University of Kwazulu-Natal

What S Next For Ai Andreessen Horowitz Founders Share Their Thoughts

Bonisiwe Shabane
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what s next for ai andreessen horowitz founders share their thoughts

Andreessen Horowitz just announced the firm has raised a little more than $15 billion in new funding. The haul represents over 18% of all venture capital dollars allocated in the United States in 2025, according to firm co-founder Ben Horowitz, but even more jaw-dropping is that it brings the organization to... Which is fitting, since a16z appears to be very friendly with actual sovereign wealth funds, including at least one from Saudi Arabia. The firm, which employs many hundreds of people across five offices — three in California, plus New York and Washington, D.C. — has become a globe-spanning operation with employees on six continents. In December, it opened its first Asia office in Seoul for its crypto practice.

That newly committed capital breaks down across five funds: $6.75 billion for growth investments, $1.7 billion each for apps and infrastructure, $1.176 billion for “American Dynamism” (more on that shortly), $700 million for biotech... It’s the kind of money that makes you wonder where it all comes from and, more importantly, where it all goes. The “where it comes from” question is one the firm has historically declined to answer. When we asked a16z this week about its limited partners and its distributed-to-paid-in capital ratio — the DPI, or how much actual cash the firm has returned to investors over its 16-year history —... What we do know is that CalPERS invested $400 million in 2023, marking the first time in a16z’s history it took money from a major California pension fund, probably because institutions with transparency requirements... We also know that Sanabil Investments, the venture arm of Saudi Arabia’s Public Investment Fund, lists Andreessen Horowitz among its portfolio holdings.

The Saudi connection isn’t subtle. Back in 2023, Horowitz and Marc Andreessen appeared onstage with WeWork co-founder Adam Neumann to discuss their $350 million investment in his then-new residential real estate venture, Flow. The venue was a conference backed by one of Saudi Arabia’s largest sovereign funds. Horowitz praised Saudi Arabia as a “startup country,” adding that “Saudi has a founder; you don’t call him a founder, you call him his royal highness.” Good morning, tech reporter Beatrice Nolan here, filling in for Allie Garfinkle. Fortune just wrapped up its Global Forum in Riyadh, Saudi Arabia, which hosted business and finance leaders to discuss a range of business topics, including—unsurprisingly—the future of artificial intelligence.

Speakers included major names such as Qualcomm’s Cristiano Amon, Bridgewater Associates’ Ray Dalio, and Citi’s Jane Fraser, with almost every conversation managing to work some aspect of how AI is reshaping industries. What caught my eye was Andreessen Horowitz’s partner Anjney Midha sharing his perspective on where, amid an explosion of AI startups and simmering fears of a potential bubble, the next wave of investment opportunity... Midha said the new “golden age” of investment opportunities would come in an “explosion of new frontier teams.” “It was very popular two or three years ago to say there’s only going to be three or four labs and teams that are going to do any real training…and startups will be left... But reasoning models have changed the game, Midha said, referring to the new generation of AI systems designed to “reason” problems step by step, mimicking logic and reflection rather than predicting the next word... These models can evaluate their own outputs better, break complex tasks into sub-tasks, and learn from feedback, potentially bringing AI closer to complex, real-world problem-solving.

Despite continuing to bet big on A.I. startups and chip programs, the founders of the venture capital firm Andreessen Horowitz say they’ve noticed a drop off in A.I. model capability improvements in recent years. Two years ago, OpenAI’s GPT-3.5 model was “way ahead of everybody else’s,” said Marc Andreessen, who co-founded Andreessen Horowitz alongside Ben Horowitz in 2009, on a podcast released yesterday (Nov. 5). “Sitting here today, there’s six that are on par with that.

They’re sort of hitting the same ceiling on capabilities,” he added. By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. That’s not to say the investment firm doesn’t have faith in the new technology. One of the most aggressive investors in the A.I. space, Andreessen Horowitz earlier this year earmarked $2.25 billion in funding for A.I.-focused applications and infrastructure and has led investments in notable companies including Mistral AI, a French startup founded by former DeepMind and...

to enhance air travel. Despite their embrace of the new technology, Andreessen and Horowitz concede there are growth limitations. In the case of OpenAI’s models, the difference in capability growth between its GPT-2.0, GPT-3 and GPT-3.5 models compared to the difference between GPT-3.5 and GPT-4 show that “we’ve really slowed down in terms... One of the primary challenges for A.I. developers has been a global shortage of graphics processing units (GPUs), the chips that power A.I. models.

OpenAI CEO Sam Altman last week cited needs to allocate compute as causing the company to “face a lot of limitations and hard decisions” about what projects they focus on. Nvidia, the leading GPU maker, has previously described the shortage as making clients “tense” and “emotional.” What happens when one of Silicon Valley’s most influential venture capital firms decides to go all in on AI? Andreessen Horowitz (a16z), known for early bets on companies like Facebook, Coinbase, and OpenAI, is reportedly raising a colossal $20 billion fund exclusively for artificial intelligence. That’s not a typo—twenty billion dollars for one sector, in one country, from one fund. Let’s unpack what this means—not just for tech investors, but for the future of AI, global capital flows, and the reshaping of America’s innovation narrative.

Focus: Growth-stage AI companies in the United States Timing: Months after a16z raised $7.2B across various funds In early 2025, Andreessen Horowitz began quietly circulating fundraising documents for what would become the largest venture capital fund in the firm's history: a $20 billion vehicle focused exclusively on American artificial intelligence companies. The fund, if successfully raised, would dwarf the firm's previous record of $9 billion raised in early 2022. It would position Andreessen Horowitz—known colloquially as a16z—as the single most aggressive institutional investor in the AI revolution. The fundraising effort came from both co-founders, but Ben Horowitz's operational fingerprints were everywhere.

Unlike his partner Marc Andreessen, whose public persona centered on techno-optimism and cultural commentary, Horowitz focused on the mechanics: portfolio construction, founder support, and the brutal economics of venture capital during technological transitions. The $20 billion AI fund represented Horowitz's conviction that infrastructure—not just applications—would capture the majority of value in AI's next decade. The fund's strategic allocation revealed a16z's full-stack approach. According to multiple reports, approximately $6 billion would target growth-stage companies with proven traction. Another $1.5 billion would fund AI infrastructure—chips, compute platforms, data systems, and developer tools. A separate $1.5 billion tranche would back AI applications across healthcare, legal, coding, and creative verticals.

An additional $1+ billion would support "American Dynamism" investments in defense, manufacturing, and national security applications. By November 2025, Andreessen Horowitz had already deployed more than $10 billion across the AI value chain, making it the most active major venture capital firm in the sector. The portfolio spanned foundation models (OpenAI, Anthropic, Mistral AI, xAI), infrastructure providers (Databricks, Groq, Cerebras), developer tools (LangChain, Replit), and application layer companies (Cursor, Harvey AI, Ambience Healthcare, Abridge, ElevenLabs). The firm ranked first among venture capital firms globally with $46 billion in assets under management as of July 2025. But the numbers only told part of the story. Andreessen Horowitz's AI dominance reflected a partnership that had survived for sixteen years—an unusually long tenure in an industry known for spectacular blowups between co-founders.

Marc Andreessen provided the vision, the public platform, and the technical credibility from his Netscape and Mosaic pedigree. Ben Horowitz brought operational experience from eight brutal years building and nearly destroying Opsware, the enterprise software company that taught him everything he would later codify in "The Hard Thing About Hard Things." The current discourse surrounding artificial intelligence often fixates on its limitations, questioning its capacity for true invention or creative genius. However, as Marc Andreessen provocatively posited during a recent a16z Runtime conference, perhaps the more salient question is: “My answer to both of those is, well, can people do those things? And… I’ve only met a few… Most people never do.” This fundamental reframing of intelligence and creativity, central to the closing keynote address featuring Andreessen and Ben Horowitz, reshapes the entire conversation around AI’s... General Partner Erik Torenberg moderated the discussion, which delved into LLM capabilities, the nature of innovation, market dynamics, and the geopolitical implications of AI.

Andreessen’s argument posits that much of what we laud as human intelligence and creativity is, in essence, sophisticated pattern recognition and recombination – a process AI excels at. He suggests that genuine, unprecedented conceptual breakthroughs are exceedingly rare, even among humans. If AI can surpass “the bar of 99.99% of humanity,” as Andreessen noted, its utility and transformative power are undeniable, regardless of whether it achieves a philosophical definition of “true” invention. This perspective shifts the focus from an idealized, almost mystical view of human genius to a more pragmatic assessment of output and impact. Ben Horowitz echoed this sentiment through the lens of hip-hop, highlighting how sampling and remixing existing elements led to entirely new, groundbreaking forms of music. This iterative, combinatorial approach, he implies, mirrors much of technological and artistic progress.

Beyond the philosophical debates, the co-founders addressed the pervasive question of whether the current AI boom constitutes a bubble. Horowitz offered a nuanced, psychologically informed definition: “A bubble is a psychological phenomenon… In order to get to a bubble, everybody has to believe it’s not a bubble.” The very fact that this question... The underlying fundamentals, they argue, remain robust: the technology demonstrably works, and customers are actively paying for its capabilities. Andreessen drew parallels to historical platform shifts, recalling the personal computer’s evolution from a text-based system in 1975 to graphical user interfaces (GUIs) 17 years later, followed by web browsers five years after that. Each shift fundamentally altered user experience and product forms, often in unforeseen ways. He emphasized that “We don’t yet know the shape and form of the ultimate products” that will emerge from AI.

This implies that current chatbot interfaces are merely early iterations, and the true innovations in user experience are yet to be discovered by a new generation of entrepreneurs. Their discussion extended to leadership, questioning the conventional wisdom that pure intelligence dictates success. Andreessen provocatively stated, “High IQ experts work for mid-IQ generalists… When you look at the world today, do you think we’re being ruled by the smart ones?” This highlights the importance of qualities beyond... While AI is making strides in simulating these, human leadership still relies heavily on navigating complex social dynamics, motivation, and sometimes, the challenging task of convincing people to act against their immediate preferences for... If one thing is certain about generative AI, it’s that no one knows exactly how it will play out from a product or user experience perspective. Which interfaces will win out?

Which tasks will be augmented by large language models (LLMs), and which ones will be completely upended by them? How will creative AI models change our expectations of what we can do with computers? We’re at a moment not unlike the advent of the web or the smartphone. It’s clear something huge is afoot, and the early applications are fun, interesting, and somewhat obvious. We can identify the early winners. What we don’t know is what second-order applications and use cases will emerge to reshape our personal and professional lives, and who will be the companies to build them.

We recently held our annual Connect/Enterprise event and, for this very reason, artificial intelligence—particularly generative AI and LLMs—was a major topic of conversation both on and off the stage. Below are some edited highlights from this year’s speakers, where they share their thoughts, experiences, and strategies around generative AI. If you want to hear what these speakers and others had to say about growing their companies and fighting through tough times, you can do that here. Marc Andreessen spoke with fellow a16z General Partner Martin Casado about how entrepreneurs and startups might think about generative AI, largely from a product perspective. In this first clip, he explains why he thinks generative AI is a major architectural shift in computing, and why it represents an opportunity for startups to get a leg up on incumbents.

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