The fund will invest in late-stage networks, payment blockchains as well as decentralized finance (deFi) initiatives.

Andreessen Horowitz, the hallowed venture capital firm from Silicon Valley, has pulled off a coup by raising $515 million for its second crypto-facing fund. It had raised $300 million for its first, similar fund in June 2018. (CryptoVibes)

Andreessen Horowitz, or a16z, is famous for making investments such as Skype Inc., Appito Inc., Airbnb Inc., Lyft Inc. (NASDAQ: LYFT), Stripe Inc. and Coinbase Inc. It is also known for bets on cryptocurrencies like Bitcoin and Ethereum, and digital startups such as Maker DAO, a developer of stablecoins; Compound, a crypto lender and Celo, a mobile payments startup.

Investing focus

The new fund closed on Thursday. It will invest in blockchain and crypto businesses over the next few years.

Decentralized finance, payments blockchains, crypto applications, etc. are some of the areas where developers are doing innovative work, and which attract a16z.

“These are a few areas where people are already building, but it only scratches the surface of the yet-to-be-imagined applications that entrepreneurs will dream up,” said a16z in a statement. “In the same way that it wasn’t obvious in 2007 how applications on top of mobile phones would change so many aspects of the ways in which we move, consume, travel, communicate, and even date, it’s hard to imagine what the very best apps and use cases will be for blockchain-based computing platforms.”

a16z vision: Payments, including the great unbanked

Very dear to a16z’s heart is the possibility that payment blockchains will transfer value quickly, cheaply, and without middlemen.

“Unlike existing systems where the sender and receiver must have fee-extracting bank infrastructure in place, payment blockchains require no bank account, thereby opening up financial services to the two billion-plus unbanked worldwide,” a16z said.

a16z vision: bitcoin

What asset serves as a store of value and is scarce, secure, durable, portable, and censorship-resistant? In the view of a16z, bitcoin is a fiat substitute much like gold but available as a digital alternative.

a16z vision: DeFi

A new generation of financial services that ride on top of blockchains constitutes decentralized finance (DeFi), such as crowdfunding, lending, insurance, derivatives, and trading. This is an area of powerful investible interest to a16z.

“With programmable trust, scarcity, and value as new building blocks, DeFi opens the components of finance to the same recombination and experimentation that makes open-source software so powerful.”

Other areas that have gripped a16z’s interest are the crypto-monetization of creative work such as writing and music, and programming; and the build-out of Web 3.

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