Andreessen Horowitz, one of the largest technology-focused venture capital firms alongside the likes of Japan’s SoftBank and San Francisco’s Sequoia Capital, both of which oversee over a trillion dollars in combined company value, has created a $300 million fund dedicated to the crypto market.
Long-Term HODLing Approach
Since 2009, Andreessen Horowitz (A16Z) has invested in and created more multi-billion dollar startups than any other venture capital firm in the world. As an early investor in companies like $31 billion AirBnB, $10 billion Coinbase, $576 billion Facebook, $7.5 billion GitHub, and $72 billion Uber, A16Z has always focused on highly potent startups targeting rapidly growing markets.
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Its early investment in Coinbase back in 2013, a company that is fully focused on a market that was very small and relatively unknown to investors in the public market at the time, best demonstrated the ability of A16Z to spot markets that have the potential to experience exponential growth and companies that can remain at the forefront of a new global revolution.
This week, A16Z officially announced the formation of a $300 million fund targeted at the crypto market, with a primary strategy and long-term vision of creating valuable investments in emerging startups and cryptocurrencies for returns in the long run.
Chris Dixon, general partner at A16Z, emphasized that the company is fully aware of the volatile nature of the market and expects the cryptocurrency sector to have more ups and downs in the future.
Instead of allocating resources to avoid downtrends and “crypto winter,” Dixon noted that the company’s first crypto fund will invest in the market with the focus of holding onto cryptocurrencies and stake in startups with an “all-weather” approach.
“We’ve experienced ups and downs in the cryptocurrency market, and expect there will be many more. There’s potential in the technology, and some of the downturns can be the best investments,” said Dixon, as CCN.com reported.
Why Invest Amidst a 70 Percent Crypto Correction?
The timing of A16Z in entering the cryptocurrency market, amidst a 70 percent correction, the third worst correction in the history of the market, could come as surprising to many investors. But, the forward-thinking approach of A16Z in investing in the cryptocurrency market at this phase shows the thought process of investors in the A16Z crypto fund, that investment opportunities at this price range will never come back.
Each time the cryptocurrency market recovers from its correction, it establishes a new all-time high and then falls back to its previous all-time high; it has never fallen back to its previous bottom.
Dixon added that the firm remains confident that it is still early in the cryptocurrency movement, considering the long-term picture laid out by investors like billionaire trader Mike Novogratz who said that the cryptocurrency market will feel like a bubble when it is at $20 trillion.
The entrance of Andreessen Horowitz at a period like this shows that the firm does not believe that both major and minor cryptocurrencies will never be at this price range again in the future, and the firm’s confidence that it can evolve into a multi-trillion dollar industry.
“We believe we are still early in the crypto movement,” Dixon said, implying that the cryptocurrency sector is at its infancy and has potential to grow at a fast pace in the long-term.
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Last modified: March 4, 2021 5:09 PM