Original Author: Not Boring

Original Translation: Saoirse, Foresight News

Editor’s Note: This article focuses on the venture capital giant a16z, delving into its core of "non-traditional venture capital" as it raises a new $15 billion fund—strategically positioning for the future with an engineering mindset and betting on potential companies (like Databricks) with firm conviction. The text intersperses performance data and classic cases, breaking down its progression from a startup to managing over $90 billion in assets. If you want to understand how this "tech believer" is reshaping industry rules, it’s worth diving into the text.

When a16z announced the hefty news of raising $15 billion, the entire venture capital circle was once again stirred—some unearthed long-standing doubts about its model, while others were curious about where this money would flow.

To get a clearer picture of this controversial institution, I spoke with its GPs (General Partners) and LPs (Limited Partners), had in-depth discussions with founders of post-investment companies valued over $200 billion, and combed through its fund return data since its inception.

However, rather than getting caught up in "where a16z went wrong," I wanted to ask: what are those smart people, who have always made the right judgments in the past, aiming for now? I must admit, I was once a crypto advisor for a16z and listed as a shareholder alongside core figures, so I can't claim to be a completely objective observer.

But I don’t want to judge whether this $15 billion is worth investing—institutional LPs have already voted with real money, and the answer will take ten years to reveal. I want to help you see clearly: why has a16z become the "best storyteller" in the venture capital circle? What unconventional ambitions lie behind the future it speaks of?

"I live in the future, and the present is already the past; my existence itself is a gift, if you don't agree, just walk away."

— Kanye West, "Monster"

"Too ostentatious," "should speak less and do more politically," "do not agree with one or two of its recent investment projects," "quoting the Pope on social media is too inappropriate," "with such a large fund, it’s impossible to bring reasonable returns to LPs"…

These voices have been heard by a16z for nearly 20 years.

For example, in 2015, The New Yorker journalist Tad Friend had breakfast with Marc Andreessen (co-founder and General Partner of a16z) while writing "The Future Pioneers." Prior to that, Friend had heard doubts from a fellow venture capitalist: a16z's fund size is too large, but its equity stake is too low [1], and to achieve a total return of 5-10 times for the first four funds, the total valuation of its portfolio would need to reach $240 billion to $480 billion.

Friend wrote in the article: "When I tried to verify this data with Andreessen, he made a dismissive gesture and said, 'That's nonsense. We have the full set of models—we're just here to catch elephants and chase big fish!'"

Remember this scene, because you might have similar doubts next, and Andreessen will likely have the same reaction.

Now, a16z announced that all its investment strategies have raised $15 billion, with regulated assets under management (RAUM) exceeding $90 billion.

a16z's various fund strategies and corresponding fund sizes raised in 2025

In 2025, the venture capital fundraising market is dominated by a few leading institutions, and a16z's fundraising amount exceeds the combined total of the second and third-ranked Lightspeed ($9 billion) and Founders Fund ($5.6 billion) [2].

In the worst venture capital fundraising environment in nearly five years, a16z's fundraising amount in 2025 accounted for over 18% of the total venture capital raised in the U.S. [3]. Typically, a venture capital fund takes an average of 16 months to complete fundraising, while a16z took just over three months from start to finish.

Breaking it down, a16z has four funds that made it into the "Top 10 Fundraising of 2025": the late-stage venture fund LSV V ranked second, the AI infrastructure fund X and the AI application fund X tied for seventh, and the "American Vitality Fund" AD II ranked tenth.

Comparison of fundraising sizes of U.S. venture capital institutions in 2025-2026

Some might say that with so much money, venture capital institutions cannot reasonably allocate it to achieve excess returns. But I guess a16z's response would still be: "That's nonsense." After all, they are always "catching elephants and chasing big fish"!

Currently, among all of a16z's funds, its portfolio includes 10 of the "Top 15 Private Companies by Valuation": OpenAI, SpaceX, xAI, Databricks, Stripe, Revolut, Waymo, Wiz, SSI, and Anduril [4].

Over the past decade, a16z has invested in 56 unicorn companies [5], more than any other institution in the industry.

The total valuation of the unicorn companies in its AI investment portfolio accounts for 44% of the entire industry [6], also ranking first.

From 2009 to 2025, a16z led investments in 31 "companies with final valuations exceeding $5 billion" in their early rounds, which is 50% more than the combined total of the second and third-ranked institutions.

They not only have the full set of models but also have solid performance backing.

As mentioned earlier, peers once questioned that the portfolio valuation of a16z's first four funds needed to reach $240 billion to $480 billion to meet standards. In fact, the total valuation of a16z's Funds 1-4 (calculated at exit or latest post-investment valuation) has reached $853 billion [7].

Total portfolio value of a16z's first four funds

And this is just the valuation at exit—just Facebook alone has since increased its market value by another $1.5 trillion!

This scenario has repeated itself: a16z's seemingly crazy bets on the future are often deemed "foolish" by industry insiders, but a few years later, they find out it’s actually not foolish!

After the global financial crisis in 2009, a16z raised $300 million for its first fund and proposed the idea of "providing operational support platforms for founders." Ben Horowitz (co-founder and General Partner of a16z) recalled: "We talked to many venture capital peers, and most said it was a foolish idea, advising us not to do it, saying this model had been tried before and simply didn’t work." Now, almost all leading venture capital firms have similar platform teams.

In 2009, a16z took $65 million from this fund and, along with Silver Lake Partners and others, acquired Skype from eBay for $2.7 billion. At that time, "everyone said this deal wouldn't happen because the intellectual property risk was too high"—after all, eBay was in a lawsuit with Skype's founders over technology ownership. Less than two years later, Microsoft acquired Skype for $8.5 billion, and Ben recalled the doubts at that time in a blog post [8].

In September 2010, Marc and Ben raised $650 million for their second fund, subsequently making large-scale late-stage investments in Facebook ($50 million, post-investment valuation $34 billion), Groupon ($40 million, post-investment valuation $5 billion), Twitter ($48 million, post-investment valuation $4 billion), betting that the IPO window was about to open. The Wall Street Journal wrote in an article titled "Venture Capital Newcomers Shake Up Silicon Valley" that peers were quite unhappy, believing "private equity transactions are not what venture capital should be doing" (at that time, this operation, which is now common, was still very new and hadn’t even been termed "secondary transactions"). Benchmark partner Matt Cohler once stated: "You can make money trading pork futures and oil futures, but that’s not what we should be doing." And what happened? In November 2011, Groupon went public with a valuation of $17.8 billion; in May 2012, Facebook went public with a valuation of $104 billion; in November 2013, Twitter's first-day closing valuation reached $31 billion.

In January 2012, Marc and Ben raised $1 billion for their third fund and $540 million for a parallel opportunity fund. At this point, the doubts turned into the now-common "too large a scale": a16z's fundraising that year accounted for 7.5% of the total venture capital raised in the U.S., while the overall performance of the venture capital industry was sluggish. A 2014 Harvard Business School case study on a16z mentioned that a report from the Kauffman Foundation in 2012 pointed out: "For over a decade, returns in the venture capital industry have been very poor." Data from the Cambridge Association showed that the average return rate for venture capital in 2012 was only 8.9%, far below the S&P 500 index's 20.6%. Legendary venture capitalist Bill Draper once said: "The consensus in the Silicon Valley venture capital industry is that too many funds are chasing too few truly excellent companies." This statement remains applicable today.

In 2016, The Wall Street Journal published an article, which David Rosenthal of the Acquired podcast called "obviously a smear piece orchestrated by peer venture capitalists," titled "Andreessen Horowitz (a16z) Fund Returns Lag Behind Venture Capital Elite." At that time, a16z's three funds had been established for 7 years, 6 years, and 4 years, respectively, and the article stated: Fund 1 could rank in the top 5% of the industry, Fund 2 only in the top 25%, and Fund 3 didn’t even make it into the top 25%.

Return performance of a16z's first three funds, compared to industry leaders

But looking back now, this third fund can be considered "legendary": as of September 30, 2025, its net TVPI (Total Value to Paid-In) after fees reached 11.3 times; if including the parallel fund, the net TVPI would be 9.1 times.

The portfolio of Fund 3 includes: Coinbase (which has brought a total allocation of $7 billion to a16z LPs), Databricks, Pinterest, GitHub, and Lyft (though they missed out on Uber, a single missed opportunity cannot overshadow the multiple precise investments made). I believe this fund can be considered "one of the most successful large venture capital funds in history." After the third quarter of 2025, Databricks (currently a16z's largest holding) saw its valuation rise to $134 billion, indicating that the performance of Fund 3 is still climbing (assuming other holdings have not depreciated). From Fund 3 and the parallel fund alone, a16z has already net distributed $7 billion to LPs, with nearly an equal amount of unrealized gains yet to be realized.

A significant portion of these unrealized gains comes from Databricks. In 2016, when The Wall Street Journal was pessimistic about a16z, this big data company was still small, just months away from a $500 million valuation. Today, Databricks accounts for 23% of a16z's total net asset value (NAV).

Anyone who has interacted with a16z will frequently hear the name "Databricks." It is not only a16z's largest holding (perhaps also among the top three projects in terms of holding amount in the entire venture capital industry), but its development history is also a vivid example of a16z's "best operational model."

The Operational Formula of Databricks and a16z

Before discussing Databricks, there are a few key points about a16z that need to be understood first.

First, a16z was founded and is operated by engineers—not just founders, but "founders with engineering backgrounds." This influences the institution's design logic (pursuing economies of scale and network effects) and determines their standards for choosing markets and companies.

Second, at a16z, "being second in the investment industry" may be the biggest "original sin" of investing. If you miss the winner early on, you can still make a follow-up investment later; but if you invest in the second place, you will completely lose the chance to invest in the winner—even if the winner has not yet emerged at that time.

Third, once a16z identifies a company as a "track winner," the classic operation is to "invest far beyond the other party's expectations." This approach is often mocked in the industry, but they persistently adhere to it.

These three points have never changed since a16z was established.

In the early 2010s, just a few years after a16z was founded, "big data" was the trend, and the mainstream big data framework in the industry was Hadoop. Hadoop uses the MapReduce programming model developed by Google to distribute computing tasks across inexpensive commodity server clusters rather than expensive dedicated hardware, making it a promoter of "big data democratization." Subsequently, a number of companies emerged around Hadoop, and in 2014, industry investment peaked: Cloudera, founded in 2008, raised $900 million, and the total financing for Hadoop-related companies that year grew fivefold compared to previous years, reaching $1.28 billion; Hortonworks, spun off from Yahoo, also went public that year.

With the big data trend in full swing and funds pouring in, a16z took no action.

a16z's "z"—Ben Horowitz—was fundamentally skeptical of Hadoop. Before serving as CEO of LoudCloud/OpsWare, he had a background in computer science and believed that Hadoop could not become a mainstream architecture: "The programming is complex, hard to manage, and not suited to future needs—every step of MapReduce computation requires writing intermediate results to disk, which is maddeningly slow for iterative computing tasks like machine learning."

Thus, Ben chose to avoid the Hadoop craze. Jen Kha told me that at the time, Marc even "complained" about Ben:

"We must have missed out! We completely messed up, made a big mistake!" Marc was quite anxious at that time.

But Ben said: "I don't think this is the direction of the next architectural revolution."

Later, when Databricks emerged, Ben said: "This might be right." And of course, he bet everything on it.

The birth of Databricks was perfectly timed, and it was located near the University of California, Berkeley.

During the Iranian Revolution in 1984, Ali Ghodsi's family fled Iran and moved to Sweden. His parents bought him a Commodore 64 computer, and he taught himself programming on it, achieving such a high level that he received an invitation to be a visiting scholar at UC Berkeley.

At Berkeley, Ali joined the AMPLab, where he, along with eight researchers including his mentor Scott Shenker and Ion Stoica, worked to bring the ideas from PhD student Matei Zaharia's thesis to life, developing Spark—a powerful open-source big data processing engine.

The design philosophy of Spark is "to replicate the functions achieved by tech giants using neural networks without complex interfaces." It once set a world record for data sorting speed, and Zaharia's thesis won the "Best Computer Science Paper of the Year." However, following academic conventions, they open-sourced the code, and almost no one used it.

Starting in 2012, the eight of them had multiple dinners to discuss and ultimately decided to establish a company around Spark, naming it Databricks. Seven of them became co-founders, with Shenker serving as an advisor.

Co-founder of Databricks Ali Ghodsi sitting in the front middle position, Forbes

The team initially thought, "We need a little money, but not too much." Ben recalled in an interview with Lenny Rachitsky:

"When I met with them, they said, 'We need to raise $200,000.' At that moment, I knew they had Spark, and their competitors were already backed by significant funding from Hadoop companies. Moreover, Spark is open-source, and time is of the essence."

Ben also realized that as academics, this team "could easily be satisfied with small goals." He told Lenny: "Generally speaking, if a professor can achieve a $50 million valuation when starting a business, they are already a 'hero' on campus."

So Ben delivered them some "bad news": "I can't write a check for $200,000."

Then he followed up with the "good news": "I can write a check for $10 million."

His reasoning was: "If you're going to start a business, you have to take it seriously and go all in. Otherwise, you might as well stay in school."

The team decided to drop out. Ben further increased the investment, with a16z leading Databricks' Series A funding round, with a post-investment valuation of $44 million, and a16z holding 24.9%.

This initial encounter—Databricks asking for $200,000, a16z investing $10 million—set the tone for their collaboration: once a16z invests in you, they will "completely believe in you" and push you to "aim for bigger goals."

When I asked Ali about the impact of a16z, his attitude was very clear: "I believe that without a16z—especially without Ben—Databricks would not exist today. I don't think we would have made it this far. They truly believe in us."

In the third year after the company was founded, revenue was only $1.5 million. "At that time, we had no idea if we could succeed," Ali recalled, "The only person who truly believed that this company would be worth a fortune in the future was Ben Horowitz. His confidence was stronger than all of ours, to be honest, even stronger than my own confidence. He deserves high praise for that."

Having belief is a wonderful thing, but when you have the ability to make that belief self-fulfilling, its value becomes even greater.

For example, in 2016, Ali was trying to establish a partnership with Microsoft. In his view, the market had an urgent need for "integrating Databricks into the Azure cloud platform," and this collaboration should have been a natural fit. He had asked several venture capital partners for help in connecting with Microsoft CEO Satya Nadella—they did help, but these connections ultimately "got lost in the process of the president's assistant and went nowhere."

Subsequently, Ben personally stepped in to establish a formal communication channel between Ali and Satya. "I received an email from Satya, in which he said: 'We are very interested in establishing a deep partnership,'" Ali recalled, "He also copied his deputy and the deputy's subordinates. Within just a few hours, my inbox received 20 emails from Microsoft employees I had previously tried to contact without success, all asking: 'When can we meet to discuss in detail?' At that moment, I realized: 'Things are different now; this collaboration is definitely going to happen.'"

Another example is in 2017, when Ali was trying to recruit a senior sales executive to accelerate the company's business growth. This executive proposed to include a "change of control clause" in the contract—essentially, if the company was acquired, the shares he held could be accelerated for realization.

This became a sticking point in negotiations, so Ali asked Ben to help persuade this executive, convincing him that Databricks' valuation "would reach at least $10 billion." After communicating with this executive, Ben sent Ali the following email:

Ben Horowitz's email to Ali Ghodsi, September 19, 2018, provided by Ali Ghodsi

"You are seriously underestimating the value of this opportunity.

We will become the Oracle of cloud computing. Salesforce's valuation is 10 times that of Siebel, Workday's valuation will be 10 times that of PeopleSoft, and our valuation will be 10 times that of Oracle—this means our target is $2 trillion, not $10 billion.

Why does he need a 'change of control clause'? We are not going to have a change of control at all."

This is perhaps one of the most impactful corporate emails in history, especially considering that at the time, Databricks' revenue run rate (annualized revenue) was $100 million, and its valuation was only $1 billion; today, the company's revenue run rate has exceeded $480 million, and its valuation has reached $134 billion.

"They can see the full potential of something," Ali told me, "When you're in the thick of it, dealing with daily operations, facing various challenges—negotiations falling through, being pressured by competitors, funds running low, no one knowing your company, employees constantly leaving—it's hard to maintain that long-term perspective. But they show up at board meetings and tell you: 'You will conquer this world.'"

Their judgment was correct, and this belief has brought them substantial returns. In summary, a16z participated in all 12 rounds of financing for Databricks, with 4 rounds led by a16z. It is precisely because of investments like Databricks that the initial capital invested in Fund 3 has performed so well; at the same time, Databricks is also one of the core drivers of revenue growth for the larger "Late-Stage Venture Capital Funds 1, 2, and 4."

"First and foremost, they genuinely care about the company's mission," Ali commented, "I believe Ben and Marc do not primarily view this as a return-seeking investment; investment returns are secondary. They are believers in technology, hoping to change the world with it."

If you cannot understand Ali's assessment of Marc and Ben, you will never truly grasp what a16z is.

What Exactly is a16z?

a16z is not a traditional venture capital fund. On the surface, this is evident: the fundraising completed by the company is the largest venture capital fundraising across all strategies since SoftBank's $98 billion Vision Fund in 2017 and the second Vision Fund in 2019. This is entirely inconsistent with the characteristics of traditional venture capital. However, even so, the SoftBank Vision Fund is essentially just a "fund," while a16z is not.

Of course, a16z raises funds and needs to generate returns for investors. It must excel in this regard, and so far, its performance has been outstanding. Not Boring has compiled the return data for a16z's funds to date, which we will share below.

But first, we need to clarify: what exactly is a16z?

a16z is a "community of technological believers." Everything it does is aimed at promoting the birth of more advanced technologies to create a better future. The company firmly believes: "Technology is the glory of human ambition and achievement, the vanguard of progress, and the means of realizing human potential." All actions stem from this core belief. It holds a steadfast confidence in the future and bets the entire company's resources on practicing this belief.

a16z is an "institution." It is a business, a company whose goal is to achieve scalable development and continuously improve itself in the process of scaling. I believe that many characteristics of an "institution" are absent in traditional "funds," which I will elaborate on below. I believe this "institution > fund" positioning precisely unravels the most contradictory point in the self-perception of the venture capital industry: this industry provides the most scalable products (capital) to the companies with the greatest potential for scaling (tech startups), yet the industry itself is perceived as "not meant to scale."

This distinction of "institution > fund" originates from a16z's general partner (GP) David Haber. He is the team member with the most "East Coast finance background" and describes himself as a "learner studying the business models of investment institutions." He explained: "The objective function (core goal) of a fund is to earn the most incidental returns with the least manpower and in the shortest time; whereas the goal of an institution is to create excellent returns while building a competitive advantage that can generate compounding effects. What we need to think about is: how to make the company stronger in the process of scaling, rather than weaker?"

a16z is operated by engineers and entrepreneurs. The typical practice of traditional asset management managers is to compete for a larger share of a fixed "cake"; whereas engineers and entrepreneurs will work to make the "cake" itself bigger by building a more complete system and promoting the scaling of that system.

a16z is the "master of the time domain," an "institution born for the future." In moments of grand ambition, this institution sees itself as equal to the world's top financial institutions and governments. It has stated that its goal is to become the "JPMorgan of the information age," but in my view, this expression still underestimates its true ambition. If governments serve "specific spatial ranges," then a16z serves "the vast temporal dimension of the future." Venture capital is merely one way it has found—through this method, it can have the greatest impact on the future, and this business model aligns best with the logic of "profiting from promoting the future."

a16z creates and "sells" influence. It builds its influence through scalable development, cultural construction, networking, organizational structure building, and past successful experiences; subsequently, it bestows this influence upon the tech startups in its portfolio—primarily through sales support, marketing, talent recruitment, and maintaining government relations. However, in the words of its founders, a16z will "do everything it can to help," and what it can do seems to go far beyond that.

If you were to design such an institution—one that firmly believes "technology is penetrating markets far beyond the traditional tech industry boundaries," and believes "all fields will eventually become technological"—then what you would ultimately create is a company that sells "winning capabilities" to thousands of companies that may one day form the core of the economy. I believe the institution you ultimately create would be very similar to a16z.

Because those companies that may one day form the core of the economy are often small and weak in their early stages. They initially scatter across various fields, each with different goals and competitors, often competing against each other; at the same time, they face giants that dominate the current market and are unwilling to yield to newcomers. A startup, no matter how bright its prospects, may struggle to recruit the top hiring officers (and thus attract the best engineers and executives); it may be unable to advocate for policies that secure a fair competitive environment; it may lack sufficient audience to have its ideas heard; and it may lack enough credibility to sell products to government departments and large enterprises overwhelmed by sales pitches promising the next big trend.

For any startup, investing billions of dollars to build the above capabilities, only to serve itself, is illogical; but if these capabilities can be shared across "all these startups," covering "future markets worth trillions of dollars," then these small companies can suddenly possess the resources of large companies. Their success or failure will depend solely on the quality of the product itself, and they can push the future forward in the way they deserve.

What kind of effect would be produced if the agility and innovation of startups were combined with the influence and strength of the "masters of the time domain"?

This is precisely what a16z has been striving to do—starting this endeavor when it was still a startup itself.

Why Did Marc and Ben Found a16z?

In June 2007, Marc wrote a blog post titled "The Only Thing That Matters," which is part of the "Pmarca Startup Guide." On the surface, this article offers advice to tech startups, but looking back now, it resembles a "manual for founding a16z." The core of the article answers one question: among the three core elements of a startup—team, product, market—which is the most important?

Entrepreneurs and venture capitalists often say "the team is the most important"; engineers typically say "the product is the most important."

"Personally, I support the third viewpoint," Marc wrote, "I believe the market is the most crucial factor determining a startup's success or failure."

Why? He explained in the article:

"In a high-quality market—one with a large number of real potential customers—the market will 'pull' the startup to launch products…

Conversely, in a poor market, even if you have the best product in the world and the top team, it won't matter—you are destined to fail…

To pay tribute to former Benchmark Capital partner Andy Rachleff, I propose the 'Rachleff Rule for Startup Success':

The primary reason companies fail is the lack of a quality market.

Andy stated it this way:

Top teams in a poor market will lose to the market;

Poor teams in a quality market will lose to the market;

Only top teams in a quality market will produce extraordinary achievements."

I believe Marc and Ben saw a "quality market" in the venture capital industry (one that no one realized was as quality as it was), filled with "poor teams" (also not recognized for how poor they were).

Between 2007 and 2009, Ben and Marc were contemplating what to do next. They were already very successful tech entrepreneurs—despite their success, they still felt a drive; and because of this success, they had the capital to "not have to care about others' opinions," allowing them to take bold risks.

But what exactly should they do?

Whether as entrepreneurs or later as angel investors, Marc and Ben had dealt with many unprofessional venture capitalists, and they thought, "Competing with these people might be quite interesting."

"In my view, Marc has never done this for the money," David Haber told me, "He was already quite wealthy by around age 20. Initially, he likely did this more to 'show Benchmark or Sequoia Capital a thing or two.'"

There is another characteristic of the venture capital industry that, during the most severe economic downturn caused by the Global Financial Crisis (GFC), almost no one realized: it might be the highest quality market in the world. And this was crucial for Marc.

Of course, not all venture capital firms are terrible. The two firms Marc wanted to "show a thing or two"—Sequoia Capital and Benchmark—are actually very good (Marc even quoted Andy Rachleff's views!). However, they have a tendency to "oust founders." For founders who want to retain control, Peter Thiel founded Founders Fund back in 2005, during the investment period of "Fund II" in 2007—just as Mario wrote, this fund ultimately achieved a performance of "for every $1 invested, it returned $18.60 in cash (DPI, Distributions to Paid-In)."

But compared to today, the venture capital industry at that time was still a "lazy, closed, manually operated industry."

Marc often tells a story: in 2009, when he and Ben were considering founding a16z, they met with a GP from a top venture capital firm, who compared investing in startups to "taking sushi off a conveyor belt." According to Marc's recollection, this GP told him:

"The venture capital industry is like dining at a conveyor belt sushi restaurant. You just sit on Sand Hill Road, and startups will naturally come to you. Even if you miss one, it’s okay because the next sushi will come around quickly. You just sit there, watch the 'sushi' go by, and occasionally reach out to grab a piece."

Marc explained to Jack Altman on the "Uncapped" podcast: "If the goal is just to 'maintain the current good days,' this approach can work as long as the industry's ambitions are limited."

But Marc and Ben's ambitions go far beyond that. In the company they were about to establish, "missing a quality deal"—that is, failing to invest in an excellent company—would be the biggest mistake. This is no small matter, as they clearly see that as the market expands, the scale of those large tech companies will far exceed expectations.

"Ten years ago, there were about 50 million internet users, and even fewer had broadband connections," Ben and Marc wrote in the fundraising memorandum for "a16z Fund I" in April 2009. "Today, there are about 1.5 billion internet users, many of whom have broadband connections. Therefore, whether on the consumer side or the infrastructure side, the most successful companies in the industry may have potential that far exceeds that of the most successful tech companies of the previous generation."

At the same time, the cost of starting a company has significantly decreased, and the processes have become simpler—this means that more startups will emerge in the future.

In their letter to potential limited partners (LPs), they wrote: "Over the past decade, the cost of developing a new technology product and bringing it to market, at least in beta form, has dramatically decreased; today, this cost typically ranges from $500,000 to $1.5 million, whereas ten years ago it required $5 million to $15 million."

Finally, as startups transition from "tool providers" to "players directly competing with industry giants," their own ambitions are also expanding—this means that all industries will eventually become tech industries, and the scale of all industries will thus become larger.

This is why, at that point in time, the "market" was so high quality. Marc continued:

"From the 1960s to around 2010, the venture capital industry had a fixed 'script'… The companies at that time were essentially 'tool providers,' or 'companies selling picks and shovels'—mainframes, desktop computers, smartphones, laptops, internet access software, SaaS (Software as a Service), databases, routers, switches, disk drives, word processing software, all of which are tools.

Around 2010, the industry underwent a permanent transformation… The most successful companies in the tech sector are increasingly those that directly enter traditional industries and compete with existing giants."

In the early days, was a16z "overpricing" companies? Or was the pricing at that time actually reasonable compared to the future potential they foresaw for those companies?

Looking back now, it is easy to assert the latter; but what is impressive about a16z is that they held this judgment before things happened.

As they wrote in their document: about 15 tech companies achieve $100 million in annual revenue each year, and the market capitalization created by these companies accounts for 97% of the total market capitalization of all companies founded in the same year—this is the well-known "Power Law" today. Given this, they must invest as much as possible in those companies "with the potential to become one of the 15 companies"; then, among these companies, they will double down on the winners.

To achieve this, having just two investment partners is not enough— a16z must build the company in a way "that is different from all its peers."

Therefore, after outlining the basic investment terms of "Fund I" (with a target fundraising size of $250 million, of which the general partners will contribute $15 million), Ben and Marc summarized the company's core strategy in one paragraph.

"AH Fund I Fundraising Memorandum"

Even though the company has now far exceeded "two partners" in scale and its ambitions are no longer limited to "entering the top five in the industry," they are still executing this strategy.

Three Stages of a16z's Development

Since the establishment of its first fund, throughout the company's development history, in my view, a16z's extraordinary belief in the future and its asymmetrical confidence have always been its core competitive advantages. It is this differentiated quality that has given rise to all other competitive advantages.

As the company's ambitions, resources, fund sizes, and influence have continued to expand, the ways it leverages this advantage and achieves differentiation have also evolved.

Stage One (2009 - Around 2017)

In a16z's first stage (2009 - around 2017), its core insight was: if "software is eating the world," then the value of top software companies will far exceed the valuation expectations of everyone at that time.

With this belief, a16z took three actions to successfully rise from an industry newcomer to one of the top five investment firms:

• Pay high prices for deals: As mentioned earlier, some of the deals made by a16z's early funds were considered overpriced or off the conventional path by many peers at the time. In the "Acquired" podcast, Ben Gilbert stated: "The outside world generally criticized them for 'throwing money to buy fame,' squeezing into quality projects through high-priced investments," but he also pointed out that this approach was reasonable at the time and questioned: "Does anyone still think that any project a16z invested in between 2009 and 2015 was actually overvalued? The answer is definitely no." As Ben Horowitz explained in a 2014 Harvard Business School (HBS) case study: "Even facing valuations in the billions, investors may still underestimate the potential of these companies." This "underestimation" is where a16z's opportunity lies.
• Build operational infrastructure seen as 'wasteful' by others: Forming a full-service team, hiring recruiting partners, establishing executive briefing centers… To fund managers at the time, these initiatives seemed like "extra expenses" that would drag down costs. However, if one believes that the companies in the portfolio can grow into "category-defining" industry benchmarks and need to possess enterprise-level strength to achieve this goal, then these investments are reasonable. a16z's move was a layout for the future— in the future, startups must have the image of "mature enterprises" to win contracts from Fortune 500 companies.
• View technical founders as a scarce resource: This was also a gamble—due to the reduced cost of starting a company and lower barriers, even without traditional management experience, technical geniuses have the ability and will inevitably create more influential companies. Therefore, a16z did everything possible to attract and support such founders, bringing the model of innovative talent agencies like CAA into the venture capital industry. Today, "founder-friendly" has become a popular concept in the industry, but at that time, this was undoubtedly an innovative move.

It is worth noting that in the first stage, a16z's core goal was to invest in the "right companies" and realize returns when these companies grew to their expected successful scale. Of course, they also focused on supporting founders, but essentially, the core of this stage was to seize the opportunity for "valuation arbitrage."

Core Data of a16z's Funds from 2009-2017 (Stage One)

a16z's Fund III (AH III) performed outstandingly by investing in both Coinbase and Databricks, but what is more noteworthy is the "sustainability" of its performance.

"As limited partners (LPs), we are pleased to see funds consistently achieve a 3x (net) total value to paid-in capital ratio (TVPI), with occasional performances exceeding 5x (net) TVPI, and a16z has precisely achieved this," said David Clark, Chief Investment Officer of VenCap (who has been an LP since a16z's Fund III), "a16z is one of the few firms capable of consistently delivering such performance on a large scale over the long term." This can also be glimpsed from the performance data mentioned above.

If in this stage, a16z was willing to "pay high prices" and "cross-invest like investing in pork futures" to build brand reputation and wait for long-term returns, then in the short term, the cost of this "expenditure" seems not high.

Stage Two (2018-2024)

In a16z's second stage (2018-2024), its core belief shifted to: the scale of leading companies will far exceed everyone's expectations, they will remain private for longer, and the "scope of technology's consumption" of industries is broader than others realize.

Based on this belief, a16z took three actions to leap from "top five companies" to industry leaders:

Raise larger funds: In the first stage, a16z raised $6.2 billion through nine funds; in the five years of the second stage, it raised $32.9 billion through 19 funds. The traditional venture capital consensus is that "the larger the fund size, the lower the return rate," but a16z proposed the opposite view: if the ultimate value of leading companies will become higher, then more capital is needed to maintain a meaningful ownership stake through multiple rounds of financing. For venture capital, the worst-case scenario is "missing out on leading companies" or "having insufficient stakes in already invested leading companies." Marc often says: "You can only lose the principal you invested (i.e., a 1x loss), but the upside is almost unlimited."

Break through the "single fund" model to achieve diversified layouts: In the first stage, a16z mainly raised core funds, complemented by subsequent late-stage funds. Although each general partner (GP) has their own focus area, all GPs invest from the same batch of funds. Additionally, a16z raised a biotech fund—because the biotech field is vastly different from other fields. This article will focus on a16z's venture capital funds outside of biotech and healthcare.

After entering the second stage, a16z began to implement a "decentralized" layout: In 2018, under the leadership of Chris Dixon, a16z launched its first fund focused on the cryptocurrency sector, CNK I; in 2019, the company hired David George to lead the establishment of a dedicated Late Stage Ventures (LSV) and raised the largest fund at that time—LSV I, which reached $2.26 billion, about twice the size of any previous a16z fund. During this period, a16z raised multiple new funds around core sectors, cryptocurrency, biotechnology, and LSV, and also launched a dedicated seed fund (AH Seed I, $478 million) in 2021, a dedicated gaming fund (Games I, $612 million) in 2022, and the first cross-strategy fund (2022 Fund, $1.4 billion)—this fund allows LPs to proportionally invest in all funds of the same year.

Importantly, although each fund could leverage the company's centralized resources (such as the investor relations team), each fund also formed dedicated platform teams covering marketing, operations, finance, event planning, policy research, and other areas to meet the needs of founders in specific verticals.

Extended Holding Periods: In the second stage of a16z's development, leading companies began to remain private for longer periods and raised more funds in the private market—this included both "primary market financing" for company operations and "secondary market transactions" to provide liquidity for employees and early investors. When a16z purchased late-stage secondary market shares of Facebook that year, Matt Cohler compared this practice to "investing in pork futures," and now this model has become the norm in the industry—companies like Stripe, SpaceX, WeWork, and Uber can all obtain liquidity in the private market that was previously only available in the public market.

This trend posed challenges for the industry: LPs found it difficult to easily obtain liquidity, leading to disruptions in capital allocation cycles. However, for institutions (like a16z) that firmly believe "the scale of tech companies will expand significantly," this was a godsend—it not only provided opportunities to invest more funds in quality private companies but also shifted the returns that originally belonged to public market investors to the private market. I believe this shift is one of the key reasons why venture capital firms like a16z can significantly expand in scale without lowering return rates.

To respond to this trend, a16z took two key actions: first, it became a registered investment advisor (RIA), allowing it to freely invest in cryptocurrencies, public stocks, and secondary market transactions; second, under David George's leadership, it launched the aforementioned LSV I fund. In the second stage, of the $32.9 billion raised by a16z, the LSV series funds contributed $14.3 billion. Additionally, the cryptocurrency fund was also split—the fourth cryptocurrency fund (CNK IV) was divided into a seed fund ($1.5 billion) and a late-stage fund ($3 billion).

Here are the top 10 investment projects of each LSV fund sorted by "post-latest round financing valuation" or "current market value":

• LSV I: Coinbase, Roblox, Robinhood, Anduril, Databricks, Navan, Plaid, Stripe, Waymo, Samsara
• LSV II: Databricks, Flock Safety, Robinhood (which has exited the public market and reinvested in Databricks), Stripe, Deel, Figma, WhatNot, Anduril, Devoted Health, SpaceX
• LSV III: SpaceX, Anduril, Flock Safety, Navan, OpenAI, Stripe, xAI, Safe Superintelligence, Wiz, DoorDash
• LSV IV: SpaceX, Databricks, OpenAI, Stripe, Revolut, Cursor, Anduril, Waymo, Thinking Machine Labs, Wiz

If, as previously criticized, a16z's investments were to "ride the coattails of well-known companies," then the above investment portfolio is undoubtedly a "quality heat list." More importantly, according to data from the Cambridge Association for the second quarter of 2025, LSV I ranked in the top 5% among its cohort of funds, while LSV II and LSV III were also in the top 25% (the first quartile) of their cohort.

As of September 30, 2025, LSV I had a net TVPI of 3.3x; LSV II had a net TVPI of 1.2x (though this number may have risen after Databricks and SpaceX recently completed financing); LSV III had a net TVPI of 1.4x (additionally, reports indicate that SpaceX is about to complete a large-scale secondary market transaction, with a valuation potentially reaching $800 billion, more than doubling its previous valuation, so LSV III's net TVPI is likely to rise further).

Believing that the ultimate value of these leading companies will far exceed most people's expectations (though not everyone's— for example, Founders Fund's judgment on SpaceX and Thrive's judgment on Stripe align with a16z's), a16z was able to invest more funds while these quality private tech companies were still in their private stages.

The key is that a16z has proven: under the right conditions, growth funds can also achieve venture capital-level returns. Specifically, according to analysis data I obtained from an a16z LP, if a venture capital firm has strong early investment capabilities and continues to invest during the growth stage, it can not only achieve venture capital-level returns (multiples) but also obtain a higher internal rate of return (IRR). Of course, establishing deeper cooperative relationships with these companies can further enhance a16z's industry influence.

In the second stage, a16z believes the most important goal is to "hold as many shares of leading companies as possible"—if they can gain a deep understanding of the company through early investments and continue to invest through a dedicated late-stage fund (or make up for early investment mistakes), this goal becomes easier to achieve (even though their ownership stakes have not yet reached the "controlling" levels common in other asset classes).

The core of this stage remains "arbitrage," but unlike the first stage, a16z has made more efforts in this stage to help individual portfolio companies succeed.

Although the return cycles of the second stage funds have not yet fully concluded, compared to the performance of the first stage funds during the same period (when the Wall Street Journal reported their poor performance), the return rates of the second stage funds are currently leading.

Comparison of a16z Funds' Investment Return Performance with Cambridge Association Industry Benchmarks

Specifically: the net TVPI of the fund raised in 2018 is 7.3x; the fund from 2019 is 3.4x; the fund from 2020 is 2.4x; the fund from 2021 is 1.4x; the fund from 2022 is 1.5x.

Core Performance Data of Some a16z Funds from 2018-2024 (Second Stage)

The most noteworthy highlight of this stage is the outstanding performance of the cryptocurrency funds (CNK 1-4 and CNK Seed 1)—among them, CNK I has already brought LPs a net distribution to paid-in capital ratio (DPI) return of 5.4x.

Even more surprisingly, despite some questioning a16z in 2022 for "timing it wrong and raising too many cryptocurrency funds," as of now, the $3 billion raised for the fourth cryptocurrency fund (CNK IV) has achieved a net TVPI of 1.8x.

The two core stories of the second stage—the LSV series funds and the cryptocurrency funds—perfectly reflect a16z's two beliefs about the future: LSV is a response to the trend of "extended private company cycles and increased private market financing needs"; while cryptocurrency represents a philosophy—innovation (and returns) may come from entirely new fields that are completely different from traditional investment tracks.

These two stories also highlight a16z's need to further expand its service scope—both to support portfolio companies and to empower the entire industry. For example, to help late-stage portfolio companies grow, a16z needs to replicate some of the advantages of the public market in the private market; and to ensure the survival space of the cryptocurrency industry in the U.S. and to ensure that various new technology companies can have a fair chance in competition with existing giants, a16z must venture into Washington (to engage in policy lobbying).

This leads to a16z's third stage (2024 - future). In this stage, its core belief is: if a fair development environment can be obtained, new technology companies can not only reshape various industries but also excel in all industries; and a16z must lead the industry and even the entire country in the right direction.

This belief once again changes a16z's positioning. When the company's scale reaches a certain threshold (the $15 billion new fund being raised is a clear marker), "picking winners" is no longer enough—

To create winners, it is necessary to shape an environment conducive to their competition.

As Ben said: "It's time to lead the industry."

a16z's Third Stage: It's Time to Lead the Industry

At this moment, you might imagine a scenario where an analyst from a competing venture capital firm messages journalist Tad Friend saying: "To achieve cumulative returns of 5-10 times on these two new funds totaling $15 billion, 'you need to expand the entire U.S. tech industry several times over from its current base.'"

And you can probably guess how Marc and Ben would respond: That's right, that's exactly what we plan to do.

This is precisely the plan a16z has clearly articulated, and its logic is as follows:

Since 2015, a16z has invested in more unicorn companies at the early stage than any other investor, and the gap between it and the second-ranked investor (Sequoia Capital) is comparable to the gap between the second and twelfth places.

Data source: Stanford University Professor Ilya Strebulaev

Clearly, the "number of unicorns grown from early-stage investments" is a very specific and convenient metric for measuring the "best investor." More common evaluation methods reference return rates—whether in terms of multiples, internal rate of return (IRR), or simply the total cash distributed to limited partners (LPs). Some may also focus on investment hit rates or performance stability. There are various ways to assess rankings in the venture capital industry, each with different perspectives.

However, this evaluation standard centered on the "number of unicorns" seems to align closely with a16z's perspective on the industry. During discussions with a16z's cryptocurrency team, I repeatedly heard the viewpoint that if many excellent entrepreneurs are focusing on a particular field, it is acceptable to bet on that field—even if the final judgment turns out to be wrong; but if one chooses the wrong investment company in that field or misses the eventual leader for any reason, that is unacceptable. As Ben said:

"We are well aware that starting a business is highly risky, so as long as we follow the correct process in our investments and make reasonable assessments of the risks, we won't overly worry even if some investments ultimately fail. On the contrary, if we fail to accurately judge whether a particular entrepreneur is the best candidate in their field, we will take that very seriously.

Choosing the wrong emerging field is not a big deal; choosing the wrong entrepreneur is serious; missing out on excellent entrepreneurs is also a big problem. Whether due to conflicts of interest or voluntary abandonment, missing out on a company of significant historical importance has far more severe consequences than investing in the best entrepreneur in a misjudged field."

From a16z's own defined "core metrics," it has indeed become a leader in the venture capital industry.

"So, what comes next?" Ben posed the question, "What does it mean to lead an industry?"

In a lengthy announcement about raising $15 billion for the X platform, he provided the answer: "As the leader of the U.S. venture capital industry, the future of new technology in America is, to some extent, in our hands. Our mission is to ensure that America wins the technological dominance of the next 100 years."

It is rare for a venture capital firm to make such statements.

But if you agree with the following premises—technology is the engine of progress, America must maintain its leading position by having a technological advantage, a16z is the largest and most influential investor in emerging tech companies in the U.S., and has the ability and resources to provide these companies with opportunities to compete fairly with industry giants—then this statement is not without reason.

He further pointed out that to win the technological dominance of the next 100 years (which a16z sees as equivalent to winning overall leadership for the next 100 years), it is necessary to master key new technological architectures—AI and cryptocurrency—and apply these technologies to the most important fields, such as biotechnology, national defense, healthcare, public safety, and education, even integrating them into government operations.

These technologies will greatly expand market size. As I discussed in my articles "The Tech Industry Will Expand Significantly" and "Everything Can Be Technologized," industries and tasks that were previously outside the scope of the tech industry have now been included. This means that the venture capital addressable value (VCAV) will also increase significantly.

The scale of U.S. venture capital exits is significantly increasing, chart source: VenCap Chief Investment Officer David Clark

This is a continuation of a16z's long-standing investment strategy, but there is a key shift in philosophy: as long as a16z fulfills its responsibilities as a leader, this value can be released, and the future of America (and even the world) can be secured.

Specifically, this means doing five things:

1. Reshape U.S. technology policy to return to its peak;
2. Fill the gap between the development of private enterprises and public companies;
3. Promote the evolution of marketing models towards the future;
4. Embrace new models of enterprise creation;
5. Continuously shape corporate culture while enhancing its own capabilities.

Those seemingly perplexing moves by a16z are almost all aimed at achieving these five goals.

Most notably, in the past two years, a16z has increasingly voiced its opinions in the political arena, with Marc and Ben publicly supporting President Trump in the last election. This action sparked dissatisfaction among many, and some believe that venture capital funds should not interfere in national politics.

However, a16z firmly opposes this viewpoint. It hopes to "reshape U.S. technology policy to return to its peak."

Marc and Ben articulated their position in the "Small Tech Company Development Agenda," with core points summarized as follows:

• Emerging tech companies are crucial to national development.
• To win the future, there needs to be a legal, policy, and regulatory framework conducive to innovation, while preventing resource-rich industry giants from hindering competition through "regulatory capture."
• However, the current situation is quite the opposite: "We believe that poor government policies have become the number one threat facing small tech companies."
• Currently, no one is speaking up for emerging tech companies at the government level or in the fight against industry giants: industry giants won't do it, and startups shouldn't invest limited resources in such matters.
• The financial returns of venture capital firms are closely tied to the success of emerging tech companies, so the venture capital industry should take up this banner; as the leader of the venture capital industry, a16z has an even greater responsibility.

a16z's political stance is "single-issue oriented," focusing solely on the development of small tech companies while adhering to a bipartisan principle.

Its public stance includes: "We will not engage in political controversies that are not directly related to small tech companies" and "Our support or opposition to a politician depends solely on their attitude towards small tech companies, regardless of their political party or stance on other issues"—based on what I have seen and heard at a16z, these are not hollow slogans but their genuine action guidelines.

a16z's involvement in politics is not because it finds it interesting (although at least Marc seems to enjoy this "lively scene"; he appears to be passionate about many things and can find humor in absurdity—this ability is an underrated competitive advantage, but we don't have time to discuss it today). In the short term, a16z is willing to endure the "appearance of foolishness" and criticism from all sides just to ensure that emerging technologies can thrive in the long term.

As former Benchmark partner Bill Gurley pointed out in "2581 Miles," for a long time, the tech industry could largely ignore Washington (referring to the U.S. government), and Washington could largely ignore the tech industry. But a few years ago, the situation changed, partly due to what I mentioned earlier—the positioning of the tech industry has shifted from "building tools" to "competing with industry giants." The cryptocurrency industry is the first to face "life-and-death" level regulatory pressure.

When a16z first ventured into the political circle in Washington, "small tech companies" had not yet formed an influential group there. Large tech companies have dedicated lobbying teams and government relations networks; industry giants—whether banks, defense companies, or leaders in other fields—also have their own lobbying resources and connections. However, small tech companies, including those in the cryptocurrency sector, lacked such support. At that time, aside from Coinbase, no small tech company could afford the costs and groundwork required to establish a representative mechanism in Washington (or even in state legislatures across the U.S.).

Therefore, in October 2022, a16z's cryptocurrency team hired Collin McCune as the head of government affairs, leading efforts to educate U.S. politicians about cryptocurrency. Collin, Chris Dixon, a16z's General Counsel for the cryptocurrency sector Miles Jennings, other team members, and entrepreneurs from a16z's portfolio and the entire cryptocurrency industry frequently traveled to Washington to explain how cryptocurrency works, its development potential, and more importantly—the risks that excessive regulation could lead to the "stillbirth" of emerging technologies.

These efforts have yielded results. Largely thanks to their efforts and the bipartisan political action committee "Fairshake SuperPAC," the cryptocurrency industry is no longer facing the risk of being "drowned" by legislation. Last year, President Trump signed the GENIUS Act, which for the first time brought crypto stablecoins under regulatory oversight; at the same time, a comprehensive cryptocurrency market structure bill passed the House with overwhelming bipartisan support and is currently being submitted to the Senate for review, with hopes of being passed and signed into law later this year.

This experience played a significant role as artificial intelligence became a focal issue in Washington. Now, McCune oversees all of a16z's government affairs operations, establishing a permanent presence in Washington that covers multiple areas, including AI, cryptocurrency, and "American Dynamism." Currently, a16z is advocating for the establishment of unified federal AI regulatory standards to avoid chaotic and inconsistent regulatory policies across states and to promote other policies conducive to innovation.

Although the term "lobbying" may carry negative connotations, the current reality is that competitors of small tech companies have mature government affairs and policy teams, and they are trying to make it difficult for newcomers to obtain a fair competitive environment through "regulatory capture."

To ensure that the tech industry wins the future and that a16z's funds achieve returns, staying away from politics is no longer a viable option. The good news is that a16z's survival depends on the creation, growth, and success of emerging enterprises, so it has more motivation than any institution to maintain a fair competitive environment conducive to innovation.

Because even a16z itself admits that, standing in the present, no one can predict which companies will emerge in the future or how these companies will come into being.

"Embracing new models of enterprise creation" means recognizing the possibility that, with the help of AI technology, the number of employees needed for entrepreneurs to start businesses in the future may only be 1/10 or even 1/100 of what was required in the past, and the elements needed to build an excellent company may also be entirely different from those in the past. This also means that a16z itself needs to make adjustments.

For example, a16z launched an internal accelerator program called "Speedrun": providing up to $1 million in investment for startups and conducting a 12-week incubation program. Through this program, a16z can gain early insights into the founding models of these new enterprises and conduct in-depth examinations of each participating company, allowing for more informed additional investments in potential companies.

But this move also comes with risks: increasing the number of companies that can claim "backing from a16z" and lowering investment thresholds may dilute a16z's brand credibility. For example, a16z faced controversy on the X platform for investing in a company called Doublespeed through its Speedrun project—this company claims to provide "synthetic creator infrastructure," but others have labeled it a "phone farm" and "spam-as-a-service."

Source: Futurism

Some argue that "the company received investment from Marc Andreessen," which is quite ironic—because Marc does not participate in investment decisions for Speedrun projects under $1 million, as each Speedrun investment only accounts for about 0.001% of a16z's assets under management (AUM). But this precisely highlights the core of the issue: I have seen many mentions of this "company backed by a16z" on the X platform, only to later guess it might be a project incubated by Speedrun and then verify it. Most people, however, do not take the time to verify this.

Another more controversial similar case is the startup Cluely, which claims to "help users cheat in various affairs," and a16z led a $15 million investment in the company through its AI application fund.

People have reason to question: why would a16z, an institution committed to shaping America's future, invest in a company that places "viral spread" above "ethical standards"? In the eyes of those active online, does the presence of a company like Cluely in the portfolio weaken the credibility of all other invested companies?

The answer is likely affirmative. Personally, I do not agree with this investment decision—it gives off a sense of "low taste" and "lack of dignity."

However! From a16z's own logic, this decision is consistent.

Because setting aside the product itself, the core message conveyed by Cluely is: in the age of artificial intelligence, the model of starting a business is undergoing fundamental changes—the premise being that the capabilities of underlying models are tending towards integration and commodification, thus "propagation ability" will become the only key factor; and to gain propagation, even sparking some controversy is inconsequential.

If a16z is truly committed to "embracing new models of enterprise creation," then spending $15 million and incurring a small controversy on the X platform to gain a "front-row seat" to observe a highly innovative business creation model is actually not a high cost.

More broadly, in the industry where a16z operates, occasionally "appearing foolish" is a necessary cost to avoid repeating Kodak's mistakes. Companies must be willing to take risks, and these risks extend far beyond the financial aspect. Given a16z's scale, investing a small amount of money is actually one of the lowest-risk forms of risk-taking.

However, there is also a viewpoint that, from a broader perspective, these small controversies on the X platform (which is also a portfolio company of a16z) are fundamentally inconsequential. In fact, when I asked a16z general partner Katherine Boyle (who is also a co-founder of the company's "American Dynamism" business) about this issue, she expressed such a view:

"You might say, yes, we do receive some criticism on the X platform because of certain companies—like people in a certain circle in San Francisco or New York not liking a particular company, saying 'We don't like what they do in American Dynamism! We don't like what they do in cryptocurrency!'

But from the scale of our entire system, these momentary small controversies are utterly insignificant.

The top institutions have scalable systems, just like the country of America. When America makes some awkward moves on the global stage, do we care? No, because it does not have a substantial impact on America, just as similar events do not affect the Roman Catholic Church.

We think in terms of 'centuries,' not 'a tweet.'"

You may not agree with all of a16z's actions, but you cannot help but admire the company's boldness.

It is worth mentioning that when I asked some of a16z's LPs what they thought about these companies that sparked controversy on the X platform, their reaction was often one of confusion, asking "Who?"—clearly, they had never heard of these companies.

For a16z's returns, what truly matters is always the "leading companies": discovering them early, successfully participating in their financing deals, and holding as many shares as possible in the long term. If you ask any a16z LP if they know Databricks, they will certainly be familiar with it.

Now, in the third phase of "leading the industry," there is another equally important task: even as these leading companies have significantly expanded in scale, they must be supported to continue growing.

I believe this is the core meaning of what Ben referred to as "filling the gap between the development of private enterprises and public companies"—this is also the most critical perspective reconstruction for understanding a16z's positioning and how it hopes to achieve 5-10 times returns on its $15 billion fund.

Ben stated: "In the past, venture capital would help companies achieve $100 million in revenue and then hand them over to investment banks, which would take over the subsequent IPO process." But that era is long gone. Today's companies not only remain private for longer but are also larger in scale—this means that the venture capital industry, represented by a16z, needs to enhance its capabilities to meet the development needs of large enterprises.

To this end, a16z recently hired former VMware CEO Raghu Raghuram, giving him a "triple role": serving as a general partner for the AI infrastructure team led by Martin Casado, a general partner for the growth investment team led by David George, and also as a managing partner, acting as Ben's "advisor to assist in operating the company." Raghu will co-lead a series of new initiatives with Jen Kha to "meet the needs of large enterprises during their growth process."

Specifically, these initiatives include: collaborating with governments around the world to help portfolio companies scale and expand their markets locally; establishing strategic partnerships with companies like Eli Lilly (both parties have jointly initiated a $500 million biotech ecosystem fund); expanding the number and depth of limited partner (LP) relationships globally; and broadening the service scope of a16z's executive briefing center—this center can provide customized services for large enterprises, allowing them to directly connect with companies in a16z's portfolio in relevant fields.

Even for large enterprises, if each company were to build certain resources from scratch, it would be neither realistic nor cost-effective, but having a16z build them uniformly and distribute them to the entire portfolio is a reasonable choice. These resources happen to involve government levels, trillion-dollar enterprises, and tens of trillions of dollars in capital.

All these initiatives could allow companies to grow while remaining private, without sacrificing the credibility, partnerships, or financing channels that public companies possess.

This means that companies can grow to a larger scale in the private market—and the private market is precisely a16z's core coverage area.

This also means that a16z has the opportunity to invest more funds, with a reasonable probability of obtaining substantial returns; and more returns can be converted into more resources to enhance its own capabilities and increase its industry influence—these capabilities and influence can further empower its portfolio companies and even gradually empower the entire emerging technology industry, thereby promoting more and higher-quality new technologies to be applied in more areas of the economy, ultimately allowing everyone to have a better future.

Of course, there are bound to be many risks in the process. "More money, more trouble," and leaders always have to bear more criticism, etc.

In my view, a16z is participating in industry competition with an unprecedented breadth and scale, which contains both opportunities and risks.

For example, the broader the business coverage, the more potential risk points there are. Theoretically, the longer a company remains private, the more difficult it becomes to create liquidity for limited partners (LPs); the difficulty for LPs to invest in new funds will also increase, and these new funds are the financial foundation for a16z to invest in future potential giant companies.

However, ultimately, two core groups determine everything: founders and LPs—they are both the customers of the company and the investors in the company.

The Only Key Groups: LPs and Founders

The choice of which institution to accept investment from by founders and which institution to invest in by LPs reflects their attitudes towards a16z, which encapsulates all the core logic I previously discussed.

My analytical logic is as follows:

• If the top founders believe that the entire system built by a16z can help them create larger companies than through other means, they will prioritize a16z's investment (at least ensuring that a16z becomes one of their financing targets).
• If LPs believe that a16z will continue to invest in the best founders, then even in the face of liquidity crises, they will prioritize investing in a16z and hold their fund shares for the long term.

When I spoke with Jen Kha, she shared an anecdote that clearly indicates: in the venture capital industry, "investing in the top companies" (provided the right track is chosen) is the only key thing.

A few years ago, during a brief venture capital bear market, the market faced liquidity concerns and was filled with uncertainty due to the Trump administration's unclear stance on the tax status of donation funds. At that time, a16z proactively offered liquidity support to LPs. Looking back at the news reports from that time—including rumors about top donation funds selling off venture capital portfolios—it is not difficult to see that a16z's move was like handing a glass of water in the desert.

Specifically, a16z's first fund (Fund 1) held seed round shares of Stripe, while the third fund (Fund III) acquired a significant amount of shares in Databricks' Series A financing. a16z told LPs: "We know everyone is facing a liquidity crisis. If you are willing, we can buy back your shares in these companies to create some liquidity for you."

"Packy, here's the situation," Jen recalled, "All 30 LPs replied, 'Absolutely not considering it.' They said: 'Thank you for your kindness, but we do not want to cash out from these companies' shares; we want to cash out from shares of other companies.'"

As an LP of a16z, VenCap Chief Investment Officer David Clark explained: "The core of venture capital is not short-term liquidity, but long-term compound growth. We do not want fund managers to sell the best companies' shares too early."

Wesleyan University's Anne Martin is one of those 30 early LPs, and her investment experience exemplifies the power of compounding. Since the establishment of a16z's first fund in 2009, she has supported the firm—at that time, she was still at the Yale endowment; now, as the Chief Investment Officer at Wesleyan University, she has participated in 29 of a16z's funds. The latest fund raised by a16z will push this number over 30.

"In the portfolio I lead, a16z not only has a significant position but is also the longest-held asset," Anne told me last month, "At my first investment committee meeting after joining, I recommended two new fund managers to the committee, and a16z was one of them."

Initially, Anne invested in a $300 million fund—Jen noted: "She negotiated the limited partner agreement (LPA) terms directly with Ben." Regarding a16z's belief that "the market opportunity is sufficient to support larger funds," Anne expressed agreement:

"What makes a16z special is… take a $1.6 billion AI infrastructure fund as an example, you can simply create a matrix calculation: 'Assuming they hold 8% of the company at exit… what exit valuation is needed to break even on the fund?' If they hold 8%, the exit valuation needs to reach $20 billion. While such cases are not common, a16z seems to hit quite a few. More importantly, is an 8% stake reasonable for them? Because many times, their stake is much higher."

Only for reference… but indeed feasible

"I think for them, the key is the ownership stake and the ability to help these companies achieve significant outcomes," Anne told me, "It is these two points that reassure LPs about large-scale funds."

It is this ability to "help companies achieve significant outcomes" that makes even the most sought-after founders willing to offer a16z better investment terms than other competitors. In 2025 alone, a16z completed several deals at valuations lower than those of other top firms in the same round. While I cannot disclose specific company names, I learned that last year alone, four well-known tech companies adopted this model during their financing.

In fact, founders highly recognize the resources a16z can provide, and thus are sometimes willing to accept valuations below market levels. This is in stark contrast to a16z's early situation—at that time, competitors were unhappy with a16z's frequent high-priced bids and even nicknamed it "A-Ho." The changes today are enough to prove that collaborating with a16z brings real and tangible value, and companies are willing to accept "higher dilution ratios" in exchange.

This means that although I previously mentioned two key groups, ultimately, there is really only one core: if the top founders are willing to collaborate with a16z, the best LPs will naturally follow suit.

Can a16z enhance the development outcomes of its portfolio companies?

This is the crux of the matter, isn't it? We can express it with a hypothetical formula:

a16z's contribution to market value × Total affected market value

The challenge of this formula lies in the fact that to significantly increase the left side "contribution ratio," assistance must be provided when the right side "total affected market value" is at its lowest (i.e., in the early stages of the company).

However, when you truly help small companies grow into industry giants, the loyalty you gain is priceless—founders will proactively recommend you to other founders considering financing and will speak for you in media reports.

Previously, I asked Erik Torenberg to help connect me with a few founders of a16z-backed companies, and within hours, he connected me with founders of companies with a total market value exceeding $200 billion, including Ali Ghodsi of Databricks and Garrett Langley of Flock Safety.

I specifically mention these two founders because within 48 hours of our connection, two significant events occurred: first, Databricks announced it had completed a $4 billion financing round, reaching a valuation of $134 billion; second, Flock Safety assisted in capturing the suspect involved in the murder of individuals related to Brown University and MIT. These two events vividly demonstrate the influence of a16z's portfolio companies.

Information source: Boston.com and The Wall Street Journal

But what I really want to understand is: how does a16z leverage its influence to support these companies? Does this support truly change the trajectory of the companies' development? Does the resource system that a16z invests hundreds of millions or even billions of dollars in really bring significant changes to the companies?

To believe in a16z's bet in the third phase—that is, to create substantial returns for the $15 billion new fund by expanding the market scale of tech startups and enhancing the value of portfolio companies—you may first need to believe that the answers to the above questions are affirmative.

And the answer is indeed affirmative.

Recall that Ali from Databricks once stated: "Without a16z, there would be no Databricks today." Just this one company has added $134 billion (and still growing) in value to the investable market for venture capital, bringing approximately $20 billion in net returns to a16z. Even if his statement is somewhat exaggerated, it is not difficult to argue that a16z's support for Databricks—from early sales assistance, facilitating collaboration with Microsoft, to helping build specific departments—has already covered all the investments a16z has made in platform building since its inception.

In fact, we can make a hypothesis: if a16z currently still holds about 15% of Databricks, rough calculations show that as long as a16z's contribution to Databricks' value reaches around 25%, it can cover the regular venture capital management fees it has collected since its establishment.

All the founders I interviewed mentioned a16z's consistent working model—regardless of which general partner (GP) they interacted with, this model clearly bears the shadow of the innovative talent agency CAA: they never interfere when you don't need them, allowing you to run the company independently; once you express a need, they will "mobilize everyone" to provide support.

This is also a key way a16z wins investment deals: GPs of various funds are responsible for deciding on investment targets, and when needed, they will mobilize all resources of the company—including Marc and Ben themselves—to strive for the deal.

"The ideal state for the company is 'delegated authority, shared beliefs, and collaborative problem-solving,'" David Haber told me, "Marc basically says: 'As long as you tell me this is the next Coinbase, I am willing to fly anywhere in the world. I can invite this entrepreneur to my house for dinner tonight. Act immediately, at all costs.'"

After the deal is completed, the collaboration model between GPs and founders remains the same.

"No matter the situation, their support is unconditional. a16z even tends to over-support me and the founding team; even if we have differing opinions, they never interfere too much," Ali said, "But as long as you need help, they will all get involved to ensure the problem is solved."

Of course, a16z's support for Databricks is such, and I have heard exactly the same thing from several other early-stage a16z portfolio companies.

Shane Mac, CEO and co-founder of XMTP, a company in the cryptocurrency field backed by a16z, told me via message:

"a16z has done a lot, just like most venture capital firms. But I think what’s more important is what they 'don’t do':

They never meddle; they don’t engage in short-term speculation; they never let me waste time. Every resource they introduce has changed the trajectory of our company’s development. They made me believe in myself more and made me realize that I could also build such an ambitious business, and together we can change the world.

I think that’s what they excel at: believing in me and pushing me to break through my self-imposed limits."

The founders of "Anonymous Company" (which I reported on when a16z invested at the end of 2024), Dancho Lilienthal and Jose Chayet, also had a very similar experience—even though they were interfacing with another GP (Anish Acharya) from a different team (AI Apps).

A few weeks ago, they had a Zoom call with Anish. At that time, they were anxious because their company's growth was "steadily compounding" rather than "exploding like other AI companies."

"We were worried that investors would think 'this company is growing too slowly, I don’t want to spend more time on them,'" Dancho recalled, "And Anish looked at us through the screen and said: 'Guys, unless I die or get fired, I will always support you. No matter what happens, I’m in.'"

They described this "non-intervention, support when needed" model as follows:

"It's like the ideal perfect parent—always there when you need them, taking responsibility, ensuring everything goes smoothly; when you don’t need them, they never disturb you or create chaos."

This model is both excellent and has a clear design intent.

Joe Connor, founder of Odyssey (a company focused on "school selection platforms," which has received investment from both a16z and Not Boring Capital), stated that he does not seek daily operational advice from a16z, but "whenever I need to contact anyone in the world, I just send a message to Katherine, and I can get connected."

Although a16z can help companies connect with experts in any field globally, it clearly states that it will not interfere in company operations. In a 2014 Harvard Business School (HBS) case study, Marc once said: "We are not the 'training wheels' for startups. Companies must do what they can do themselves; we will not do it for them."

a16z's goal is to empower companies with "credibility" and "influence."

For a long time, a16z has provided various services. In this regard, Alex Danco, who studies such issues in depth, told me: "What is the most important service we provide now? It’s recruitment support and sales and marketing support. Why these two? Because these two areas most need 'credibility reserves,' and a16z's core role is to be a 'credibility bank.'"

Or, as Marc said: "What you want from venture capital is influence."

Joe gave me two examples.

Not long ago, when Odyssey was still in its early development stages, it encountered a Stripe-related issue that could not be resolved through conventional channels. "a16z connected me with Patrick Collison, and the problem was solved immediately," he said. "Every time I sought help, I was never turned down. Stripe is valued at about $95 billion, while our valuation at the time was almost negligible, but we are all part of the a16z ecosystem, and everyone supports each other."

Even outside the a16z ecosystem, the name itself carries significant weight. Odyssey's clients are state governments, and these government officials might not even be able to name three venture capital firms, nor do they care about venture capital. But Joe stated, "They know a16z, they know Marc and Ben. When we had no track record and states couldn't choose us based on past experiences, a16z's endorsement gave the states confidence—making them believe we could deliver on our promises and that we had the excellent technology as advertised, because the institution that invested in Stripe and Instacart recognized us."

In October 2024, Odyssey won the operational contract for Texas's $1 billion Education Savings Account (ESA) program—this is the largest program of its kind in the United States. Now, Odyssey has earned credibility through its own strength.

This is a concrete manifestation of "empowering credibility" and proves that credibility is scalable. For the vast majority of market participants who do not closely follow Silicon Valley dynamics, building credibility requires "scale support." The more successful a16z's self-marketing is, the stronger the credibility of its portfolio companies becomes in the eyes of potential customers, partners, and employees.

"If our company did all sorts of amazing things but no one knew about it," Ben asked in the article "It's Time to Lead the Industry," "then did we really achieve anything?" Clearly, a16z's marketing targets include founders—they need to understand what help a16z can provide. But at the same time, a16z's marketing targets also include all the entities that founders may collaborate with in the future.

Marketing

For this reason, investing in building a top-notch new media team in the industry is fully justified.

Some attention is cheap and lacks novelty, while the goal of the new media team is to create actual value from that attention. The team operates a complete internal media system: creating and managing high-quality owned channels (covering platforms like X, YouTube, Instagram, and Substack), planning product launch events and timeline takeover activities (referring to concentrating on leading platform content dissemination during specific time periods), and directly deploying personnel to provide support during critical stages of portfolio company development.

"We are currently facing some PR challenges," Garrett Langley of Flock Safety told me a few weeks ago—at that time, his company had not yet assisted in solving the murder cases related to MIT and Brown University, nor had they turned around the PR situation in the short term. "While most institutions on the investor list only offered ideas, a16z took concrete action. Erik and his team got directly involved, without hesitation. They have now joined our Slack workgroup, participating in our positioning and brand document writing. Just this week, we recorded a podcast with Ben. Having a brand like a16z, which combines credibility and reputation, stand up for our business is crucial for market perception and employee confidence."

During periods of smooth company development, such as the vibrant early stages of a startup, they also provide support. Legendary computer scientist and founder of World Labs, Fei-Fei Li, stated, "Four weeks before our 'Marble' product launch, their new media team proposed an idea I had never seen before—using a 3D LED virtual stage to shoot the launch video while generating the scene environment in real-time through our own product. From movie-quality video production, behind-the-scenes documentary filming, event planning, to connecting with thought leaders in the visual effects (VFX) field, they collaborated with us throughout. The final product launch garnered widespread attention. At that time, we had not yet built our own marketing capabilities, and they helped us lay the foundation for our marketing system. This comprehensive support, extending from creative conception to company building, is simply unavailable elsewhere."

I admit I may be a bit biased, as these people are my friends and long-term partners, but they truly are the top professionals in the industry.

For a long time, Erik has been dedicated to building a new media agency, which is why I initially invited him to participate in the production of "The Miracle Era." He has always believed that venture capital firms can also have structural advantages.

I remember once when Erik and I discussed his team-building philosophy; I never imagined he could recruit someone like Alex Freaking Danco.

If "writing is a technique for conveying influence"—I firmly believe this—then having Alex Danco and the newly joined Elena Burger write for you and collaborate with you is undoubtedly a superpower that money cannot easily buy. Nowadays, every company is scrambling to hire a "Chief Storytelling Officer," while a16z continues to attract such talent and radiate their capabilities throughout the entire portfolio company ecosystem.

Additionally, I first met Erik and David Booth during the On Deck project in 2019. In the tech circle, no one understands the value of "community building" as deeply as David does. Now, with more ample resources and opportunities to connect with top talent globally, he is putting his experience into practice—committed to transforming a16z into a more efficient "priority connection" machine (referring to a positive feedback loop mechanism that attracts quality resources through resource allocation) and enabling the venture capital business to have network effects.

I realize my tone may be a bit too enthusiastic at this moment, and a16z has previously attempted to lead industry narratives through projects like "Future," which unfortunately did not pan out. But two points need to be clarified: 1) From the economic logic mentioned above, a16z should indeed attempt 100 initiatives like "Future"; 2) This platform team is the one I am most familiar with—after all, I am also engaged in related work, and I never even thought I could recruit such talent. If other teams can reach this level, I would be even more convinced that a16z is indeed building a machine with compounding advantages, which is difficult for individual companies to construct independently.

Every dollar spent on telling the stories of the company and its portfolio companies radiates value across multiple dimensions, ultimately distributing the costs across each dimension to a point that is almost negligible. Moreover, regardless of how much a16z invests, as long as these investments help them secure a quality company like Databricks, Coinbase, Applied Intuition, Deel, Cursor, or any other a16z-backed company you recognize, all investments are worthwhile.

This is the economic logic that a16z follows across all its businesses. This logic is identical to the company's approach to investing in startups—"you can only lose the money you invested, but the potential returns are almost limitless"—and it is now applied to every decision the company makes.

For a16z, building a top-tier system that most portfolio companies need (but is not the core business of these companies) is far more reasonable than allowing individual companies to build it independently—at least until the companies reach a sufficiently large scale.

Talent Recruitment

From the actual feedback, every founder I have interviewed mentioned that a16z's support is particularly crucial in two areas: talent recruitment and sales.

Since its inception, talent recruitment has been a core service of a16z. At that time, Marc and Ben recruited Shannon Callahan from Opsware; subsequently, Shannon persuaded Ben to hire Jeff Stump as the head of talent, and together they built a talent team in the early venture capital field that is considered "priceless."

"The scale and quality are completely on different levels," Ali stated when comparing a16z's talent team with those of other venture capital firms. "Other firms might just 'help out'—for example, hiring a few people to assist with recruitment; whereas a16z has a professional recruitment department, whose core responsibility is to meet recruitment goals, and their performance metrics focus on successfully securing candidates and filtering top talent for you."

Founders at different stages of development have told me that this talent team can provide support from the startup phase all the way to maturity.

Oskar Shulz, co-founder and president of Cursor, mentioned in an email: "a16z's scale allows it to provide help across multiple functional areas," with the most critical being "engineering/research recruitment and executive recruitment. Other smaller firms simply do not have the resources to provide us with a comprehensive talent pool analysis."

Here, "resources" also include general partners (GPs). In a recent conversation between a16z AI infrastructure team GP Martin Casado and Cursor CEO Michael Truell, they mentioned that Martin would use his nights and weekends to recruit talent for Cursor. "Get your board members more involved in communication until they 'wave the white flag,'" Truell joked, "Make the most of their time."

Qasar Younis, founder and CEO of Applied Intuition, valued at $15 billion, stated: "Many of our early employees, including the company president, came from a16z's recommendations. The second-in-command of the finance department also came from a16z. Several a16z employees have even joined Applied Intuition, such as Matthew Colford—who was an early member of a16z's government affairs department."

Alex Bouaziz, co-founder and CEO of Deel, mentioned that as the company scales and its weight in the a16z portfolio increases, the resources and support they can access also grow:

"Since we started working with a16z, Shannon Barbour (executive talent partner) has felt like a member of our recruitment team. We closely collaborate with her and Jeff Stump on executive recruitment—for example, when recruiting a CFO, Ben personally interviewed all the candidates, which was incredibly impressive. The CFO we were interested in (Joe Kauffman) is outstanding and has high demands, and Ben and Anish successfully persuaded him. Anish would message him, and Ben would also message him."

Today, Deel's annual recurring revenue (ARR) has surpassed $1 billion, and the board is preparing for an IPO. "a16z helped us recruit two of the three independent board members—Francis deSouza (Chief Operating Officer of Google Cloud and board member of Disney) and Todd Ford (former Chief Financial Officer of Coupa and board member of HashiCorp). They were responsible for talent sourcing, in-depth due diligence, background checks, and referrals, dedicating a significant amount of time to become our true strategic partners."

Sales Support

Whether in the early or later stages of business development, a16z's support in sales is equally important, encompassing both direct support and indirect empowerment.

Astro Mechanica is a portfolio company of a16z's "American Dynamism" sector and Not Boring Capital (I reported on this company in April 2024). Its founder and CEO, Ian Brooke, stated that both direct and indirect support are crucial for the company to expand its client base in the defense sector.

"When introducing ourselves to government partners, no other fund has the credibility and brand recognition that a16z does—especially within the Department of Defense (DoD)," he commented on the value of indirect support. Regarding direct support, "a16z ensures it builds influence within government agencies to facilitate key connections, such as helping us reach out to the U.S. Air Force Rapid Capabilities Office."

"The core of working with the government is establishing relationships with the right people and departments," he further explained. "a16z intentionally cultivates these relationships and proactively shares them with us. An executive from the Defense Innovation Unit (DIU) once told me, 'We highly value a16z's recommendations and actively ask them, "Which companies should we reach out to?"'"

Qasar's company primarily sells products to automotive manufacturers and is now gradually expanding into defense and other "American Dynamism" related industries. He believes a16z has helped the company successfully penetrate the defense sector: "Our first defense client was connected through their Executive Business Center (EBC) activities." Regardless of the industry, Applied Intuition can receive precise referrals. "As long as it's someone I want to connect with, Marc can help me reach them," Qasar said. "Whether in defense, automotive, construction, or mining, he can build the connection channels."

Of course, a16z can also provide support in software sales—this is precisely the company's core area of advantage, where network effects and scale advantages are fully realized.

Cursor's Chief Operating Officer, Jordan Topoleski, stated that a16z invested in Cursor during its Series A funding, and its sales support is specifically reflected in: "In the first year of collaboration, the platform team referred nearly 200 Chief Technology Officers (CTOs) of key target clients to us. They would hold daily stand-up meetings with us, assist us late into the night at our office, and even arrange for a team to organize strategic meetings for us. When we were expanding into financial services, they arranged 34 meetings with executives in their office within a week. They are like an extension of our sales and go-to-market (GTM) team."

Taking Databricks as another example, 50% of the company's early sales were attributed to EBC support; and the transformative collaboration with Microsoft was particularly driven by Ben's efforts.

Deel's Alex also mentioned that the company found it challenging to penetrate the enterprise market in its early days, but is now acquiring large clients and facilitating collaborations through a16z's enterprise market platform and GTM team. Currently, revenue from enterprise clients accounts for 10%-15% of the company's total revenue.

Both Alex and Garrett from Flock Safety noted that in the early stages of business development, a16z indeed adopted a "hands-off, as-needed" approach; but as the company scaled, a16z's platform team would embed within the corresponding departments of the company—this approach allows founders to maintain operational autonomy while providing tangible support for business development.

"For me, it is often difficult to clearly tell investors what help I need," Alex said. "But when there are dedicated platform personnel embedded in the team—such as aligning the recruitment and GTM teams with our internal counterparts—the results are much better than if I were to proactively state specific needs."

Garrett described a16z's support system as a "venture capital barbell model":

"With some venture capital firms, you choose a specific GP (general partner), and the firm itself becomes secondary. But I think a16z is the opposite—you choose the firm, not an individual GP. Although technically, DU (a specific GP) is our board member, I communicate with Ben, David George (who is responsible for growth investments), Alex Immerman (also part of the growth team), Erik Torenberg (responsible for communications/branding), Stump (responsible for executive recruitment), and others—I could continue listing names, but I think you get my point.

And this is just my personal connection; every member of our management team has a dedicated contact person at a16z for their respective functions. This level of support is crucial."

Deep involvement in the operational details of leading portfolio companies means that a16z can assist in various tangible and quantifiable ways, contributing to business growth on multiple levels.

But more importantly, this also means that a16z understands these companies well enough to provide both "confidence support" and "financial support" at critical moments.

Confidence Support

Qasar Younis has had a very positive experience collaborating with a16z. Marc participates directly in company affairs as a board member—this is not common; and whenever support is needed, Marc and the entire a16z team extend their help, opening up their network resources for him.

"But," he admitted while knocking on wood for good luck, "we haven't faced a real crisis yet. I believe the response of investors in a crisis is the true test of their value."

From this perspective, the evaluations of a16z by Garrett from Flock Safety and Alex from Deel are very persuasive. As mentioned earlier, the new media team embedded support during a PR crisis faced by Flock Safety; and Alex also admitted that Deel encountered similar PR challenges last year.

Source: Axios

"As an organization," Alex told me, "whenever negative media coverage arises, they stand firmly with us."

I vividly remember this. At that time, Rippling accused Deel of espionage, and almost immediately after the news broke, I saw Ben and Anish publicly supporting Deel on Twitter—I thought at the time that this action was very "bold."

Alex said, "They expressed, 'We know your character, your way of working, your background, and your ethical standards; we will support you.' They not only made public statements but also reacted quickly. In private communications, they would remind others, 'Guys, you know Alex.' When someone like Ben has all the details and has been following your specific situation for the past two or three years, the weight of that support is unparalleled."

"Other investors have also provided support," he added, "but a16z's support is clearly superior. They proactively think of ways to help me organize my response strategies, bring in the most professional people to assist, and even roll up their sleeves to solve problems. During that chaotic period, I couldn't find a more reliable partner than them."

If they cannot "stand up" for their portfolio companies, then what is the meaning of so-called "hardcore credibility"?

Later, Deel's annual recurring revenue (ARR) surpassed $1 billion; and then they raised $300 million from new investor Ribbit Capital—Ribbit Capital must have conducted thorough due diligence and ultimately reached the same conclusion as a16z. After this financing, Deel's post-money valuation reached $17.3 billion, which is $5 billion higher than the valuation during the D round financing in February 2025 (before the crisis). Of course, a16z participated in this financing, just as it has in every round of financing, including secondary transactions.

"They are extremely loyal investors," Alex stated, "whenever there are secondary equity transactions or other investors reducing their stakes, a16z will buy as much stock as possible. They bought up all the circulating Deel shares in the market because they are deeply involved in the company's operations and understand us well. Other investors in the market are not familiar with us—after all, Deel had never publicly raised funds before."

Additionally, Deel once needed funds to acquire another company. "Our Series C financing was technically not a conventional financing round," Alex recalled, "At that time, I wanted to acquire a company and urgently needed funds, so I communicated with several investors. But no other firm could do what a16z does—you just need to tell them, 'This acquisition will change the industry landscape,' and they can quickly act to inject $100 million for the acquisition."

Alex revealed that thanks to this ongoing support, a16z now holds "over 20%" of Deel's shares through multiple funds. This shareholding ratio is a result of a16z's steadfast belief and concrete strategic support.

This precisely confirms the effectiveness of its model: deeply understanding portfolio companies and closely collaborating, thus knowing these companies better than any other institution; decisively investing fully when others hesitate, while helping the company achieve a scale far beyond independent development.

After communicating with the founders, it is not difficult to see that collaborating with a16z has had a direct and substantial impact on their businesses. However, similar to a16z's layout in the policy field, its influence includes both direct effects and indirect empowerment—even founders outside the a16z portfolio can benefit from the changes it brings to the industry.

This means that another way a16z supports its portfolio companies and the broader field of tech startups is by compelling other funds to invest management fees into "helping startups succeed."

"a16z's many early advocated concepts have now become mainstream views in the venture capital industry," Qasar from Applied Intuition told me, "such as 'founder-centric,' 'equipping general partners (GPs) with technical backgrounds,' and 'building platform teams.' Looking back, firms like Benchmark, Founders Fund, KP, Sequoia, and Khosla prided themselves on 'post-investment invisibility'—they would even explicitly state, 'You may never hear from us again,' viewing this model as an advantage rather than a flaw. But now the situation has completely reversed: founders actively ask, 'What else can you provide me? After all, I can get money anywhere.'"

"This is the industry mark left by a16z."

As I wrote in early 2024 in "Venture Capital and the Free Lunch," I believe management fees are "one of the most interesting categories of capital globally," and a16z holds substantial management fees. This has also become one of the main criticisms from the outside—some believe that a16z's constant desire to raise more funds is because every penny can bring in management fee income each year, regardless of investment performance.

However, a more noteworthy perspective might be that a16z's eagerness to raise large amounts of capital is precisely to invest substantial resources in building a system that "helps companies succeed"—an investment that few other capital sources are motivated to make, yet can genuinely assist their portfolio companies and emerging technologies in winning competition.

Initially, my collaboration with a16z's cryptocurrency team made me realize this; and during the writing of this article, I became even clearer: no other institution can continuously, actively, and successfully allocate management fees in beneficial directions like a16z.

"In my view," David Haber stated, "one of a16z's early structural advantages is that Marc and Ben had already achieved financial freedom and did not need to rely on salaries for living. Therefore, they can focus on the long term, investing management fees into platform building to create a compounding competitive advantage. We still adhere to this trade-off: unlike many funds that pay high salaries and bonuses to employees, we choose to invest in the company itself, allowing advantages to compound over time."

You can invest $1 billion of LP (limited partner) funds to create a system that supports the success of all portfolio tech companies; just with Databricks alone, this investment can yield multiple returns; and the subsequent success of every company like Coinbase, Applied Intuition, Deel, Cursor (or any other a16z portfolio company you can think of) will continue to generate returns for this system.

For this reason, all major venture capital firms are now trying to build similar systems. This means that founders can receive billions of dollars in funding support, along with hundreds of savvy and well-connected professionals working for them—helping them replace rigid industry giants, reduce resource waste, cope with survival crises, bridge global distances, ensure security, and achieve all the goals that technology should accomplish for the future.

And this is the core significance of the a16z model.

The Future of Future Companies

Today, a16z has over 600 employees, and new members are joining frequently. Anyone who joins must sign the company's "Cultural Document."

Although all company owners read this document, Katherine Boyle believes, "We have not given it the attention it deserves."

"There is a line in the document," she said, "the third point: We believe in the future and are willing to bet the company on it." Katherine particularly agrees with this statement. In her view:

"Everyone in Silicon Valley misunderstands the meaning of this statement. It means we will never do anything that bets against the future. This is why we sometimes appear 'foolish' compared to other institutions that may be bearish. But our cultural document clearly states that no one can bet on the future failing.

I actually think this statement should be the first. No other institution can make such a commitment. Other institutions might issue memos saying 'a macro crisis is coming,' but 'believing in the future and betting the company on it' is precisely why Marc and Ben founded this company.

Marc and Ben are not afraid to look 'foolish,' but if anyone bets on the future failing in any field, they will definitely be fired."

Believing wholeheartedly and unreservedly in the future can be seen as charmingly naive or, on the flip side, as mere empty talk.

Years ago, before I delved into a16z, I thought this kind of statement was at least partially empty rhetoric. Aren't they just "elephant hunters" (referring to investors focused on potential unicorn companies)? They just want to win. Packaging themselves with "the future" is no different from wrapping themselves in "the American flag."

From the outside, a16z seems to be trying to build one of the largest financial institutions in the world. This impression partly stems from the fact—its managed regulatory assets have exceeded $90 billion, which is undoubtedly a significant amount to me.

When we compare a16z's fund size with large financial institutions like Apollo and Blackstone, David Haber pointed out that a16z's scale is still relatively small—Blackstone manages $1 trillion in assets, and Apollo is also approaching that scale.

In terms of compounding advantages, scale effects, incentive mechanisms, internal operations, and how to operate a global financial institution, a16z has much to learn from these giants. On the surface, the current forms of these institutions bear similarities to what a16z hopes to become.

But I believe there is an essential difference between the two.

Apollo and Blackstone do not actually "believe" in anything—they are financial institutions aimed at creating financial returns. There is nothing wrong with this: the economy needs the services they provide, and they excel in this regard.

But a16z is "faith-driven." It is building a company that creates a better future through technology, with finance merely being a means to achieve that goal. Like all legitimate tech companies, it continuously compounds and optimizes during its growth. It has the ability to mobilize more and more resources and influence to strive for the future it firmly believes in—even if the specific shape of that future is currently unclear.

And it is the entrepreneurs' responsibility to depict the details of the future. They provide specific directions, while a16z provides the belief support.

As the call was about to end, I asked Ali: after more than a decade of collaboration with a16z, what does he think is the biggest misunderstanding the outside world has about this company? He hardly hesitated.

"Ben and Marc are true believers," he said, "If you can't see that from reading their blogs, I can say that their faith in technology is even to the point of 'obsession.' They genuinely believe that technology can fundamentally change the world, and in every startup they participate in, they view the future from this perspective—seeing the maximum potential these companies can achieve."

Looking back at a16z's development history, it is essentially a "history of public skepticism": everyone thought Marc and Ben were doing venture capital in a "foolish way"; after about a decade of waiting, they realized the results showed they were right; then everyone began to imitate them, but missed all the compounding advantages a16z accumulated during its competitors' "decade of skepticism."

And this cycle continues to repeat.

When the fund size was only $300 million or even $1 billion, it was not surprising that this model could succeed, but it certainly wouldn't work at such a large scale.

It was not surprising that it succeeded in the early days of social networks, but it certainly wouldn't work in cryptocurrency, "American Dynamism," or artificial intelligence.

However, at least so far, in the vast majority of cases, a16z's model has succeeded.

When a16z chooses to believe in something, its conviction is more steadfast and enduring than anyone else's. It has the resources to remain patient and understands that this unwavering investment will eventually yield returns—this is something it also has enough resources to validate.

Regardless of whether you think their judgment this time is correct, whether you agree with their philosophy, or whether you like their way of doing things, Marc, Ben, and the team they have built at a16z genuinely believe they are working for the future, and in the process, they are also working for all of us.

Although it may sound somewhat counterintuitive, among all the venture capital models I have seen, their approach is a model of "humility": if a group of extremely intelligent people are passionate about something, that thing is likely worth investing passion in. Following their direction, even raising an entire fund to pursue them before others realize "there is an opportunity here."

You may not agree with this model, and you should even question it! There is no single correct path in venture capital, but you must have something you firmly believe in.

However, you might not want to make judgments about a16z without understanding the "rules of the game" it is participating in or the "stakes" it is betting on.

One of a16z's core bets is: technology will occupy an increasingly large share of the economy, and when this trend occurs, the scale of emerging companies will be 10 times or even 100 times that of the traditional companies they replace. This is a fundamental judgment that any bold venture capital fund can make.

But a16z's other bet is more unique: it believes it can accelerate the arrival of such a future through policy advocacy, platform building, and resource integration, making the future's form grander and more complete; while in the process, helping its portfolio companies win competition. Based on my conversations with a16z's founders, this bet seems to be starting to pay off— and it is a bet with extremely asymmetric returns and risks: every success can accumulate more capabilities for the company; the entire system grows like a snowball, achieving compounding growth.

In my view, combining the first two bets, one of the most interesting bets under a16z is precisely the most "obvious" one—one can understand it simply by changing perspectives:

Venture capital firms can also become better as they scale, just like almost all other types of companies in the world.

If this judgment is correct (I believe it is), then a16z's most glorious days are still ahead.

This is undoubtedly a good thing, and I admire this group of people.

But the truly magical aspect of a16z's "product" is that as it scales, it is indeed continuously optimizing—when it accumulates more resources, skills, networks, and influence, every emerging tech company that collaborates with it, and even many that do not, can leverage its scale to achieve growth.

If a16z succeeds, the world will present a picture where emerging tech companies can compete on a more equal footing with industry giants, ultimately allowing "the best products to win."

If a16z succeeds, the world will present a picture where, from energy to artificial intelligence, from cryptocurrency to autonomous vehicles—every layer of the tech stack will see emerging technologies integrate into the economy more quickly and profoundly, generating a greater impact.

If you, like me, believe that "emerging technologies can provide humanity with tools to make the world better," then the world of a16z's success will be a world that arrives sooner and is more prosperous.

a16z is working for the future. If its judgments are completely correct, then the best days for all of us are still ahead.

Appendix: Important Disclosure Statement Related to Performance

This appendix is for informational purposes only and does not constitute an offer to purchase any interests in funds managed by a16z Capital Management LLC (hereinafter referred to as "ACM"). The information in this document should not be construed as legal, tax, investment, or accounting advice and should not be relied upon in any form. Investing in any fund managed by ACM involves high risks, including the risk of losing the entire investment amount.

Unless otherwise stated, all data is as of September 30, 2025. All performance data, valuations, and fund summaries contained in this document are unaudited and may change. Past performance does not represent future results, and there is no guarantee that any fund or investment managed by ACM will achieve similar performance in the future. Furthermore, due to significant differences in market conditions, investment strategies, and other factors, the performance of ACM's future funds may not be comparable to the performance of existing funds. No individual investor or fund has achieved the investment performance shown in this document.

The gross and net performance data provided in this document do not represent and should not replace the actual performance of the various funds managed by ACM. The performance data of some funds reflects the use of warehouse credit, capital calls, or similar credit lines; if calculated from the activation of credit lines rather than initial capital contributions, the performance data would differ and may be lower. The performance data includes the performance of the "main fund" described in this document and all "aggregate funds" (i.e., vehicles that pool funds from multiple independent investors, primarily used to invest in the main fund, including funds that do not charge management fees or performance shares); if these aggregate funds are excluded, the performance data would be lower. Fund performance does not include the performance of ACM's Bio and Health Strategy Fund, Cultural Leadership Fund, single investor vehicles, or special purpose/single investment vehicles (SPVs), unless specifically noted.

Performance data includes reinvested capital; if the reinvestment portion is excluded, the performance data would differ. Performance data reflects fees voluntarily waived by general partners (GPs); if such fee waivers are excluded, the performance data would be lower. The investments and portfolio companies described in this document do not represent the entire portfolio of funds managed by ACM, and there is no guarantee that the described investments will be profitable, nor that future investments will have similar characteristics or achieve similar results. Performance data does not include all investment funds managed by ACM. For a complete list of all investment projects managed by ACM, please visit a16z.com/portfolio.

Gross/Net Total Value to Paid-In Capital Multiple (TVPI): Refers to (1) the cumulative distribution amount paid to all limited partners (LPs) of the fund, compared to (2) the sum of the fair value of all limited partner capital accounts at the end of the period, relative to the cumulative contributions of all limited partners to the fund. Net TVPI has deducted the impact of management fees, fund expenses, and performance shares.

Net Paid-In Capital Distribution Multiple (DPI): Refers to the cumulative distribution amount paid by ACM funds to limited partners, relative to the cumulative contributions of all limited partners to the fund.

Fund-Level Gross Performance Metrics: Include cash, other assets, and liabilities held by the fund. Gross returns have added back management fees, performance shares, and fund expenses.

[1] An analyst from a competitor estimated this ratio to be 7.5%, which is close to actual data. a16z's average ownership stake in its portfolio companies is 8%.

[2] Pitchbook data shows that Founders Fund completed fundraising for its Growth III fund ($4.6 billion) and IX fund ($972 million) in 2025.

[3] According to Pitchbook data, the total fundraising scale of U.S. venture capital funds in 2025 was $82 billion, which includes the $15 billion raised by a16z.

[4] Source: Valuation data from Pitchbook, as of September 14, 2025.

[5] Source: Ilya Strebulaev, Stanford Graduate School of Business Venture Capital Program, April 2025.

[6] Source: Based on Pitchbook data available as of July 31, 2025, excluding AI unicorns in mainland China and Hong Kong.

[7] Past performance does not represent future results. For important disclosures and information regarding fund returns, please refer to the appendix.

[8] Insight Partners supporters please note: The institution raised its XII fund ($20 billion) in 2022, which includes an acquisition fund.

[9] For more information on "Late Stage Venture (LSV)," refer to David George's recent engaging conversation with Patrick O'Shaughnessy and Harry Stebbings.

[10] a16z's tenth AI infrastructure fund raised $1.7 billion, and the calculation example in this article uses $1.6 billion (for ease of calculation).

[11] "The core logic is simple: if large funds are confident they can benefit from the growth of the early-stage tech ecosystem, then they have reason to invest in various 'ecosystem development' initiatives. If you believe technology is beneficial (which I firmly believe), then the management fees used to strengthen the tech ecosystem are like a 'charitable investment that can generate sustainable returns.'

a16z recently announced that it would 'support candidates who align with our technological vision and values.' Additionally, it has formed a world-class cryptocurrency research team, whose core belief is 'to create an industry research lab that bridges academic theory and industry practice.' Since then, the team has developed and open-sourced several practical products based on research results, including Lasso and Jolt.

For institutions with a long-term vision, there is an economic incentive to support initiatives with long return cycles and high uncertainty—support for such initiatives has gradually disappeared in today's increasingly rigid and slow-moving government and academia. For example, I would not be surprised if more venture-backed basic and applied research labs emerge in the future."

[12] It should be clarified that the compensation for the a16z team is quite generous, and there is no need to "feel sorry" for them. The key point is that a16z has chosen not to concentrate large amounts of money in the hands of a few (allowing them to earn "enough to buy a galaxy"), but rather to provide generous compensation to more employees, thereby building a compounding competitive advantage.

Recommended Reading:

RootData 2025 Web3 Industry Annual Report

Xiao Hong: From Small Town Youth to Manus CEO, a Long-Termist Bitcoin Believer

The Power Shift of Binance: The Dilemma of a 300 Million User Empire

When Twitter is Infiltrated by Solana's Forces, Starting with Support for Reading Asset Prices?

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