Exclusive: Venture giant a16z crypto targeting around $2 billion for its fifth fund, sources say

Led by longtime investor and entrepreneur Chris Dixon, a16z crypto launched its first $300 million fund in 2018, the year after a blockchain craze sent Bitcoin prices soaring to $20,000. Each subsequent fund has been larger than the last, culminating in a monster $4.5 billion vehicle in 2022 out of which the firm continues to invest. While the latest fund will be less than half that amount, one of the sources said that a16z crypto is planning a shorter fundraising cycle to take advantage of how rapidly trends in crypto can shift. The previous funds were all raised within one or two years of each other. (A16z crypto chief marketing officer Kim Milosevich declined to comment.)

The venture giant’s fifth foray into digital assets comes as the crypto market is sputtering, despite a recent uptick. Bitcoin has dipped by almost half since it notched an all-time high in October, and publicly traded crypto companies have seen their stocks plummet. Still, the industry is enjoying its most favorable regulatory environment in Washington, D.C., in its 17-year history.

Read, write, own

When a16z set up its first crypto fund, digital assets were still a novelty amid traditional investors. But the venture firm and Dixon shepherded institutional money into the space, with a number of other mega-firms soon following, including Paradigm as well as Haun Ventures, which was founded by a former a16z crypto general partner. Fortune reported last year that Haun was raising $1 billion across two new funds. 

A16z crypto has backed a number of winners, including the crypto financial services firm Anchorage, the prediction market Kalshi, and the decentralized exchange Uniswap. Still, other investors in digital assets have scrutinized the philosophy espoused by Dixon, summarized by his 2024 book Read Write Own. Dixon has been a champion of the “Web3” approach to crypto, arguing that blockchains can create decentralized versions of internet applications and plumbing, from social media platforms to lending protocols. 

But many of these projects have petered out, including the a16z-backed Farcaster, which was building a decentralized version of Twitter. Farcaster decided to repay the full $180 million it raised from investors earlier this year after selling its infrastructure to a different company. 

Instead, the crypto industry has mostly pivoted to pure financial projects centered around stablecoins and tokenization, or offering blockchain-wrapped versions of other financial assets. Even stalwart crypto investors are pivoting. Kyle Samani, the cofounder of the venture outfit Multicoin Capital, stepped away from his company in February and said he would focus on investing in other sectors in tech. And the crypto VC firm Paradigm, founded by Sequoia and Coinbase alumni, is raising as much as $1.5 billion for a new fund whose focus includes crypto but also AI and robotics, the Wall Street Journal recently reported. A spokesperson for Paradigm declined to comment.     

A16z crypto’s fifth fund will fully focus on blockchain investments, a source familiar with the raise told Fortune. 

In a recent post on X, Dixon acknowledged that blockchain has entered its “financial era,” but pushed back against the claim that his philosophy of “read write own” had failed. “Finance isn’t separate from the broader thesis; it’s part of it,” Dixon wrote. “It’s the foundation and proving ground for everything else.”

Amid its fundraise, a16z crypto has been active in dealmaking. Recent examples have included a decentralized protocol called Babylon that helps users collateralize their Bitcoin holdings, a cross-platform integration tool for prediction markets called Kairos, and a $50 million investment into the Solana staking protocol Jito.