Andreessen Horowitz is aiming to raise $450m for a second cryptocurrency investment fund, two people briefed on the matter said, deepening the venture capital firm’s commitment to the sector as the global coronavirus outbreak rattles start-up investors.
Best known for backing social media companies such as Facebook and Twitter, Andreessen was one of the first venture firms with a large fund dedicated to cryptocurrencies, raising $350m in 2018 for start-ups working on the blockchain technology underpinning digital coins.
The fund has also been one of the staunchest backers of Facebook’s controversial Libra currency project and holds a seat on the association’s board.
Andreessen could finalise the new fund in about a week but has not yet placed a hard cap on its size, one of the people said. The firm declined to comment.
The fundraising comes at a difficult time for both venture capital and cryptocurrencies, as tech investors grow cautious about the impact of coronavirus on lossmaking companies.
Venture capital investment in blockchain technologies grew more than three-fold to almost $4.3bn in 2018, according to CB Insights data, but dropped by one-third last year following an extended rout in bitcoin.
Cryptocurrencies have largely weathered the coronavirus-led turmoil in capital markets. The Bloomberg Galaxy Crypto Index was up about 6.5 per cent this year as of Tuesday, recovering from a sell-off in early March.
Andreessen is seeking the new funding less than two years after raising its first version. Venture capital firms typically seek new funds about every three years but have recently quickened their usual pace of fundraising following a frenzied stretch of investment in recent years.
The Silicon Valley-based investor gained a foothold in cryptocurrencies with an early investment in Coinbase, the payments and trading company that has been valued at about $8bn. Its first cryptocurrencies fund has largely focused on new protocols such as the computing company Dfinity and projects involving digital currencies backed by reserve assets such as the US dollar.
Andreessen said it designed the first fund to be able to hold investments for more than 10 years, longer than the typical venture fund, and directly purchase digital coins and tokens.
The firm registered as a financial adviser last year, subjecting its partners to greater regulatory scrutiny but allowing it to invest in cryptocurrencies and tokens with fewer constraints.
Some other venture capital firms have put a pause on cryptocurrency investments following initial excitement in 2018, seeing few near-term practical uses for the technology.