Exclusive-Andreessen Horowitz seeks to raise $20 billion megafund amid global interest in US AI startups

By Krystal Hu, Anna Tong and Kenrick Cai

SAN FRANCISCO - Venture capital firm Andreessen Horowitz is seeking to raise about $20 billion in what will be the largest fund in its history, to capitalize on global investors' interest in backing U.S. artificial intelligence companies, sources told Reuters. 

The tech investment firm, known informally as a16z, has told limited partners that the fund will be dedicated to growth-stage investments in AI companies and draw upon global investors keen on investing in American companies, the sources said. The record fundraising and the goal of capitalizing on foreign investment interest in the U.S. tech industry come against the backdrop of a sweeping tariff plan by President Donald Trump to urge companies to manufacture goods in the U.S.

To raise such a large amount of capital, a16z has been pitching it around the world. International LPs see the fund as a way to invest their money more easily into American AI companies without restrictions, one of the sources said.

Andreessen Horowitz did not reply to requests for comment.

A16z's founders, venture capitalists Marc Andreessen and Ben Horowitz, announced last year they would support Trump, breaking with their traditional support for Democratic candidates, a sentiment shared by other prominent Silicon Valley figures such as Elon Musk.

Even by the standards of a firm known for raising some of Silicon Valley's largest investment vehicles, the new fund would represent a colossal step up in scale. It would test LPs' interest in venture capital amid global economic turmoil and continue the debate over how scalable this asset class is while maintaining appealing returns.

If successfully raised, the new megafund would be surpassed only by SoftBank's two Vision funds, a massive experiment by deploying unprecedented amounts of capital into the tech sector, which has yielded mixed results. SoftBank Vision Fund 1, launched in 2017, was a record-breaking $100 billion fund, while its successor, Vision Fund 2, manages about $56 billion from SoftBank's balance sheet. Another Silicon Valley venture capital firm, Sequoia Capital, has over $56 billion in assets under management across multiple funds, with its evergreen fund growing to $19.6 billion this year, according to filings. 

A16z's largest fund to date is a $5 billion growth-stage fund it raised as part of a $9 billion fundraise it announced in early 2022. It similarly asked LPs to commit capital into a grab bag of funds, each focused on a different sector or stage of startup maturity, to secure a $7.2 billion haul in 2024, $3.75 billion for a growth fund. 

The new fund, in its early stage, could take several months to close. Some LPs are drawn to the performance of its previous large funds, including one dedicated to cryptocurrency investments, as well as a16z's close ties with the Trump administration, one source said.

A sizable chunk of the capital would be set aside for follow-on investments into AI companies in the firm's portfolio, one source told Reuters. A16z was an early backer in some of today's hottest AI companies including Databricks and Musk's xAI, and has continued to participate in their multibillion-dollar growth-stage fundraising rounds.

The firm is asking LPs to back a single vehicle instead of several across different sectors, underscoring both venture capitalists' obsession with artificial intelligence, and the massive capital demands of companies — in particular among those building large language models that require major amounts of computing power and data.

A16z has already been aggressive in backing numerous companies in the field, participating billion-dollar funding rounds as a lead investor in AI model developer startups including xAI, Safe Superintelligence and France-based Mistral. It has also purchased shares of OpenAI through a tender offer in the secondary transaction market.

Founded in 2009, a16z announced itself with a loud attitude and ambitions to disrupt the venture capital industry by going bigger. It raised funds larger than the industry norm and outbid traditional blue-chip investors to win stakes in promising startups, further sweetening the deal by hiring a legion of staff to provide support for those companies.

 The first $300 million fund was considered an enormous debut fund at the time. A16z now manages $45 billion of assets under management, according to its website. It became a registered investment advisor in 2019, gaining more flexibility in investment style beyond the traditional VC. The firm runs several sector-specific funds that invest in categories such as biotechnology, cryptocurrency and defense tech.

For AI companies, it recently put together a cluster of thousands of Nvidia's GPUs that it advertised for rent to startups in its investment portfolio that might otherwise have difficulty securing access to the chips.

(Reporting by Kenrick Cai and Anna Tong in San Francisco and Krystal Hu in New York; Editing by Kenneth Li and Matthew Lewis)