Fri. Jan 21st, 2022

This morning, the private-market powerhouse Andreessen Horowitz announced that it has closed $9 billion in new capital for its venture capital, growth stage and biotechnology-focused vehicles.

The company, better known as a16z, also raised a $2.2 billion crypto fund last year.

These company fundraising highlights the growing size of private-market investment vehicles that we usually classify as venture capital, and the burgeoning capital base of a16z itself.

Looking back, the group’s last-generation funds — including its seventh $1.3 billion venture capital fund, its second $3.2 billion growth fund, and its third $750 million bio-focused fund — were only worth a little more than half of the last total money raised. So it looks like the a16z is not only reloading, but raising more capital than ever for its usual focus.

It should come as no surprise that the group is attracting larger investment capital pools. The first crypto fund was worth $300 million, the second $515 million, and the most recent about four times that. As an investment collective, a16z, like many investors in the private market, puts more capital to work with each new crop of new funds.

The trend of larger funds is generally believed to be a contributing factor to larger funding rounds for startups, and some of the pressure related to access to deals (harder) and startup valuations (higher).

To underline how big venture and venture-type funds are today, remember that Norwest Venture Partners closed a $3 billion fund last month. That pushed the group’s total capital it has raised “over the decades,” as our own Connie Loizos put it, to $12.5 billion. So a huge chunk of the company’s historic capital was raised last quarter.

It’s a capital arms race in private markets as enthusiasm for technology companies, both traditional (software, etc.) and groundbreaking (crypto, quantum computing, metaverse, etc.) remains hot. The fact that public markets have taken a slightly different path in recent weeks doesn’t seem to have slowed the fund-raising medal’s venture capital firms. Not yet, at least.

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