a16z Raises $4.5 Billion For Its Largest-Ever Crypto Fund

Venture capital firm a16z has raised $4.5 billion for its fourth crypto fund, the firm announced Wednesday morning. 

The new fund dwarfs a16z’s previous fundraising efforts and brings the total amount of money the firm has raised for crypto ventures to $7.6 billion. 

“We think we are now entering the golden era of web3,” Chris Dixon, a general partner at the firm, wrote in a blog post announcing the fund. “A massive wave of world-class talent has entered web3 over the last year. They are brilliant and passionate and want to build a better internet. That’s why we decided to go big.”

“We think we are now entering the golden era of web3”

Chris Dixon, a16z

Crypto Fund 4 will provide nascent crypto companies with $1.5 billion in seed financing and $3 billion in venture financing, according to the firm. 

Web3 gaming, DeFi, zero-knowledge proofs, decentralized social media, self-sovereign identity and layer 1 and 2 infrastructure are among the fund’s areas of focus.

General partner Arianna Simpson said the firm would also ramp up hiring to meet the needs of companies in which a16z has chosen to invest. 

The firm’s teams specialize in “research and engineering, security, talent & people, legal & regulatory, go-to-market, and a lot more,” she said on Twitter. 

Outsized Influence

Projects struggling to raise capital in the bear market may welcome the news.

But a16z, like any venture capital firm, expects something in exchange for its money. Well before Wednesday’s announcement, critics have said it has already amassed too much influence among key Web3 projects. 

Last year, holders of the Uniswap governance token UNI voted to fund a new lobbying organization called the DeFi Education Fund. In a letter to a16z, DeFi Watch author Chris Blec noted the decision “was largely decided by a16z delegates.” 

The firm had received voting tokens in exchange for its investment in Uniswap and later chose “delegates” to participate in Uniswap governance on its behalf.

“The challenge for users when trying to fully understand a16z’s influence is that we do not know who all of these delegates are, how they are chosen, or if undelegated a16z voting is occurring from other wallets,” Blec wrote. “This makes it impossible for tokenholders to understand the full impact that a16z and its delegates are cumulatively having on DeFi voting mechanisms.” 

“…impossible for tokenholders to understand the full impact that a16z and its delegates are cumulatively having on DeFi voting mechanisms.” 

Chris Blec, DefiWatch

In a bid for transparency, the firm later announced it would “open source” its delegate program. Nevertheless, with a $4.5 billion fund, a16z is now set to more than double its existing stake in the Web3 ecosystem, and cries from its critics will likely grow louder.