Andreessen Horowitz raises $7.2 billion, a sign that tech startup market may be bouncing back
- Andreessen Horowitz raised $7.2 billion for several funds, the bulk of which will go toward late-stage, or growth, investments.
- The firm is reeling in hefty amounts of cash while the broader startup and IPO markets remain depressed.
- Andreessen Horowitz didn't announce any further fundraising for its crypto arm.
Venture capital firm Andreessen Horowitz said Tuesday that it raised $7.2 billion across five different funds, a sign of optimism in the tech startup world, which has seen a dearth of significant exits over the past two years.
"This marks an important milestone for us," Ben Horowitz, who co-founded the firm with Marc Andreessen in 2009, wrote in a blog post.
The biggest chunk of new funding is in Andreessen Horowitz's growth fund, which reeled in $3.75 billion. That money gets invested in later-stage companies that are viewed as closer to going public, or capital-intensive businesses that require big checks.
Horowitz said in the post that $1.25 billion will be dedicated to infrastructure, which includes artificial intelligence investments, while $1 billion will go to app investments, $600 million to games and another $600 million to what the firm calls American dynamism, or "founders and companies that support the national interest." That includes aerospace, defense, education and housing.
The firm had initially aimed to raise $6.9 billion from investors for a new set of funds, including two with an AI focus, Bloomberg previously reported. AI investing has been red hot in Silicon Valley and beyond, while the broader market has been in a downturn.
Since 2021, when tech IPOs and startup investing surged to a record, venture investors have closed their wallets. Soaring inflation and rising interest rates in 2022 pushed investors out of risky assets and forced cash-burning startups to dramatically cut costs. Even with the stock market recovering, venture deals have remained depressed.
Deal volume for U.S. venture investments in the first quarter sank to its lowest level since 2017, according to data published earlier this month by PitchBook. The story was similar across the globe, with worldwide volume reaching its lowest since 2016 and total deal value falling to a level not seen since 2019.
Meanwhile, there have been very few tech IPOs since the end of 2021. Reddit and Astera Labs went public in the first quarter, the first venture-backed tech companies to debut since September. They accounted for 73.4% of total exit value in the U.S. in the period, according to PitchBook.
Horowitz made no reference to the market slowdown in his post. Nor did he suggest that any new funding will be dedicated to cryptocurrencies, an area where Andreessen Horowitz was particularly bullish during the crypto craze that lifted bitcoin to a record in 2021. The firm raised a $4.5 billion crypto fund in 2022, bringing its total amount raised for crypto and blockchain investments to $7.6 billion.
Andreessen Horowitz remains on track to raise more money for its crypto fund and a separate biotechnology fund, a person familiar with the matter told Bloomberg. A spokesperson for the firm didn't provide a comment and directed CNBC to the blog post.
One of Andreessen Horowitz's more notable bets of the past couple years involved WeWork's controversial co-founder Adam Neumann and his new startup called Flow. Andreessen Horowitz wrote a $350 million check to the company, which was just getting started and has yet to make inroads in the residential real estate market.
Andreessen Horowitz said in a blog post at the time that Neumann's efforts to redesign the office experience at WeWork are "often under appreciated" and that the firm loves "seeing repeat-founders build on past successes by growing from lessons learned."