Source: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A6991773531495690240
State of Crypto Venture Capital: #AndreessenHorowitz Went All In on #Crypto at the Worst Possible Time: As #cryptocurrency prices soared last year, no #investor bet more on the sector than #Andreessen #Horowitz. https://lnkd.in/gDkZzejj: The #venturecapital firm had developed a reputation as Silicon Valley’s greatest #crypto #bull, and one of the earliest #evangelists for how the #blockchain #technology powering #cryptocurrencies could change business. His unit was one of the most-active #crypto #investors last year, and in May announced a $4.5 billion crypto fund, the largest ever for such #investments. The timing wasn’t good.
Prices for #bitcoin and other #cryptocurrencies have plunged this year in the midst of a broad #market #downturn, erasing #billions of #dollars in paper gains for Andreessen’s #funds. #Consumer #demand has vanished for some of the firm’s most-prized #crypto #startups, while others are facing increased scrutiny from #regulators.
Andreessen’s flagship crypto fund shed around 40% of its value in the first half of this year. That decline is much larger than 10%-20% drops recorded by other #venture #funds, which have largely avoided the risky practice of purchasing #volatile #cryptocurrencies, according to fund investors.
Despite the record cash pile, Andreessen has dramatically slowed the pace of its #crypto #investments this year. Now the fund has to convince nervous #investors that Andreessen didn’t overplay its hand for the May fund, which other #crypto #venturecapitalists said is too large for a sector headed into a so-called #crypto #winter.
In an interview, the Fund head said he remains faithful to the #cryptocentric vision of the #internet called #Web3 that underpins Andreessen’s push into the sector—a view that #blockchain versions for a range of services will return #financial #control and #power to users in the form of #cryptocurrencies they can #earn and #trade.
The Team also increasingly touted their vision for #Web3. They argued that #blockchain’s creation of #currency-like #tokens for users could give them more control and financial benefit for #blockchain-based versions of services such as ride-sharing and social media, undermining the power of dominant tech monopolies.
In addition to investing in crypto companies, Andreessen purchased the #tokens they created, effectively betting separately on the company and its product. The unconventional strategy delivered windfalls during the crypto bull market but also made the deals riskier.
Andreessen is also contending with harsher #regulatory #scrutiny of #crypto #startups and the #funds that backed them, which is threatening to put an end to the era of loose oversight that enabled the creation of thousands of cryptocurrencies.
IN-DEPTH: https://lnkd.in/gqhEmtHK
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