a16z crypto funds still have billions to deploy, says co-founder Chris Dixon

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Majority’s newest crypto fund a16z has yet to roll out, said Chris Dixon, general partner and founder of the crypto fund, in an interview on The Block’s podcast, The Scoop.

The latest $4.5 billion fund, known as “Crypto Fund 4”, was launched in May and has dedicated $1.5 billion in seed investments and $3 billion in capital investments -risk.

“We’ve deployed less than 50%, so we’re left with the majority of our recent fundraising,” Dixon said.

The company is a Silicon Valley titan, having raised a total of $7.6 billion for the sector after launching its first crypto fund four years ago. He has recently backed crypto startups including Aztec, Mysten Labs, and Yuga Labs. He is also known for his big bets on crypto startups such as Anchorage Digital, Sky Mavis, and Coinbase.

“Our venture capital funds have a minimum lifespan of 10 years, which means that if you decide to invest in our fund, you commit to us with money, and you are locked in for at least 10 years and honestly it’s usually 15 years and we extend it,” Dixon said on the podcast. He also made a distinction with crypto hedge funds, which he said don’t have the same flexibility to expand the rollout.

HODLing Tokens

Dixon said the funds retained 95% of everything they invested in.

He said crypto investors who believe a16z told his token investments misunderstand the firm’s risk model.

“All of our data shows that the vast majority of returns come in the later years of funds, and the worst thing you can do in venture capital is sell good assets too early,” Dixon said.

The ebbs and flows don’t ultimately affect the business model, he added.

In October, the Wall Street Journal reported that a16z’s flagship crypto fund fell 40% in value in the first half of this year.

Navigate FTX unscathed

The venture capital firm was relatively untouched by the collapse of FTX, while many other players such as Coinbase Ventures and Sequoia found themselves licking their wounds and zeroing in on their investments in the collapsed exchange.

“We never really, frankly, took it seriously,” Dixon said, describing his experience with FTX and his only meeting with founder and former CEO Sam Bankman-Fried.

a16z had previously invested in Coinbase, and Dixon said he used his knowledge of that investment to inform his thought process about other exchanges. He said he has seen a “mole hit” pattern forming frequently where new off-shore trades pop up and then disappear with each cycle.

“For me, it was like what is technological innovation?” said Dixon. “What’s up? It’s Coinbase without compliance, security, and funding based in an offshore location.”

Identifying technological innovation is central to a16z’s thesis, Dixon said, noting that doesn’t mean there won’t be train wrecks in the portfolio.

“If you don’t have an on-chain trust and you don’t have a regulated off-chain trust, I wouldn’t put my money into it,” he said.

Disclaimer: As of 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took out a series of loans from founder and former CEO of FTX and Alameda, Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose these transactions.

2022 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended for use as legal, tax, investment, financial or other advice.

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