The new capital is being split across multiple funds, including the firm’s ‘Growth’ fund that invests in emerging technology such as AI.
Andreessen Horowitz (A16z) has managed to raise $7.2bn in fresh funding to support multiple venture endeavours.
The funding is being split across multiple funds, with $1bn being allocated for start-ups making apps, $600m planned for the gaming sector and $1.25bn allocated for infrastructure.
The VC firm is allocating $3.5bn to its ‘Growth’ fund, which it describes as a late-stage fund that invests in companies executing “unusually big visions for emerging categories in technology”, such as AI.
A16z is also allocating $600m into its ‘American Dynamism’ fund, that focuses on various sectors such as aerospace, defense, public safety, education, housing and manufacturing – companies that support the national interest, according to the VC.
In a blogpost, A16z co-founder and general partner Ben Horowitz said the VC market has changed dramatically since the firm was founded 2009, as the belief back then was that in any given year, only 15 companies would “ever generate $100m in revenue and those 15 companies would drive almost all of VC returns”.
“This meant relatively small fund sizes and a small number of partners in a single fund was the optimal approach,” Horowitz said.
But he claims that now, various submarkets have become as big as the “original entire venture capital market” and that A16z has grown to have dedicated investor teams for each of these submarkets.
“Each area requires deep expertise, so it’s not wise to try to cross-train someone in, for example, games and infrastructure,” he said. “More importantly, founders building AI foundation models need an entirely different set of networks and capabilities than founders building biotech therapies.
“To best serve the market, we created dedicated venture funds, each with its own team of experts and capabilities, specifically focused on each segment.”
The VC firm has been taking a larger focus on the AI sector in recent years. In January, Andreessen Horowitz co-led an $80m funding round into ElevenLabs, a start-up developing AI-powered audio tools to create synthetic voices.
A16z co-founder Marc Andreessen also spoke out against those raising AI concerns last year and argued that the technology will “save the world”.
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Andreessen Horowitz co-founder and general partner Ben Horowitz in 2018. Image: Steve Jennings/Getty Images for TechCrunch via Flickr (CC BY 2.0)
