a16z crypto fund shrinks by 55% but still seeks fundraising, after Paradigm shifts to AI, who will safeguard Web3?

Author: Fortune

Translation: Deep Tide TechFlow

Deep Tide Guide: The largest player in crypto VC has launched a new fundraising round at a high Bitcoin price, shrinking to less than half of the 2022 fund size. More noteworthy is the industry ecosystem’s divergence: Paradigm shifting towards AI and robotics, Multicoin founder leaving, while a16z remains fully committed to blockchain—who will decide the outcome of this bet will define the next crypto cycle.

Full text below:

The biggest player in crypto venture capital has returned to the fundraising track. According to multiple anonymous sources to Fortune, Andreessen Horowitz’s blockchain division, a16z crypto, is currently raising its fifth fund, targeting approximately $2 billion, with plans to complete fundraising by the first half of 2026.

a16z crypto, led by seasoned investor and entrepreneur Chris Dixon, was established in 2018 with an initial $300 million fund, at a time when the blockchain boom pushed Bitcoin’s price above $20,000 the following year. Since then, each fund has exceeded the previous one, culminating in a massive $4.5 billion fund in 2022—which is still actively investing. Although the latest fund is less than half that amount, a source said a16z crypto plans to shorten its fundraising cycle to seize the rapidly changing crypto trends. Previously, each fund was raised every one to two years. (Kim Milosevich, a16z crypto’s Chief Marketing Officer, declined to comment.)

This giant VC is entering the digital asset space for the fifth time, amid a weak crypto market that has recently rebounded. Bitcoin has fallen nearly in half since hitting a record high in October, and publicly traded crypto companies’ stock prices have also plummeted. Nonetheless, the industry is enjoying its most relaxed regulatory environment in Washington in its 17-year history.

Read, write, own

When a16z launched its first crypto fund, digital assets were still a novelty to traditional investors. But this VC firm and Dixon brought institutional capital into the space, followed by many large institutions 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 crypto financial services firm Anchorage, prediction market platform Kalshi, and decentralized exchange Uniswap. However, other digital asset investors have questioned Dixon’s philosophy—summarized in his 2024 publication, Read Write Own. Dixon has long been an advocate of the “Web3” approach, arguing that blockchain can create decentralized versions of internet applications and infrastructure, from social media platforms to lending protocols.

Many of these projects, however, have since faded away, including a16z’s investment Farcaster—an effort to build a decentralized Twitter. Earlier this year, after selling its infrastructure to another company, Farcaster decided to fully refund its $180 million raised from investors.

Meanwhile, the crypto industry has largely shifted toward pure financial projects centered around stablecoins and tokenization, or offering blockchain-wrapped versions of other financial assets. Even staunch crypto investors are changing course. Kyle Samani, co-founder of Multicoin Capital, left the firm in February to focus on other tech sectors. According to a recent Wall Street Journal report, Paradigm, a crypto VC founded by Sequoia and Coinbase alumni, is raising up to $1.5 billion for a new fund that will focus not only on crypto but also on AI and robotics. Paradigm declined to comment.

Sources familiar with the matter told Fortune that a16z crypto’s fifth fund will be 100% focused on blockchain investments.

Dixon recently posted on X (formerly Twitter) acknowledging that blockchain has entered its “financial era,” but rebutted claims that the “read write own” philosophy has failed. “Finance is not outside the broader narrative; it is part of it,” Dixon wrote. “It is the foundation and verification layer for everything else.”

During the fundraising period, a16z crypto’s investment activities have been ongoing. Recent examples include: helping users collateralize Bitcoin positions via the decentralized protocol Babylon, cross-platform prediction market tool Kairos, and a $50 million investment in Solana staking protocol Jito.