| Andreessen Horowitz's announcement this week of its long-rumored $4.5 billion crypto fund is the latest in a slew of mega funds that closed in recent months. But some investors are sticking to small crypto-focused VC funds and say the funds are thriving. Why it matters: With so many firms raising over $1 billion in one fell swoop, it's easy to believe that's the only way to win. The big picture: In 2022 so far, five firms have announced that they've secured at least $1 billion in capital; three did so during 2020 and 2021. What they're saying: "Our value prop: We're a long-term structured vehicle fund and have lived through many cycles as it relates to crypto," Archetype founder Ash Egan tells Axios about how the firm markets itself to entrepreneurs. Archetype recently raised $150 million for a new fund. Between the lines: "Smaller, $25-$75 million funds can be more nimble than larger funds," Hash3 Capital Fund general partner Hootan Rashidifard tells Axios. Just like in the rest of the venture market, larger funds need to deploy more capital at once. - That ability to write smaller checks also means they can be friendlier participants in so-called party rounds — something that's particularly popular among crypto startups if they don't want their eventual tokens to be concentrated among a few investors.
- Also: "Even if [the large funds] did invest $250,000-$500,000, the founder might not get the same attention from that investor as from the smaller fund," Rashidifard adds.
Yes, but: It's unclear how the fundraising environment for crypto VC funds will look in a year or two. - Many limited partners are feeling tapped out on their venture capital allocations, so emerging managers with smaller funds may not be at the top of all lists for the next cycle.
The bottom line: As in the rest of venture capital, the big funds grab all the attention. But there's still plenty of room for smaller players who can convince top entrepreneurs to take their capital instead. | 
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