Can Andreessen Horowitz prevent the next crypto winter?

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Hello everyone and welcome back to Chain reaction.

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Last week we talked about the difficult road ahead for Coinbase. This week we’ll talk a little about Andreessen Horowitz’s multi-billion dollar bet on the continued viability of web3. Read on to check out the latest episode Chain Reaction Podcast also.

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May was not the most favorable month for cryptography. The subsequent weeks of falls have left speculation that “buy the fall” will subside as industry players buckle up for winter.

There was a brief moment of warmth this week when Andreessen Horowitz (a16z) announced that he had raised $4.5 billion for his fourth crypto fund, more than double the size of his last fund. It is the largest institutional crypto firm to date and came at an interesting time…

While VCs around the world have been forcing their portfolio companies to cut their burnout rate and buckle up for tough times, many crypto founders were already prepared for this moment, having received silly amounts of money from VCs solely to avoid raising cash later. While tech as a whole hasn’t experienced a prolonged recession since the early 2000s, cryptocurrency startups have experienced much tougher booms and busts. Even though the treasury is full, it is fair to assume that the crypto winter will freeze a lot of venture capital-backed startups.

A16z hasn’t divulged too many details about its exact plans for this fund, but they have interestingly revealed that they plan to allocate at least $1.5 billion from the fund to seed deals. That’s an awful lot of seed trades—probably hundreds—from a single fund.

The question is whether the rest of the venture capital ecosystem around cryptocurrencies will survive. Many hedge funds that have entered the markets have failed, and other traditional venture capital firms seem to have shyly stuck their heads into this cycle and may be close to exiting.

For a market that’s been teeming with dumb money for a couple of years now, any pullback will leave startups stranded, and a16z’s focus on young companies with their new fund could be difficult for growth dollar companies.

Neumann, new man?

Now that Lucas has told you about a16z, Anita is here to tell you about the latest episode of the Chain Reaction podcast, where we break down the latest web3 news block by block for the crypto-curious.

We talked a lot about Andreessen Horowitz, who really said, “What recession?” this week by announcing the largest dedicated cryptocurrency venture fund. Of course, most of this capital was probably raised before the cryptocurrency markets started to drop, but we revealed the strategy of the legendary firm and discussed the somewhat dubious investment it just made in a new blockchain start-up of a well-known scammer (hint: it is something looks like Jared Leto. ).

For our guest, investor Grace Isford of Lux Capital joined us to talk about the infrastructure that works behind the scenes to keep web3 technology running smoothly.

Subscribe to Chain Reaction at Apple, Spotify or your alternative podcast platform to keep up with us every week.

keep track of money

Where is startup money moving in the crypto world:

  1. Singapore Metaverse App BUD closed $36.8M in a Series B round led by Sequoia Capital India.
  2. NFT based social platform primitives raised a $4 million seed round with Redpoint as the lead investor.
  3. Launch of NFT fraud detection Doppel received $5 million in seed funding led by FTX Ventures.
  4. DAO Community Management Platform General raised $20 million from Spark Capital, Polychain and other companies.
  5. Carbon Credit Tokenization Protocol flowcarbon raised $70 million in a Series A round led by a16z, as well as in a private token sale.
  6. Blockchain Infrastructure Provider starquare closed a $100 million Series D led by Greenoaks Capital and Coatue.
  7. DeFi Personal Finance App Pebble raised a $6.2 million seed round led by Y Combinator.
  8. Digital asset manager Babel Finance won $80 million Series B round from Jeneration Capital, 10T Holdings, Dragonfly Capital and others.
  9. Social NFT Marketplace bubble house raised $9 million in seed capital from Cassius Family, SV Angel, angel investors Steve Aoki and David Guetta, and others.
  10. Cryptocurrency tax preparation software Zen Ledger won $15 million in Series B led by Parafi.

week in web3

Everyone was talking about a cooldown in the crypto markets, but as reporters covering the situation, we felt busier than ever. It appears that VCs are busy too, trying to put to work the massive amounts of capital they raised, mostly before the markets crashed.

As for the firms currently raising new funds, they seem to be convinced that profitable opportunities in the world of cryptocurrency startups, and that this downturn will simply separate the winners from the losers. (They hope they already have winners in their portfolios.)

  • Investor Arianna Simpson, A16z giant at the web3 fund, speaks of their commitment to space even if other firms back out. told Lucas in an interview.
  • Suna Amhaz’s Volt Capital announced the creation of a $50 million crypto fund, just over a year after he debuted his $10 million car. Marc Andreessen and Chris Dixon are among the familiar faces supporting Amhaz. Lucas has details here.
  • Anita wrote about some Twitter drama that unfolded this week when the founder of fintech startup Eco took to the platform to accuse the founders of Y Combinator-backed Pebble of copying its business model. The battle between startups that use stablecoins to generate returns has led some to question the investment approach used by accelerators like YC.

TC+ analysis

Curated analysis, which you can read on our TC+ subscription service (written by Jacqueline Melinek of TC):

Terra community accepts proposal to revive LUNA cryptocurrency after stablecoin crash
Nine days ago, Terraform Labs (TFL) founder Do Kwon shared a plan to revive the Terra ecosystem after its stablecoin and cryptocurrency plummeted earlier this month and crashed crypto markets with it. Now the plan for a new Terra 2.0 has been approved by the Terra community and not everyone is sure it will be successful. Will history repeat itself?

StarkWare Quadruples Value to $8 Billion in 6 Months, Closing Round in a Volatile Market
Cryptocurrency markets may be volatile right now, but big players are still raising capital as demand for scalable blockchain infrastructure remains strong. The most recent example of this fact is StarkWare Industries, which just raised $100 million at an $8 billion valuation, the company said on Wednesday. The new capital came just six months after the unicorn closed $50 million of Series C, quadrupling its valuation from $2 billion to $8 billion.

Mastercard chief executive optimistic about crypto and sees mainstream adoption ‘sooner rather than later’
Companies large and small alike are maintaining their crypto-optimism despite the recent market correction in the emerging tech space. Harold Bosse, Mastercard’s vice president of new product development and innovation, said that the mass adoption of blockchain technology and digital assets will happen sooner rather than later. But now there are a number of issues that are preventing corporations from entering the market, Bosse said, such as a lack of understanding from senior management and regulatory issues, among other aspects.

Luna Foundation Guard Advisor Says Do Kwon Didn’t Contact Him After UST Crash
There seems to be no shortage of news about Terraform Labs’ LUNA cryptocurrency and the TerraUSD (UST) algorithmic stablecoin. Last Friday, one of the four advisors of the Guardians of the Moon Foundation (who was Terra, a Singapore-based nonprofit dedicated to defending the UST, told TechCrunch that there had been no meetings with Terra founder Do Kwon since the collapse of the UST. How does the adviser monitor the situation on Terra? Via Twitter, like everyone else, he said.

Thanks for reading and please subscribe to Chain Reaction at TechCrunch Newsletter Page,

Lucas as well as Anita

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