Startups Venture

Even A16z Is Slowing Its Investing Pace

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Andreessen Horowitz is one of the most-recognized venture capital firms in Silicon Valley and it just keeps growing. But amid a broader pullback in venture investment, the firm also appears to be slowing down its investing pace this quarter, at least compared to where it was last year.

To be clear, a16z hasn’t hit the brakes. In fact, it’s still one of the most active investors in the United States, according to Crunchbase data, along with Tiger Global Management. It’s just not investing at the same rapid pace it adopted last year, according to our data.

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The firm has participated in 46 funding rounds totaling around $2.5 billion so far in the second quarter, the lowest levels since before 2021, Crunchbase data shows. The number of rounds it has participated in and the amounts raised in those funding rounds is also down quite a bit from the first quarter of this year, when the firm participated in 62 funding rounds that totaled around $6.1 billion.

Andreessen Horowitz did not respond to a request for comment or to verify our data.

The largest deal a16z has participated in so far this quarter is Ultima Genomics’ $600 million funding round last month. Other notable rounds include SpotOn’s $300 million Series F, and Sky Mavis’ $150 million Series C.

More than half the funding rounds in which the firm has participated in so far in Q2 have been to companies that were at the seed or Series A stage, according to Crunchbase data.

Not a money problem

Andreessen isn’t lacking the funds to invest by any means. The firm has announced six new funds this year, most recently its Cultural Leadership Fund III. It has also announced its $4.5 billion Crypto Fund IV, the $600 million Andreessen Horowitz Games Fund One, AH Bio Fund IV, the Andreessen Horowitz Growth Fund III, and the AH Fund VIII.

But the data indicates that a16z is being more cautious this quarter when it comes to deploying capital amid a broader investment pullback fueled by rising inflation and interest rates, and recession fears.

It’s not alone. SoftBank, for example, appears to have tapered its investing pace and volume, and Accel seems to be investing less, and at smaller amounts, this quarter compared to Q2 last year.

Last year was one for growth

A16z more than doubled the number of funding rounds it participated in in 2021 compared to 2020, going from 104 fundings to 241, per Crunchbase data.

The firm itself also expanded rapidly. Its investing team grew 170% in four years, The Information reported in October. The firm now has 82 members on its investing team, according to its website. Today, a16z employs 428 people across all teams, and has expanded its geographical presence beyond Silicon Valley.

With a large team assembled and plenty of capital raised, the firm’s slower pace is likely a proactive strategy to guard against the current economic bumpiness.

Illustration: Dom Guzman

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