Author: Fortune

Translation: Deep Tide TechFlow

Deep Tide Introduction: The largest player in crypto VC is launching a new fundraising round just as Bitcoin's price has halved from its previous peak. The scale has shrunk to less than half that of the 2022 fund. More notably, the industry's ecosystem is diverging: Paradigm is shifting towards AI and robotics, Multicoin's founder has left, while a16z is sticking with a 100% bet on blockchain—this wager's outcome will define who calls the shots in the next crypto cycle.

The full text is as follows:

The largest player in crypto venture capital has returned to the fundraising track. According to several anonymous sources speaking to Fortune, Andreessen Horowitz's blockchain division a16z crypto is currently raising its fifth fund, with a target scale of approximately $2 billion, and plans to complete the fundraising before the first half of 2026.

a16z crypto, led by veteran investor and entrepreneur Chris Dixon, established its first fund of $300 million in 2018, during a time when the blockchain boom had pushed Bitcoin's price to $20,000 in the following year. Each successive fund has surpassed the previous one until reaching the massive $4.5 billion fund of 2022—this fund is still actively investing. Although the latest fund is less than half that figure, one source indicated that a16z crypto intends to shorten the fundraising cycle in order to seize the rapidly changing windows of crypto trends. The intervals between each fund have historically been one to two years. (a16z crypto's Chief Marketing Officer Kim Milosevich declined to comment.)

This venture capital giant is making its fifth foray into the digital asset space, coinciding with a period of poor performance in the crypto market, despite a recent rebound. Since hitting an all-time high in October, Bitcoin has lost nearly half its value, and publicly traded crypto companies have also seen significant stock price drops. Nonetheless, the industry is enjoying one of the most relaxed regulatory environments in Washington in its 17-year history.

Read, write, own

When a16z established its first crypto fund, digital assets were still a novelty to traditional investors. However, this venture capital firm and Dixon brought institutional money into the space, leading to many large institutions following suit, including Paradigm and Haun Ventures, founded by a former a16z crypto general partner. Fortune reported last year that Haun was raising $1 billion through two new funds.

a16z crypto has backed several winners, including the crypto financial services company Anchorage, the prediction market platform Kalshi, and the decentralized exchange Uniswap. However, other digital asset investors have questioned the philosophy that Dixon adheres to—summed up in his forthcoming book "Read Write Own," to be published in 2024. Dixon has been a proponent of the "Web3" path, arguing that blockchain can create decentralized versions of internet applications and underlying infrastructure—from social media platforms to lending protocols.

However, many of these projects have fallen silent, including Farcaster—an a16z investment that was building a decentralized Twitter. Earlier this year, it decided to return the full $180 million it raised to investors after selling its infrastructure to another company.

Meanwhile, the crypto industry has largely shifted towards pure financial projects centered around stablecoins and tokenization, or providing blockchain-wrapped versions of other financial assets. Even staunch crypto investors are pivoting. Multicoin Capital co-founder Kyle Samani left the company in February this year, indicating a focus on other technology sectors. According to a recent report by The Wall Street Journal, crypto VC Paradigm, founded by Sequoia and Coinbase alumni, is raising up to $1.5 billion for a new fund that not only focuses on crypto but also covers AI and robotics. A Paradigm spokesperson declined to comment.

According to a knowledgeable source speaking to Fortune, a16z crypto's fifth fund will focus 100% on blockchain investments.

Dixon recently posted on X acknowledging that blockchain has entered its "financial era," but he refuted the claim that the "read write own" philosophy has failed. "Finance is not detached from a larger narrative; it is part of it," Dixon wrote, "it is the foundation and validation ground for everything else."

During the fundraising period, a16z crypto continues to make investments. Recent cases include: a decentralized protocol Babylon that helps users use Bitcoin positions as collateral, a cross-platform integration tool Kairos for prediction markets, and a $50 million investment in the Solana staking protocol Jito.