Crypto ventures remain on ice

Andreessen Horowitz (a16z), a well-known Silicon Valley venture capital platform, is making a big move by raising $6.9 billion for a new investment fund focused on artificial intelligence (AI).

This strategy reflects significant changes in the firm's investment priorities. At the same time, he decided to postpone further fundraising for his cryptocurrency venture until next year.

How does A16z invest $6.9 billion?

According to Fortune, the proposed $6.9 billion will be distributed among various initiatives. Specifically, this funding aims to support the Master Fund and the fourth growth fund of 16z, which successfully raised $5 billion two years ago.

Additionally, a16z's allocation includes two AI-focused funds, a gaming fund and another fund dedicated to “American Dynamism.” This latter initiative targets startups working to solve pressing challenges in sectors such as aviation, defense and manufacturing in the United States.

Moreover, a16z made a strategic decision to delay the next fundraising round for crypto funds. This pause reflects a cautious approach as the industry heads into a potential bull market. However, the firm has committed $4.5 billion to crypto funds by 2022.

With more than $7.6 billion under management in four funds dedicated to Web 3 Technologies, the firm's presence in crypto is strong. Last month, a16z invested $100 million in EigenLayer, a protocol that improves security by reimagining the Ethereum network. This initiative demonstrates a16z's continued belief in the transformative potential of blockchain technology.

EigenLayer introduces a mechanism for Ethereum and ERC-20 token holders to contribute to the security of the network, earning rewards in the process. This approach aims to improve the overall security and efficiency of the Ethereum ecosystem, attracting attention and support from the crypto community and leading investors.

However, there has been a slowdown in the pace of venture capital fundraising in crypto, raising questions among market observers. For example, DeFi researcher Ignas noted that fundraising activities have been lagging despite favorable market conditions.

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Mudit Gupta, chief information security officer at Polygon Labs, said the slowdown could be due to the strategic timing of fund announcements, which indicate a more active investment space than publicly acknowledged.

“Funds are being raised, so you don't have real new information yet because it's going to be announced later. Usually, months later. I personally know that more deals happened this quarter than the graph suggests, and I only know a fraction of all the deals,” Gupta said.