This morning private-market powerhouse Andreessen Horowitz announced that it has closed $9 billion in new capital for its venture capital, growth-stage and biotech-focused vehicles.
The firm, better known by the moniker a16z, also raised a $2.2 billion crypto-focused fund last year.
These fundraises by the firm highlight the rising size of private-market investing vehicles that we tend to group under the venture capital banner, and the burgeoning capital base of a16z itself.
Looking back in time, the group’s last generation of funds — including its seventh venture fund worth $1.3 billion, its second growth fund worth $3.2 billion and its third bio-focused fund worth $750 million — were worth just a touch over half of its latest aggregate fundraise. So, it appears that a16z is not only reloading, it’s raising more capital than ever for its usual crop of focuses.
That the group is raising larger investment capital pools should not surprise. Its first crypto fund was worth $300 million, its second $515 million and its most recent around four times that much. As an investing collective, a16z, like many private-market investors, is putting more capital to work per new crop of new funds.
The trend of larger funds is generally thought to be a contributing factor to larger startup funding rounds, and some of the pressure regarding deal access (harder) and startup valuations (higher).
To underscore just how big venture and venture-ish funds are today, recall that Norwest Venture Partners closed a $3 billion fund last month. That pushed the group’s total capital it has raised “across the decades” as our own Connie Loizos put it, to $12.5 billion. So, a huge fraction of the firm’s historical capital was raised just last quarter.
It’s a capital arms race in the private markets, as enthusiasm for technology companies both traditional (software, etc.) and frontier (crypto, quantum computing, metaverse, etc.) remains red-hot. That the public markets are taking a slightly different tack in recent weeks doesn’t appear to have slowed the venture capital firm side of the fundraising coin. Not yet, at least.