Andreessen Horowitz, one of the biggest venture capital firms in the world which has invested in AirBnB, Box, Coinbase, Dwolla, Facebook, Genius, Github, Imgur, Uber, Lyft, and other multi-billion dollar companies, is planning to start a cryptocurrency-only fund to exclusively invest in blockchain projects, major cryptocurrencies, and tokens.
The firm has declined to comment to several reports around the decision of the company to enter the cryptocurrency market but has listed two open positions at the organizations. The two job descriptions for a full-time cryptocurrency lawyer and finance manager read:
“The lawyer would be responsible for making sure Andreessen Horowitz’s crypto investments are SEC-compliant. The firm acknowledges that this person would need to ‘operate in an area where the regulatory, legal and business climate remains largely unsettled.’
The finance manager would help Andreessen Horowitz collect money from its limited partners — a ‘capital call,’ in the parlance of the industry. One key challenge for this role, according to the posting, would be to help the firm assign a valuation to its crypto assets, which isn’t easy given how volatile some cryptocurrencies have proven to be.”
It remains uncertain whether Andreessen Horowitz will raise a major fund in the billion dollar range from other partners and angel investors to inject massive capital into the cryptocurrency market or maintain a private fund amongst the partners and investors within the venture capital firm.
Significance of A16Z Entering Crypto
Regardless of the size of the fund, the entrance of a leading venture capital firm into the cryptocurrency market is an optimistic sign in the long-term growth of the market, primarily because of the state of the market as of current. Since the beginning of this year, the cryptocurrency market has been in a bear market. It started the year with a valuation of $820 billion and in March, the valuation of the cryptocurrency market dipped below $250 billion. Most major cryptocurrencies and tokens recorded a loss of over 70 percent.
Hedge funds, institutional investors, retail traders, and venture capital firms are willing to enter the market at a state like this wherein most cryptocurrencies are extremely volatile because they have confidence in the long-term growth of the market and are confident in dealing with the bear market.
Already, the Rothschild family, Rockefeller family’s VC fund VenRock, and $8 billionaire investor George Soros have announced their plans to invest in the cryptocurrency market. With the addition of Andreessen Horowitz, investors in the cryptocurrency market are expecting an inflow of tens of billions of dollars within 2018.
The decision of Andreessen Horowitz to launch a cryptocurrency fund comes less than a month after it invested in a US-based digital fund called Multicoin Capital.
“While there are lots of similarities between crypto investing and traditional startup investing, there are many differences. Most obviously, crypto assets become liquid much sooner in their life cycles than traditional private equity. In addition to liquidity, everything in crypto is open source, which requires thinking about investing in a fundamentally different way,” said Kyle Samani, the co-founder of Multicoin Capital.
It was reported that angel investor and Andreessen Horowitz general partner Chris Dixon led the deal.