Andressen Horowitz's first crypto fund launched in 2019 has lost 40% of its value in the first half of the year.
Unnamed sources familiar with the firm’s crypto fund told The Wall Street Journal that a16z has been struggling to convince investors that it hasn’t bet too big on crypto.
“What I look at is not prices,” Chris Dixon, who heads up a16z’s crypto unit, told the WSJ. “I look at the entrepreneur and developer activity. That’s the core metric.”
The firm’s activity has been scarce during crypto winter. Recent news from a16z’s crypto portfolio includes the highly-anticipated Aptos Layer 1 getting off to a rough start and former WeWork CEO Adam Neumann’s Flowcarbon delaying its token launch.
Despite the rocky period, they have placed a few bets. Recently a16z participated in a $165 million Series B funding round for the decentralized crypto exchange Uniswap, which has $4 billion worth of assets on its platform, according to Defi Llama.
Unfortunately, the mix of macroeconomic factors plaguing markets has been especially potent.
The total crypto market capitalization has been hovering around $1 trillion since the summer. It’s fallen by two-thirds, from $3 trillion, compared to the October 2021 bull run, according to CoinGecko.
Publicly-traded companies, like crypto exchange Coinbase (COIN) and software company MicroStrategy (MSTR), have seen shares take a dive. Another blow for a16z, which has lost $2.9 billion on its stake in COIN, according to the WSJ.
Electric vehicle manufacturer Tesla said last week that it sold off large portions of its Bitcoin holdings to offset losses on the digital assets in its portfolio.
And just last month, markets dipped again as the Federal Reserve announced another 75 basis point interest rate hike to counteract soaring inflation. There have been predictions that the bear markets could last another 12-18 months—from none other than Solana CEO Anatoly Yakovenko, another of a16z’s portfolio companies.