Why is a16z Crypto raising another $2.2 billion to heavily invest in Web3?

Author: Zhou, ChainCatcher

On May 5, the venture capital firm Andreessen Horowitz's crypto branch a16z Crypto officially announced the completion of fundraising for its fifth fund, Fund 5, with a total scale reaching $2.2 billion.

The size of this fund is significantly smaller than the record $4.5 billion Fund 4 established in 2022. a16z crypto communications partner Paul Cafiero stated that the company intends to return to a smaller fund size because "a shorter fundraising cycle allows us to keep up with the ever-changing crypto trends."

This choice has its practical background. Fortune magazine previously cited SEC filing data revealing that by 2025, the management scale of leading crypto venture capital firms like Paradigm, Pantera, and a16z Crypto has contracted across the board. Among them, the total management scale of four funds under a16z Crypto decreased by nearly 40% from 2024 to 2025, dropping to about $9.5 billion, partly because the institution has begun returning capital to LPs of earlier funds.

The entire crypto VC ecosystem has seen a significant increase in fundraising difficulty over the past two years, with funds concentrating at the top, and the reduction in scale is the most direct response to market realities.

Looking back, the sizes of a16z Crypto's previous funds were: the first in 2018 at $350 million, the second in 2020 at $515 million, the third in 2021 at $2.2 billion, and the fourth in 2022 at $4.5 billion. This fifth fund returns to $2.2 billion, matching the size of the third fund in 2021.

According to RootData data, looking at past investment patterns, a16z Crypto has participated in 253 rounds of investment, with a portfolio of 183 projects and led 150 rounds. In terms of sector distribution, infrastructure accounts for the highest proportion at 37.7%, followed by gaming (13.1%) and DeFi (12.5%), with representative projects including Coinbase, Solana, Uniswap, Ripple, Phantom, Kalshi, LayerZero, and others.

Image source: RootData

The four GPs of a16z Crypto stated that the crypto market is currently in a quiet phase, but adoption signals are improving. In every cycle, the infrastructure left behind after speculation recedes is often more valuable than at peak times and more enduring than at troughs.

They listed three key signals. The first is stablecoins, whose trading volume fluctuates with market ups and downs, but the usage of stablecoins continues to grow even during bear markets, widely used for cross-border remittances, savings, and daily payments. This growth is more driven by network effects rather than price expectations.

The second is the maturity of on-chain financial infrastructure, with perpetual contracts used for price discovery, prediction markets for information aggregation, and on-chain lending services stabilizing the stablecoin credit market. Traditional assets are beginning to go on-chain, and the application scope has extended beyond crypto-native assets.

The third is in terms of regulation, a16z Crypto holds a positive attitude towards the GENIUS Act, believing it provides a clear compliance space for developers, and maintains an optimistic outlook on the Clarity Act being passed this year.

Based on this, a16z Crypto stated that the new fund will invest in projects that can transform new infrastructure into products for everyday use—this is the part of the cycle that receives less attention but will generate more long-term value.

In terms of investment areas, the fund will focus 100% on crypto investments, without expanding into adjacent fields like AI or robotics. The reason given by a16z Crypto is not to avoid AI, but rather to believe that the AI era makes crypto even more indispensable.

They pointed out that software is becoming increasingly complex and difficult to trust, AI systems are powerful but operate with opaque logic, and the high concentration of internet infrastructure continues to accumulate risks of single points of failure.

In this context, the core attributes of crypto networks have become more valuable: systems are transparent and verifiable, networks are inherently globalized, economic models align the interests of users and developers, and infrastructure does not rely on a few intermediaries.

These characteristics have already manifested in real products in areas such as payments, financial services, creator platforms, and decentralized infrastructure, and are gradually being adopted by financial institutions and tech companies.

At the same time, a number of previously impossible new models are emerging: users can directly hold assets and identities, possess inviolable digital property rights; numerous software agents can autonomously make decisions and trade on behalf of users, independently acquire computing power, data, and services; autonomous networks can achieve self-financing, governance, and evolution through code.

In other words, they are not directly entering the AI space but betting that the development of AI will, in turn, drive the demand for crypto infrastructure. Specifically, they are betting on the underlying tracks of stablecoins, on-chain finance, and the AI agent economy.

This contrasts with the judgments of some peers. Reports indicate that Paradigm is seeking to raise up to $1.5 billion for a new fund, planning to directly expand its investment scope into AI and robotics. [Haun Ventures](https://www.rootdata.com/zh/Investors/detail/Haun Ventures?k=MjQ2) has also completed fundraising for a new fund of $1 billion while listing AI agents as one of its core investment directions.

These two strategies represent different bets by top institutions on the next cycle: one side believes that the intersection of crypto and AI presents greater opportunities, while the other side believes that focusing on crypto itself is sufficient because the AI wave will ultimately flow back on-chain.

Additionally, Dragonfly recently completed fundraising for its fourth fund, totaling $650 million, while [Blockchain Capital](https://www.rootdata.com/zh/Investors/detail/Blockchain Capital?k=MjI2) is also raising about $700 million. The intensive fundraising by top institutions indicates that a new round of project investments will begin in the coming months.

Clearly, this round of funding is betting on the transition of crypto from the infrastructure building phase to the phase of real user adoption. Whether choosing to focus on crypto or cross into AI, this real capital will only flow to those who can turn technology into products.