What’s behind the VC crypto push?

Binance Labs, the venture arm of Binance, the crypto exchange, announced a $500M fund to invest in Web3 and blockchain technologies. The raise comes a week after Andreessen Horowitz launched a $4.5B crypto fund.

Why should we care?
Understanding these developments in light of the current crypto winter—as well as an impending (or ongoing) recession—is crucial. Both Binance and a16z seem to be channeling the saying, “the time to buy is when there's blood in the streets.” With funding on the decline across the financial landscape, both Binance and a16z may be able to leverage more favorable fundraising terms, helping shape not just crypto, but finance writ large, in their image. If crypto is where the money is, then entrepreneurs who otherwise would dive into more “traditional” fintech ventures may pivot toward blockchain-based ideas. And, at least for leaders at Andreessen Horowitz, this strategy has almost a civilizational or missionary bent to it. Chris Dixon, Managing Partner and founder of a16z crypto, said the VC firm believed crypto was approaching a “golden era” defined by “new talent, viable infrastructure, and community knowledge.” Echoing these sentiments, Arianna Simpson, General Partner at a16z, said: “What we’ve seen is that many of the best protocols and companies are actually built during periods of market instability or downturns. Because it really allows people to focus on the technology and building rather than being distracted by short-term price fluctuations.” To that end, Andreessen Horowitz is putting at least a third of its funds toward seed rounds, which, TechCrunch estimates, could mean hundreds of them. “We believe blockchains will power the next major computing cycle,” Dixon said. “That’s why we’ve decided to go big.”