Two years ago, the venture firm Andreessen Horowitz (a16z) took the wraps off a dedicated crypto fund from a subset of its limited partners who provided the firm with $300 million in capital commitments. Now, the firm says it has closed a second fund in the same vein, this time with $515 million in capital commitments.
As general partner Chris Dixon -- who leads the fund with general partner Katie Haun -- tells Fortune: “It’s very rare that major, new computing paradigms come along, and we think this is on the scale of cloud and mobile for the Internet."
Certainly, the firm has less competition for crypto deals at the moment than it might have back in 2018. Many VCs pulled back last year, with overall funding in 2019 down 28% from 2018’s peak of $4.3 billion, according to CB Insights.
Bitcoin and the cryptocurrency markets were also hammered along with the broader stock market in a downturn sparked by the COVID-19 crisis, causing some to conclude they are as vulnerable to a lot of other instruments to stock market shifts.
A big upswing since -- along with this obvious endorsement by a16z -- could turn those trends around, however. Indeed, the entire market capitalization of cryptocurrencies jumped $35.3 billion in 24 hours as of 2:19 p.m. Singapore time, according to data from CoinMarketCap.com and reported by CNBC.
Bitcoin, specifically, which fell below $4,000 last month, shot up to $9,388.30 by earlier today (though, as this is being written, it has slipped to $8,695.41).
Industry participants attribute the rally to central bank monetary policy and the "bitcoin halving" that's expected next month, when for the third time in the network's history, the reward for mining a block will be divided by two.
Andreessen Horowitz has invested directly in cryptocurrencies like Bitcoin and Ethereum, along with a range of other bets that include Coinbase, the crypto lender Compound and Anchorage, a cryptocurrency custody service.
It's also a member of both the Libra Association and the Celo Alliance for Prosperity, both of which are inviting developers to build decentralized mobile apps that are based on their own cryptocurrencies.
To drum up even more deal flow, a16z last month kicked off a free, seven-week program for cryptocurrency startups that aims to educate and "supplement -- not replace -- the many other excellent programs and resources that help founders learn about building tech startups," Dixon wrote of the school late last year.
The firm isn't taking equity in the startups as part of the program, it says. Instead, it's apparently looking to build connections to and between founders who it might want to work with it in the future.
In addition to Dixon and Haun, the firm this year added a third deal partner to its cryptocurrency practice: Arianna Simpson, the founder and managing director of the cryptocurrency-focused hedge fund Autonomous Partners.