mass adoption of blockchain technology and digital assets will happen sooner rather than later. But there are currently a number of challenges preventing companies from entering the market, Bossé said, such as a lack of understanding from senior management and regulatory concerns, among other aspects.

Luna Foundation Guard Advisor Says Do Kwon Hasn’t Reached Out Since UST Crash
There seems to be no shortage of news surrounding the implosion of Terraform Labs’ cryptocurrency LUNA and stablecoin algorithm TerraUSD (UST). Last Friday, one of four Luna Foundation Guard advisors (who been Terra’s Singapore-based non-profit organization dedicated to protecting UST), told TechCrunch that there have been no meetings with Terra founder Do Kwon since the crash. the UST. How does the advisor follow Terra’s situation? Thanks to Twitter like everyone else, he says.


Thanks for reading and subscribe to Chain Reaction on the TechCrunch newsletter page,

Lucas and Anita



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