The Elephant Hunter's Sense of Smell: a16z Invests $2 Billion in the Next Dawn of Web3

While the entire crypto industry is still trembling in winter, and countless VC firms are choosing to wait and see, the so-called “most aggressive Silicon Valley venture capital” firm a16z has once again raised its rifle.

According to Fortune magazine, a16z crypto is raising about $2 billion for its fifth fund, aiming to complete fundraising by the first half of 2026. Although this amount is half of the $4.5 billion “behemoth” fund raised in 2022, in the current market environment, it’s still enough to turn heads across the industry. Similarly, the Web3 industry’s influential VC Dragonfly announced its fourth fund on February 17, with a size of only $650 million.

a16z’s investment style in Web3 is unique, almost always betting early on all the hot tracks. According to Fortune, this fundraising round is very rushed, with only three months left in the window, and they are only investing in blockchain-related projects.

We can’t help but ask: what exactly are they seeing?

A Two-Programmer Venture Capital Revolution

To understand a16z’s current choices, we must go back to the winter of 2009.

The shadow of the financial crisis had not yet lifted, and Silicon Valley was filled with pessimism. Two tech entrepreneurs, Marc Andreessen and Ben Horowitz, both financially free, decided to start a venture capital firm at the worst possible time. Their first fund targeted $300 million, with each contributing $15 million.

What did the VC circle think at the time? “That’s a stupid idea, absolutely not worth doing.” This is how Ben Horowitz later recalled industry opinions.

Besides the aggressive size of $300 million, a16z’s fundraising memo also included a line that made peers laugh: “We believe talent is the number one resource, so we will build a platform team to serve founders.” At the time, peers thought this would increase costs and drag down returns, contradicting the traditional VC rule of “small and elite.”

Today, almost all mainstream VCs are copying this “stupid idea,” and that’s part of a16z’s DNA: daring to say “yes” when others say “no.”

In 2009, a16z invested $65 million in acquiring Skype. At that time, eBay was involved in patent lawsuits with Skype’s founders, and everyone thought it was too risky. Less than two years later, Microsoft bought Skype for $8.5 billion.

In 2010, Benchmark partner Matt Cohler mocked a16z for buying Facebook and Twitter shares in the secondary market as “reselling pork futures.” But what happened? Groupon IPO’d at $17.8 billion, Facebook at $104 billion, and Twitter at $31 billion.

In 2015, a New Yorker journalist relayed peer skepticism: for a16z to achieve 5-10x returns on its first four funds, the total portfolio valuation needs to reach hundreds of billions. Marc Andreessen dismissively gestured: “Nonsense. We’re hunting elephants, chasing the big game!”

Today, the total value of a16z’s first four funds’ portfolios has reached $853 billion, far exceeding the initial threshold. Hunting elephants has since become a classic phrase in VC industry jargon, and the two founders of a16z continue to inspire entrepreneurs with their stories: truly innovative things often look stupid at first.

That’s the nose for hunting elephants.

Early Positioning in the Crypto Track

In 2013, when most still regarded Bitcoin as a “geek’s toy,” a16z led Coinbase’s Series B funding. At that time, Ethereum hadn’t even been born.

Eight years later, Coinbase went public on NASDAQ, with a valuation once reaching $85.8 billion. After cashing out $4.4 billion, a16z still holds 7% of the shares.

This is not luck, but early foresight.

In 2018, the crypto market experienced its first major bear market, with Bitcoin falling from nearly $20,000 to over $3,000. At this moment, a16z officially launched its first crypto fund, Crypto Fund I, with $300 million.

Once again, with $300 million, no one questioned their boldness or model, and this fund’s choices silenced critics of Web3. Between 2018 and 2021, a16z’s crypto investments included MakerDAO (now Sky), Compound, Uniswap, Solana, Avalanche, NEAR, dYdX, Dapper Labs, OpenSea, and Axie Infinity.

According to DefiLlama data, Sky, Compound, and Uniswap’s TVL combined exceeded $11.4 billion, accounting for nearly 12% of all DeFi TVL. Though many names familiar four or five years ago have faded into history, their former glory still influences today’s Web3 world.

By the end of 2021, the first fund’s holdings had grown 11-fold from the initial capital, making it one of a16z’s best-performing funds. Even after a 40% decline in 2022, investors still made substantial profits.

The success of Crypto Fund I made a16z the most prominent crypto VC. In 2020, the second fund raised $515 million. In 2021, the third fund reached $2.2 billion. In 2022, the fourth fund hit $4.5 billion. With over $7.6 billion in total capital, a16z became the largest global crypto venture firm. Projects like Optimism, LayerZero, Lido, EigenLayer, among others, have almost become industry leaders across various tracks.

Of course, a16z also chases hot trends and has made mistakes. In market predictions, they heavily backed Kalshi; their investments in Celo, Chia, Dfinity, and Farcaster have also shown some misjudgments.

In this cycle, a16z has held a somewhat negative stance on inscriptions and memes, pouring hundreds of millions or even over a billion dollars into “VC coins,” which faced unprecedented setbacks. But Layer 2 solutions, LSD, re-staking, and interoperability—these are arguably the only “Web3 Native” narratives, and a16z has fully embraced them.

You could say they have an elitist arrogance, but it’s hard to say they are inexperienced.

The Double Life of a “Media Company”

In the Web3 space, a16z is almost crowned, but controversy never stops.

In 2015, former partner Benedict Evans joked: “a16z is a media company that makes money through venture capital.” This remark later became a classic critique of a16z inside and outside the industry.

In 2021, a16z launched Future.com, a centralized media platform aiming to build a “content empire” in tech. However, after 18 months, the project was shut down. The failure of Future.com did not make a16z abandon its media strategy. Instead, they shifted focus—from building centralized media to creating a decentralized “media ecosystem.”

In April 2025, a16z acquired Erik Torenberg’s podcast network Turpentine. This was a typical acquisition + talent recruitment deal. a16z expanded its media and network business through the purchase, and Erik Torenberg joined a16z to lead investments and media teams. Seven months later, a16z officially launched a16z New Media.

In their official article “What is New Media?”, a16z states that the goal of the “New Media” team is to create the best turnkey media operation in venture capital, helping portfolio founders win the narrative war, and more importantly, bypass traditional media.

In the AI era, the barrier to product development has nearly dropped to zero, but storytelling skills have unexpectedly gained higher priority. Giants like Anthropic, OpenAI, Netflix, and Microsoft are massively expanding their comms/storytelling teams. If you’ve recently seen frequent claims on social media that without AI you’ll be left behind, those are likely from these AI companies.

After all, in an era where products can be built in hours, whoever can tell stories to sell their products and services will survive.

I’ve heard many criticize a16z, claiming they lack real substance, often just telling stories for their portfolio companies, waiting for a buyer to step in. But now, this storytelling ability has become a scarce resource in the AI age. Perhaps a16z’s ability to see trends early is itself a story they tell. But I recently heard an interesting story:

a16z is a nerd-friendly VC, eager to find talented outsiders who lack social skills and are often overlooked. These people usually aren’t eloquent but have wild, unconventional ideas that seem impossible or counter to mainstream thinking. Their flaws make it hard to stand out in the human trial, but a16z finds and unites them.

When like-minded individuals gather, they create powerful chemical reactions, making a16z’s unconventional approach highly fruitful.

The simple truth: these people don’t need to face complex business wars directly but serve as strategists behind the generals on the front lines. Their foresight and calm minds always find new paths. More importantly, no one inside the team dismisses a strange idea at the start—outsiders might think they’re crazy, but the team knows it might be the best answer.

$2 Billion—Where Will It Go?

Since October 2024, the crypto market has experienced a sharp correction, with total market cap evaporating over $2 trillion. In such an environment, many crypto VCs have chosen to shrink their operations.

But a16z’s approach is: go against the trend and increase their bets.

Chris Dixon has repeatedly said that 95% of a16z crypto’s current assets are from their previous investments. They believe that in venture capital, selling high-quality assets too early is the worst decision. Dixon views blockchain as the next infrastructure of the internet, believing the crypto industry is in a long “building phase,” similar to how neural network papers from 1943 laid the groundwork for today’s AI, with mainstream adoption taking decades.

“We are thinking in centuries,” said a16z partner Katherine Boyle.

From this perspective, the current market downturn is actually the best time to deploy. Valuations are more reasonable, top projects are easier to access, and competition is lower. More importantly, a16z might see the next explosive track coming.

Fortune magazine mentioned some key points, such as a16z not wanting to raise funds for too long and only investing in blockchain-related projects.

We can roughly infer what message they’re conveying: a16z has seen some new trends and wants to deploy quickly, but hundreds of millions of dollars are not enough—they need at least $2 billion.

Many speculate they will invest in stablecoins, RWA tokenization, payments, Crypto+AI, and other popular tracks. But I believe they’ve seen something different—unfortunately, we don’t know what yet.

Although not explicitly stated, Chris Dixon’s tweet on February 7 hints at some clues:

We expect financial applications to be the first to succeed, so we invested in Coinbase, MakerDAO, Compound, Uniswap, and Morpho; but non-financial applications will eventually catch up.

Financial applications are the first not by chance but due to a fundamental sequence: only when enough people come in will new applications emerge.

Long-term lack of regulation and legislation in crypto has led the industry astray. Once regulation is in place, good projects will drive out bad ones.

It’s the chaos of those years that ultimately led to brilliance—just like the internet and AI.

Perhaps a16z has seen one or a series of new, promising tracks, or maybe the $2 billion won’t go into new sectors at all. It could be continuing to invest in projects we think are dead, or aggressively accumulating secondary market chips like in their early days.

a16z is still there, doing many things others don’t understand. But will you believe again this time?

The Power of Belief

Is a16z a Web3 evangelist or a savvy harvesters?

There’s probably no definitive answer.

From one perspective, a16z has indeed gained huge returns from the rise of crypto. A single Coinbase investment brought them over $7 billion. But from another angle, without early bets from firms like a16z, and without their financial backing for seemingly crazy entrepreneurs, could Web3 have grown to its current scale?

Their post-investment support has helped countless startups through tough times. Their lobbying has fought for a more friendly regulatory environment. Their content has educated generations of entrepreneurs and developers.

In this atypical cycle, we see market resistance to VCs. a16z once used massive reserves of UNI to try to make LayerZero the cross-chain interoperability choice for Uniswap, but the market seemed to rally behind Wormhole just to oppose VCs.

At the end of 2021, Musk joked on X: “Anyone seen Web3? I can’t find it.” Jack Dorsey sarcastically replied: “Maybe it’s somewhere between A and Z.”

Today, these jabs hit the mark. The concept of Web4.0 has been proposed, but Web3 still hasn’t clearly defined itself. Many big crypto VC partners are leaving, founders are retreating, and investors are shifting focus to stocks and traditional markets.

a16z has chosen to believe in Web3.

I’ve had moments of wavering in the past year or two, but whenever times are tough, I remember the success stories of business leaders who endured: watch what the smartest people in the world are doing, and follow them.

Right now, the smartest people globally are definitely working on AI, but some continue to openly insist on crypto. Like you, I don’t see obvious potential or hope; we seem unable to see the future. All we can do is keep an eye on that $2 billion new fund as it begins deploying.

After all, in the past 15 years, this “elephant hunter” has proven one thing: while others debate whether elephants exist, they’ve already pulled the trigger.

“Recognizing the change of times, going all-in on the big trend, witnessing many success stories, ‘Digital Wave’ reminds everyone: as the top 10% of this era, your most important mission is to correctly identify the strongest trends, fully embrace them, stop doubting, think actively, and bravely get on board.”