Andreessen Horowitz Launches Private Equity Fund

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OpenAI Enterprise AI M&A Tear - 1. OpenAI purchased enterprise-focused, video collaboration startup Multi. | 2. Last week it also acquired database tech firm Rockset to boost its enterprise AI services.

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THE HOTTEST THING IN TECH
A16z Courts Middle Eastern Wealth Funds

Andreessen Horowitz (aka a16z) plans to raise its first private equity fund, the a16z Perennial Private Equity Fund. This is another sign of the leading VC firm’s bold push into new businesses. It’s also a bid to open up capital flows from new markets, notably Middle Eastern Sovereign Wealth Funds.

The information reported in May on the growing traction of a trend of sovereign wealth funds backing U.S. Private Equity and Venture Capital firms with the expectation of attracting investments back to the region to accelerate the shift of the region’s economic base from oil to technology. This ‘roundtripping’ approach also creates large customers for the startups. A16z is uniquely well poised to best take advantage of this trend by tapping into the larger flows available to PE firms and its D.C. connections.

A16z has ~$42B in AUM and is primarily focused on technological futurism. Its recent bets skew heavily towards AI with at least 100 AI-related startups in its portfolio including May’s massive xAI round. Other areas include bio + healthcare, consumer, crypto, enterprise, fintech, games, infrastructure, defense, and ‘American dynamism’.

A16z is a dealmaking machine, with 108 deals so far in 2024 and 215 in 2023, making them the most active US VC. It also recently expanded into DC to focus on ‘public investing strategy’ and lobbying policymakers for tech and finance focusing on supporting industries like AI and Web3.

Why it Matters

The move into buyouts is a notable shift for the primarily early-stage VC firm. Based on its name, the new fund may follow a16z’s wealth management arm, Perennial in catering to family offices and investors it already has relationships with. It’s an unusual approach to run both a family office and VC firm in unison—though Iconiq Capital has done so for a decade.

A16z’s approach seems to be to deploy LP capital as fast as possible because there's so much coming in. Branching into PE is a way to increase deal size and deploy capeven faster under a name already trusted in tech, government, and foreign fundraising circles.

Show me the money

A16z’s biggest limited partner is Calpers, a California pension plan, with $0.5 billion in assets. The second is a Canadian pension fund with $300 million. However, a16z has been looking further afield with reported talks with Saudi Arabia's $925 billion sovereign wealth fund PIF to partner on a $40 billion fund to invest in AI. It’s likely this deal, and others like it, are behind A16z's move to unlock PE flows in anticipation of a deluge of money from the wealthy region into AI and other cutting-edge technologies.

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DEALS WE’RE WATCHING
Closed Deals:

AI Agent Knowledge Workers - New York stealth AI agent tech startup Emergence raised $97.2M from Learn Capital plus credit lines of $100M+.

Autonomous Warehouses - MA. AI software/robotics startup Vecna Robotics raised a $100M Series C from Tiger Global, Proficio, & IMPULSE.

Deals to Watch:

Webtoon Entertainment - An LA online comics platform aims to raise ~$315M at $2.67B at IPO. It connects 24M creators with nearly 170M MAUs in 150+ countries as at March. It lost $145M on $1.28B revenue in 2023.