Andreessen Horowitz, a venture capital firm, said yesterday that it raised $7.2 billion over 5 distinct funds amid a lack of notable exits in the digital startup space over the last two years.
TakeAway Points:
- Andreessen Horowitz has raised $7.2 billion for multiple funds, the majority of which will be allocated to growth or late-stage investments.
- The company is making significant profits even though the startup and initial public offering (IPO) markets are still struggling.
- There has been no announcement from Andreessen Horowitz regarding more funding for their cryptocurrency division.
Andreessen Horowitz, a venture capital firm, said yesterday that it raised $7.2 billion over 5 distinct funds amid a lack of notable exits in the digital startup space over the last two years.
“This marks an important milestone for us,” Ben Horowitz, who co-founded the firm with Marc Andreessen in 2009, wrote in a blog post.
Andreessen Horowitz’s $3.75 billion growth fund received the largest portion of the additional capital. With that money, investments are made in businesses that need large sums of capital or later-stage enterprises that are thought to be closer to going public.
Allocation of Funds
Specifically, Horowitz stated in the post that $1.25 billion would go towards artificial intelligence investments in infrastructure. Additionally, $1 billion would go towards app investments, $600 million towards games, and an additional $600 million would go towards what the firm refers to as American dynamism, or “founders and companies that support the national interest.” That includes aerospace, defense, education, and housing.
According to a prior report by Bloomberg, the company had sought to raise $6.9 billion from investors for a new set of funds, two of which would have an AI focus. In Silicon Valley and elsewhere, AI investment has been booming, despite a general market slowdown.
Venture Investors Pull Out
Venture investors have withdrew their funds since 2021, a year marked by a record number of tech IPOs and startup investments. In 2022, investors withdrew from riskier assets due to skyrocketing inflation and rising interest rates, forcing cash-burning companies to make drastic cost reductions. Venture deals have not improved, despite the stock market’s recovery.
As per PitchBook data released earlier this month, deal volume for U.S. venture investments in the first quarter fell to its lowest level since 2017. Globally, the situation was similar, with overall deal value dropping to a level not seen since 2019 and international volume reaching its lowest point since 2016.
Since the end of 2021, there have not been many tech initial public offerings (IPOs). The only venture-backed Internet businesses to go public since September were Reddit and Astera Labs, both of which debuted in the first quarter. According to PitchBook, they represented 73.4% of the total exit value in the United States during that time.
In his post, Horowitz did not mention the decline in the market. Additionally, he made no mention of any fresh financing being allocated to cryptocurrencies, an area in which Andreessen Horowitz was very optimistic during the bitcoin frenzy that sent prices skyrocketing in 2021. In 2022, the company raised a $4.5 billion cryptocurrency fund, increasing its total fundraising for blockchain and cryptocurrency assets to $7.6 billion.
A person familiar with the situation told Bloomberg that Andreessen Horowitz is still on track to raise additional capital for both its cryptocurrency fund and a different biotechnology venture. An official from the company declined to comment and referred CNBC to the blog article.
Horowrit’z Notable Investment
One of Andreessen Horowitz’s most prominent investments in recent years has been in Adam Neumann, the contentious co-founder of WeWork, and his new venture, Flow. The company, which was just getting started and had not yet established itself in the residential real estate industry, received $350 million from Andreessen Horowitz.
In a blog post at the time, Andreessen Horowitz stated that Neumann’s attempts to revamp the WeWork workplace environment are “frequently under appreciated” and that the company enjoys “seeing repeat-founders build on earlier accomplishments by expanding from lessons learned.”
