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Andreessen Horowitz May Be Optimistic About Tech, But It’s Still Slowing Its Deal Pace

Andreessen Horowitz -toy unicorn with Bitcoin wheels

Andreessen Horowitz is known for its bets on then-startups such as Facebook, Instagram and Airbnb.

Firm founder Marc Andreessen is also known for his opinion pieces, from “Software Is Eating The World” to the new and much-discussed “The Techno-Optimist Manifesto” published last week. The 5,000-word “manifesto” basically says technology is the cure for — not the cause of — the world’s ills and comes complete with an enemy list and even a “meaning of life” entry.

While it’s been much debated here, here and here — as well as several other places — we’ll forgo the back-and-forth and instead look to see how “optimistic” the firm really is right now in the market.

At least judging by its 2023 reported investment activity, it seems a16z, as the firm is also known, is a lot less bullish than in recent past years.

The numbers

Andreessen invested in 112 deals this year, per Crunchbase data. That puts it on its slowest pace since 2020.

That in itself is not unusual considering the state of the overall venture market. Nearly every venture firm has slowed its pace since the go-go days of 2021 when most got ahead of their skis.

As the world has somewhat returned to normal since the start of the pandemic, so has the venture world — helped along by increasing interest rates and a changing investment philosophy that stresses cash flow over growth.

However, a16z has continued to slow its pace even in the last two quarters — investing in its lowest number of deals in both Q2 and Q3 since the final quarter of 2020, Crunchbase figures show.

The firm started the year extremely strong, investing in 45 deals that totaled $7.8 billion. (That was the total amount of all the deals, not what a16z invested. Individual investments in rounds are not typically revealed.) That total value was pushed up by the huge $6.5 billion deal in Stripe the firm helped co-lead.

Since then it has only invested in a total of 60 deals in the past two quarters.

In true a16z style, it has invested in everything from AI to biotech to software, and in doing so has often gone big:

  • In April, a16z took part in OpenAI’s $300 million raise that also included participation from the likes of Sequoia Capital, valuing the AI giant at around $29 billion.
  • In June, it got in on Berkeley, California-based KoBold Metals$195 million round led by T. Rowe Price. KoBold Metals uses artificial intelligence to mine for valuable metals such as cobalt, copper, nickel and lithium used in the production of batteries for a variety of sectors, including electric vehicles. The round valued the climate-tech startup at $1.15 billion.
  • In August, Burlingame, California-based Genesis Therapeutics closed a $200 million Series B co-led by previous investor Andreessen Horowitz Bio + Health. The company is using AI to develop small-molecule drugs and make drug discovery more successful.
  • In September, a16z participated in the massive $500 million Series I raise for AI-enhanced data analytics provider Databricks, as well as co-led — along with Nvidia‘s NVentures — Palo Alto, California-based biotech startup Inceptive’s $100 million round. Inceptive aims to use artificial intelligence to discover vaccines and therapeutics.

Representatives for the firm did not return requests for comment. 

Still a lot of deals

It is important to point out that while a16z has pulled back in the market, it still far outpaces other big firms such as Sequoia Capital and Lightspeed Venture Partners, and even large growth players like the SoftBank Vision Fund and Tiger Global, which have very significantly cut back in dealmaking since 2021.

For example, Sequoia Capital took part in only 11 announced deals in Q3, per Crunchbase numbers. That was the lowest total for the firm in seven years — dating all the way back to Q2 2016 when it made only 10 deals.

So while Andreessen has pulled in the reins some — like many others — overall it does seem a little more optimistic than some of its brethren about the market right now.

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Illustration: Dom Guzman

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