a16z Crypto Fund Balloons to $2 Billion

Andreessen Horowitz is in the process of tripling down on crypto, raising its third crypto fund since 2018. Sources tell me that Andreessen Horowitz is targeting $2 billion for its third crypto fund. That’s double the size of what many people are expecting.

The new cash heap would only raise the stature of the fund’s leaders, Chris Dixon and Katie Haun. I expect the duo to have more latitude to operate independently from the rest of the venture firm, which is still tightly controlled by co-founders Marc Andreessen and Ben Horowitz.

The huge new fund will only magnify the impression that Andreessen Horowitz is playing a different game than its peers on Sand Hill Road. In November 2020, the firm declared that it had $16.5 billion under management. And limited partners seem to be clamoring for more. (Until the money is wired, there is always a chance that Andreessen Horowitz ends up raising less than $2 billion.)

Andreessen Horowitz’s rivals snark that the firm is chasing management fees — those lofty payouts firms receive just for taking people’s money. I hear that the Crypto Fund plans to charge a 2.5% management fee for most of the first decade of the fund. On a $2 billion fund, that could mean $50 million a year in fees alone. Andreessen Horowitz would see plenty of upside too with 25% carry until the fund doubles and then 30% carry after that. The firm wouldn’t take carry if it loses money. (I hear those terms are pretty standard for Andreessen Horowitz funds.)

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