Andreessen Horowitz raises $7.2 billion, a sign that tech startup market may be bouncing back
Marc Andreessen and Ben Horowitz
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Andreessen Horowitz said Tuesday that it raised $7.2 billion across five different funds, a sign of optimism in the tech startup world, which has seen a dearth of significant exits over the past two years.
“This marks an important milestone for us,” Ben Horowitz, who co-founded the firm with Marc Andreessen in 2009, wrote in a blog post.
The biggest chunk of new funding is in Andreessen Horowitz’s growth fund, which reeled in $3.75 billion. That money gets invested in later-stage companies that are viewed as closer to going public, or capital-intensive businesses that require big checks.
Horowitz said in the post that $1.25 billion will be dedicated to infrastructure, which includes artificial intelligence investments, while $1 billion will go to app investments, $600 million to games and another $600 million to what the firm calls American Dynamism, or “founders and companies that support the national interest.” That includes aerospace, defense, education and housing.
The firm had initially aimed to raise $6.9 billion from investors for a new set of funds, including two with an AI focus, Bloomberg previously reported. AI investing has been red hot in Silicon Valley and beyond, while the broader market has been in a downturn.
Since 2021, when tech IPOs and startup investing surged to a record, venture investors have closed their wallets. Soaring inflation and rising interest rates in 2022 pushed investors out of risky assets and forced cash-burning startups to dramatically cut costs. Even with the stock market recovering, venture deals have remained depressed.
Deal volume for U.S. venture investments in the first quarter sank to its lowest level since 2017, according to data published earlier this month by PitchBook. The story was similar across the globe, with worldwide volume reaching its lowest since 2016 and total deal value falling to a level not seen since 2019.
Meanwhile, there have been very few tech IPOs since the end of 2021. Reddit and Astera Labs went public in the first quarter, the first venture-backed tech companies to debut since September. They accounted for 73.4% of total exit value in the U.S. in the period, according to PitchBook.
Horowitz made no reference to the market slowdown in his post. Nor did he suggest that any new funding will be dedicated to cryptocurrencies, an area where Andreessen Horowitz was particularly bullish during the crypto craze that lifted bitcoin to a record in 2021. The firm raised a $4.5 billion crypto fund in 2022, bringing its total amount raised for crypto and blockchain investments to $7.6 billion.
Andreessen Horowitz remains on track to raise more money for its crypto fund and a separate biotechnology fund, a person familiar with the matter told Bloomberg. The firm didn’t immediately respond to a request for comment.
One of Andreessen Horowitz’s more notable bets of the past couple years involved WeWork’s controversial co-founder Adam Neumann and his new startup called Flow. Andreessen Horowitz wrote a $350 million check to the company, which was just getting started and has yet to make inroads in the residential real estate market.
Andreessen Horowitz said in a blog post at the time that Neumann’s efforts to redesign the office experience at WeWork are “often under appreciated” and that the firm loves “seeing repeat-founders build on past successes by growing from lessons learned.”
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Chinese bargain retailer Temu changed its business model in the U.S. as the Trump administration’s new rules on low-value shipments took effect Friday.
In recent days, Temu has abruptly shifted its website and app to only display listings for products shipped from U.S.-based warehouses. Items shipped directly from China, which previously blanketed the site, are now labeled as out of stock.
Temu made a name for itself in the U.S. as a destination for ultra-discounted items shipped direct from China, such as $5 sneakers and $1.50 garlic presses. It’s been able to keep prices low because of the so-called de minimis rule, which has allowed items worth $800 or less to enter the country duty-free since 2016.
The loophole expired Friday at 12:01 a.m. EDT as a result of an executive order signed by President Donald Trump in April. Trump briefly suspended the de minimis rule in February before reinstating the provision days later as customs officials struggled to process and collect tariffs on a mountain of low-value packages.
The end of de minimis, as well as Trump’s new 145% tariffs on China, has forced Temu to raise prices, suspend its aggressive online advertising push and now alter the selection of goods available to American shoppers to circumvent higher levies.
A Temu spokesperson confirmed to CNBC that all sales in the U.S. are now handled by local sellers and said they are fulfilled “from within the country.” Temu said pricing for U.S. shoppers “remains unchanged.”
“Temu has been actively recruiting U.S. sellers to join the platform,” the spokesperson said. “The move is designed to help local merchants reach more customers and grow their businesses.”
Before the change, shoppers who attempted to purchase Temu products shipped from China were confronted with “import charges” of between 130% and 150%. The fees often cost more than the individual item and more than doubled the price of many orders.
Temu advertises that local products have “no import charges” and “no extra charges upon delivery.”
The company, which is owned by Chinese e-commerce giant PDD Holdings, has gradually built up its inventory in the U.S. over the past year in anticipation of escalating trade tensions and the removal of de minimis.
Shein, which has also benefited from the loophole, moved to raise prices last week. The fast-fashion retailer added a banner at checkout that says, “Tariffs are included in the price you pay. You’ll never have to pay extra at delivery.”
Many third-party sellers on Amazon rely on Chinese manufacturers to source or assemble their products. The company’s Temu competitor, called Amazon Haul, has relied on de minimis to ship products priced at $20 or less directly from China to the U.S.
Amazon said Tuesday following a dustup with the White House that had it considered showing tariff-related costs on Haul products ahead of the de minimis cutoff but that it has since scrapped those plans.
Prior to Trump’s second term in office, the Biden administration had also looked to curtail the provision. Critics of the de minimis provision argue that it harms American businesses and that it facilitates shipments of fentanyl and other illicit substances because, they say, the packages are less likely to be inspected by customs agents.
— CNBC’s Gabrielle Fonrouge contributed to this report.
WATCH: Trump tariffs mean higher prices, big losses for Amazon sellers
Jeff Bezos, founder and executive chairman of Amazon and owner of The Washington Post, takes the stage during The New York Times’ annual DealBook Summit, at Jazz at Lincoln Center in New York City, Dec. 4, 2024.
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Amazon founder Jeff Bezos plans to sell up to 25 million shares in the company over the next year, according to a financial filing on Friday.
Bezos, who stepped down as CEO in 2021 but remains Amazon’s top shareholder, is selling the shares as part of a trading plan adopted on March 4, the filing states. The stake would be worth about $4.8 billion at the current price.
The disclosure follows Amazon’s first-quarter earnings report late Thursday. While profit and revenue topped estimates, the company’s forecast for operating income in the current quarter came in below Wall Street’s expectations.
The results show that Amazon is bracing for uncertainty related to President Donald Trump’s sweeping new tariffs. The company landed in the crosshairs of the White House this week over a report that Amazon planned to show shoppers the cost of the tariffs. Trump personally called Bezos to complain, and Amazon clarified that no such change was coming.
Bezos previously offloaded about $13.5 billion worth of Amazon shares last year, marking his first sale of company stock since 2021.
Since handing over the Amazon CEO role to Andy Jassy, Bezos has spent more of his time on his space exploration company, Blue Origin, and his $10 billion climate and biodiversity fund. He’s used Amazon share sales to help fund Blue Origin, as well as the Day One Fund, which he launched in September 2018 to provide education in low-income communities and combat homelessness.
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