One chart shows how dramatically a16z’s crypto spending has fallen

Whether you’ve been reading or scrolling through Twitter lately, you’ve probably noticed a decline in crypto startup funding. But how much of a dropout actually affects the industry?

If you look at the activities of mega-crypto investor Andreessen Horowitz, the decline looks quite dramatic.

Although the firm has continued to make deals, a16z crypto, which manages $7.6 billion in funds and raised a whopping $4.5 billion in May, participated in just seven crypto and blockchain VC deals in the third quarter of 2022, a down sharply from a peak of 26 deals in the fourth quarter of 2021, according to PitchBook data, and nearly 60% lower than the second quarter of this year. The value of the company’s investments, meanwhile, fell from nearly $2.4 billion in the first quarter of this year to about $600 million last quarter, according to PitchBook data. Note that the value of a16z’s crypto deals in the third quarter of 2022 is still higher than the previous year. (A spokesperson for a16z said the firm could not confirm these statistics given that there are deals that have not yet been announced.)

It’s certainly not just crypto – venture capital has been down by a ton in recent months, as Jessica pointed out yesterday (although seed funding has proven more robust, also in crypto).

A16z refused to chat with me. But ex-a16z partner Katie Haun reportedly was in no rush to distribute her new $1.5 billion fund to Haun Ventures either. Per a recent story in the The informationHaun told the outlet that her firm still has “the vast overwhelming majority of our capital” and that “we’ve been taking it very slowly.”

My question is, if valuations are down a lot, and these firms have tons of cash to spend, why not take the opportunity to get a lot of deals at lower prices? I recently asked Grace Isford, a principal at VC firm Lux Capital that focuses on fintech and Web3 investments, and she suggested that for crypto VCs in general, “it’s hard to know how active they’ve been recently because a lot of of their investments could also have been made in stealth,” she said. Isford noted that she has heard that some crypto funds are focusing more on liquid positions at the moment (meaning actual tokens versus equity investments) given compressed market prices. “There could be some good hedge fund opportunities,” she suggested, although Lux Capital does not participate in such hedge fund strategies. Meanwhile, a recent TechCrunch article suggested VCs are waiting for yet Lower valuations.

To be sure, many of these firms may have long rollout schedules, so they may not be in a rush to spend their money right now. And many crypto companies raised plenty of funds in 2021 or early 2022 and probably aren’t keen on mounting a downturn and taking a cut (and neither are their investors). “A lot of companies don’t need the capital right now,” Isford noted. She has been less involved in Web3 in recent months as well, Isford said.

We will have to see if the coolness in the cryptoventure space, alongside the broader slowdown in VC funding, will last in the coming quarters – and if heavy hitters like a16z will remain content with their slower pace. I bet things probably won’t get much more frothy any time soon – but these firms can’t wait forever to start using the money for their LPs.

Call out: Are you a founder or investor in the crypto/Web3 space? I’d love to hear about what you’re seeing and hearing (and doing!). Drop me a line: [email protected] or DM @AnneSraders on Twitter.

Have a nice weekend.

Anne Sraders
Twitter: @AnneSraders
Email: [email protected]
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE OFFER

– Banyan treea New York-based SKU data network, raised $43 million in Series A funding led by Fine Capital and M13.

– Hoxton Farmsa London, UK-based company that grows animal-free animal fats, raised $22 million in Series A funding. Cooperation fund and Fine Structure Ventures co-led the round and was joined by investors including Systemiq Capital, AgFunds, MCJ Collective, Founders Fund, BACKED VC, Presight Capital, CPT Capitaland Sustainable food companies.

– Telliusa Reston, Va.-based decision information platform, raised $16 million in Series B funding. Baird Capital led the round and was joined by investors including Sands Capital Ventures, Grotech Venturesand Veraz Investments.

– Chip City Cookiesa New York-based cake brand, raised $10 million in funding from Enlightened hospitality investments and Union Square Hospitality Group.

– Bookkeepinga New York-based accounting automation platform, raised $6.6 million in seed+ funding. Fine Capital led the round and was joined by investors including TTV Capital, Argonautic ventures, Learning Hippeau, Haymaker Venturesand others.

– Lithosa Seattle-based agricultural carbon removal company, raised $6.29 million in seed funding. Union Square Ventures and Gray lock led the round and was joined by investors including Bain Capital Ventures, Partners for carbon removal, Carbon Drawdown Initiative, Fall Line Capitaland Cavallo Ventures.

– StoryFitan Austin-based provider of machine learning and audience insights for the entertainment industry, raised $5.5 million in Series A funding. Refinery Ventures led the round and was joined by investors including Techstars, Elkstone Partners, Collective capital undertakings, Alumni Venturesand others.

– Co-fertilitya Los Angeles-based egg donation, freezing and donor matching company, raised $5 million in seed funding. Initial capital and Offline ventures co-led the round and was joined by investors including Coalition partners, Muse capital, Architect Venturesand other angels.

– Bumpa Lagos, Nigeria-based retail automation platform, raised $4 million in seed funding. Base10 partners led the round and was joined by investors including Plug & Play Ventures, SHL Capital, Magic fund, Jedar Capital, DFS Labs, FirstCheck Africa Angel Program, E62 Ventures, Club 14and Fast Forward Ventures.

– Hi guysa Berlin, Germany-based HR technology startup, raised $2.7 million in funding. Moon fire, cherry Ventures, Capnamicand Mediahuis Ventures invested in the round.

– LuckyTrucka remote truck insurance provider, raised $2.4 million in seed extension funding. Candid insurance investors led the round and was joined by investors including Markd’s Parker Beauchamp, Draper University Venturesand SiriusPoint.

– Web makeran Asheville, NC-based cloud networking startup raised $2.3 million in funding led by Lytical Ventures, Uncorrelated VCand SaxeCap.

– Super advisora Toronto, Canada-based digital platform developer for financial advisors, raised CAD 2 million ($1.45 million) led by Rhino Ventures.

PRIVATE EQUITY

– KKR took over a minority stake in SkinSpirit, a skin and body care company based in Palo Alto, California. Financial terms were not disclosed.

– Marconea Genstar Capital portfolio company, acquired Great plains/pool and spa products, a Houston and Kansas City-based pool and spa equipment and parts distributor. Financial terms were not disclosed.

– Nightlife supplya Trilantic North America portfolio company, acquired Bedrock Landscape supplya Las Vegas-based supplier of natural stone, pavers, bulk materials and landscape supplies. Financial terms were not disclosed.

– Strata Information Groupa portfolio company of Fort Point capitalacquired akaCRM, a San Diego-based consulting, implementation and managed support services provider for Salesforce and Conga in the higher education, K-12 and non-profit end markets. Financial terms were not disclosed.

IPOS

– Best for parkingan Austrian garage and parking lot operator, is considering an initial public offering valued at more than €1 billion ($979 million), according to Bloomberg.

– First class medicineThe Cambridge, Mass.-based developer of gene-editing therapies plans to raise $175.1 million in an offering of 10.3 million shares priced at $17.

FUNDS + FUNDS OF FUND

– Bregal Sagemounta private equity firm based in Dallas, New York and Palo Alto, raised $2.5 billion for a fund focused on growth companies with high recurring revenue.

– Operator collectivea San Francisco-based venture fund, raised $92 million for a fund focused on investing in early-stage enterprise and B2B technology companies.

HUMAN BEINGS

– a16z cryptothe Menlo Park, Calif.-based crypto investment arm of a16z, hired Collin McCune as head of government affairs. Previously he was involved House Finance Committee.

– AE Industrial Partnersa Boca Raton, Fla.-based private equity firm, hired Stephanie Sanford as senior vice president. Earlier she was involved ICBC Aviation Leasing.

– Guidepost Growth Equitya Boston-based growth equity firm, employee Nate Machado as an operating partner and Taylor Doherty and Reginald Seawright as vice presidents. The firm also promoted Steve Brown to vice president. Previously, Machado was involved Abry PartnersDoherty was there Highfive Brandsand Seawright were there McKinsey & Company.