Original ｜ Odaily Planet Daily (@OdailyChina)
Author | Golem (@web3_golem)
This year, the top VC a16z crypto, the only one willing to stick it out and fight through crypto, has also announced surrender.
On October 23, Chris Dixon, co-founder and head of crypto at a16z, announced that a16z Crypto will be renamed a16z Frontier, expanding its investment scope from crypto startups to a broader range of frontier technologies. The new fund will focus primarily on AI and the new products and markets it enables, including autonomous machines, hybrid software-hardware startups, and novel networks connecting humans with agents.
In May of this year, a16z crypto announced the closing of its fifth crypto-focused fund, raising $2.2 billion. Amid this crypto winter, the scale of this fund provided some confidence to the crypto industry—but just five months later, a16z crypto had undergone a 180-degree shift in its stance.
Although Chris Dixon stated that this shift in fund focus is merely an expansion, and that a16z Frontier will continue investing in cryptocurrency and related companies while advocating for sensible crypto regulation, the majority of his long article describes how we are in the midst of a major technological wave centered on AI and its potential investment opportunities, with only a brief mention that “blockchain will also play an important role in this transformation.”
a16z may believe it is no longer necessary to establish dedicated funds for native crypto projects; this cycle, blockchain is serving AI, which is why the "crypto" label has been removed—native crypto funds have become a thing of the past.
Crypto-native has long been lacking in innovation.
a16z crypto's shift also aligns with the characteristics of this cycle, as the dominant narratives in this crypto cycle are RWA, stock tokenization, and payments—even sectors like Perp DEX and prediction markets are integrating with traditional finance and real-world assets. In reality, there are no longer any purely innovative native crypto projects; in other words, native crypto has entered a phase of innovation depletion.
Even as a top-tier VC that serves as an industry bellwether, a16z crypto has been unable to reverse this trend. Since the closure of its fifth crypto fund in May, public records show that a16z crypto has only invested in two crypto projects in June (Canton Network and Ornn), and has made no further public investments since.
Canton Network is a privacy-focused L1 for institutional finance, with a16z crypto leading its $355 million funding round; Ornn, however, is not a crypto project but an AI initiative focused on building a GPU computing power market and price index, with a16z crypto leading its $33 million seed round.
Given a16z crypto’s standing in the industry, virtually any crypto project it wants to invest in typically faces no obstacles. Yet, even so, a16z crypto’s fifth crypto fund invested in only one purely crypto-native startup. This highlights just how difficult it is for VCs to find worthy crypto-native startups at this stage.
a16z is a VC firm dedicated to investing in "narratives." In 2011, Marc Andreessen popularized the phrase "software is eating the world," sparking a wave of investment in internet companies; in 2014, Marc Andreessen published a renowned article in The New York Times titled "Why Bitcoin Matters," in which he positioned Bitcoin as an innovation as significant as the personal computer in 1975 and the internet in 1993, prompting many traditional venture capitalists at the time to reconsider the crypto industry.
Now, for a16z, it doesn’t matter whether Crypto has truly changed the world—what matters more is that Crypto’s narrative value is steadily declining. Chris Dixon expressed this more subtly, saying, “When we first started investing in Crypto, it was a self-contained world. But as blockchain has been widely adopted, the boundaries have become blurred. Wall Street and fintech companies now frequently launch blockchain-based products, but they are not crypto-native companies.”
Web3, once hailed as the third generation of the internet, has been overshadowed by traditional finance and the new wave of AI technology.
Where can TGE be compared to IPO?
a16z Crypto is not the first VC to move beyond crypto-native investments; Paradigm announced earlier this year, when raising its new fund, that it would expand its focus to AI, robotics, and other frontier technologies. In fact, this trend emerged as early as 2025.
But there’s another practical reason VCs are stepping back from focusing on native crypto projects: the differences in exit pathways. In today’s market environment, exit channels for native crypto projects are extremely limited, making it difficult for VCs to build crypto-native projects with $10 billion FDVs. Meanwhile, crypto projects that have achieved PMF are less inclined to expand their operations for an IPO or TGE, since their revenues can already sustain themselves.
Therefore, in the coming years, VCs seeking “big wins” in crypto should look primarily to traditional financial firms or AI projects, rather than crypto-native projects.
On one hand, the potential market size of crypto-native projects with main businesses such as crypto trading and DeFi is still too small, as all products are essentially designed for the same user base, leaving limited growth potential; on the other hand, AI or fintech companies can conduct IPOs in traditional financial markets at scales of tens of billions of dollars, whereas today’s TGEs in the crypto space are limited to hundreds of millions to a few billion dollars.
Crypto hasn't lost its value; it's simply being increasingly viewed as a utility rather than a product, and no VC would be willing to limit themselves to such a narrow scope.