Less than a month after Andreessen Horowitz reportedly seeking to raise $7.2 billion from a series of new venture funds, Silicon Valley’s most ambitious venture capital firm has already grown.
According to an exclusive report from Reuters, Andreessen Horowitz (known as A16Z) is currently sought to raise a record $20 billion megafund focusing on artificial intelligence. If successful, it’s the biggest pay raise in A16Z history and one of the boldest bets on AI so far.
“Venture capital firm Andreessen Horowitz is looking to raise roughly $20 billion in what is the largest fund in history to capitalize on the benefits of global investors in supporting American artificial intelligence companies.
The fund is pointing growth-stage AI companies head-on, and sources say it has already attracted attention from global investors who want to be exposed to US technology without regulatory friction.
The company, known as the A16Z, is pitching the megafund around the world. Some limited partners (LPS) see it as a backdoor way, and they see it as a backdoor way to put it into American AI startups without red tape. This move is due to the continued expansion of interest in US AI, even amidst geopolitical tensions and economic uncertainty.
This new salary increase will put A16Z in a rare company. Only SoftBank’s vision funds are bringing together more capital for Tech. The original vision fund reached $100 billion. By comparison, Vision Fund 2 is $56 billion. Another heavyweight, Sequoia Capital, manages it across several funds. A16Z’s biggest single fund to date was $5 billion, part of a wider $9 billion salary increase in 2022.
20 Billion Power Play: A16Z Still Launched the Largest AI Fund
So even by the A16z standard, $20 billion is a huge leap.
Founded by Marc Andreessen and Ben Horowitz, the company has changed political ties in recent years. After historically supporting Democratic candidates, both founders publicly supported Donald Trump last year. Their support coincides with the broader changes in Silicon Valley, where figures like Elon Musk reflect similar sentiments. That connection has not been overlooked among the LPS. Some reportedly view it as a strategic advantage, especially if Trump takes office.
The majority of the new funds are expected to enter subsequent investments in AI companies where A16Z is already receding. The company reduced major checks to Xai, Safe Superintelligence and Mistral and purchased shares in Openai through secondary agreements. It also quietly builds its infrastructure, including access to thousands of Nvidia GPUs that portfolio startups can rent.
This funding push isn’t just about collecting dried flour. AI startups work on large language models where they need serious capital to compete, particularly those where computing and data demands are off the charts. Asking the LPS to back up a single AI-focused vehicle (instead of splitting it vertically) shows how the ALIN-IN A16Z is going.
The company’s track record, including large-scale funding, is mixed. Still, it continues to attract capital from investors chasing so many returns, and from people who don’t want to miss out on the next breakout moment for AI.
Founded in 2009 by Marc Andreessen and Ben Horowitz, Andreessen Horowitz is known as the A16Z. Since then, the company has grown into one of the most influential players in venture capital, under management of around $45 billion. As a registered investment advisor since 2019, A16Z has enjoyed more flexibility than traditional VC companies and is able to move actively into a variety of sectors.
From the start, the A16Z revealed that there was no one here to play small plays. In 2011, it poured $80 million into Twitter and became the first VC company to place a bet on all four of the most valuable social media companies: Facebook, Twitter, Groupon and Zynga. Appetite for breakout names passed on to Airbnb, Stripe, Instagram, Slack, Pinterest and Lyft. The company also supported Coinbase in 2013, and later invested in Alchemy, Solana, Opensy, Avalanche Labs and Yuga Labs.
While crypto bets have made waves during the 2021 Bull Run, the latest move from the A16Z suggests that its full focus has shifted to AI. That new $20 billion AI fund, if successful, is not the largest in the company’s history. It is one of the largest AI-centric venture funds ever raised.
The timing is remarkable. After a record year of IPOs and high-tech investments in 2021, the market was cooled down in 2022 as rising interest rates and inflation led investors to risk-off mode. According to Pitchbook, US venture deal volume in 2023 fell to its lowest level since 2017.
Still, the A16Z has not slowed down. The company recently invested $350 million in Flow, a real estate startup from Wework’s Adam Neumann, highlighting its willingness to back up its bold, sometimes controversial bet. At the same time, we are preparing to launch a new biotech fund, even if it is not mentioned in Horowitz’s latest public update, and continue to appreciate crypto opportunities.
With the high-tech startup landscape showing signs of life, the Megafund Push on the A16Z is more than just another headline. This is a clear signal that we plan to lead the next wave of innovation that begins with AI.
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