Trend Alert: Grab Mega-Returns From This VC Fund’s Next Target

Imagine being an early investor in Airbnb (NASDAQ:ABNB), Facebook (NASDAQ:FB) or Coinbase (NASDAQ:COIN)…

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You might be sitting on your own island if you invested in just one of those companies before their initial public offerings.

But venture capital firm Andreessen Horowitz invested early in each of those companies. And that’s just scratching the surface…

Andreessen Horowitz — also known as “a16z” for the number of letters between the “a” in “Andreessen” and the “z” in “Horowitz” — has an investment portfolio history that is hard to believe.

The top-tier VC fund was an early investor in Box (NYSE:BOX), Groupon (NASDAQ:GRPN), Lyft (NASDAQ:LYFT), Pinterest (NYSE:PINS), Slack and Skype, just to name a few.

In fact, a16z has been an early investor in nearly 20 companies that went public for over $1 billion… and many more companies that have been acquired for “only” several hundred million dollars each.

We’re talking mega-returns here.

Of course, by the time most investors hear about these mega-returns, the opportunity is long gone. That’s why it’s important to track what the world’s top early-stage investors are doing right now.

Today I’ll share the next big mega-trend on a16z’s radar.

But first, let’s look at what I mean by mega-returns…

The Path to Mega-Returns

In order for VC firms like Andreessen Horowitz to generate massive returns for investors, they have to do two things very well:

  • Identify and understand megatrends in their infancy.
  • Create and maintain relationships with the top entrepreneurs in these megatrends.

For example, a16z first invested in Coinbase, a cryptocurrency exchange, back in 2013 at $1 per share.

At the time there were only 14 crypto coins listed, and Bitcoin (CCC:BTC-USD) was trading for a little above $1,000. Today you can buy over 6,000 coins or tokens on exchanges like Coinbase, and Bitcoin is sitting above $57,000 as I write.

Again, Andreessen Horowitz grabbed its share of the crypto trend right near the start. Fast forward to 2021, and Coinbase went public at $381 per share. That resulted in a massive win for a16z, with total proceeds exceeding $9 billion for the firm!  

Right now, a16z is raising money for a new fund — and expects to bring in up to $1.5 billion.

The focus? Healthcare and biotech.

And we’re paying attention…

Profiting From the Future of Biotech

To be clear, we’re not talking traditional healthcare investments.

Instead, a16z and other major VC firms are targeting cutting-edge companies that challenge the traditional ways we care for our bodies.

What kinds of companies are we talking about?

Let’s take a look:

  • DeepCure uses artificial intelligence (AI) to rethink the science of drug development. The company’s vision “is to use AI-driven discovery to create better molecules and faster cures for every disease-relevant protein target.” DeepCure recently announced a $40 million funding round, led by Morningside Ventures.
  • Isomorphic Labs is “a commercial venture with the mission to reimagine the entire drug discovery process from first principles with an AI-first approach and, ultimately, to model and understand some of the fundamental mechanisms of life.” Isomorphic Labs was launched by Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Google’s parent company.
  • Rigetti is building quantum computing technology that “combines advances in engineering, physics, computer science and manufacturing. Integrating all these specialties under one roof and in one technology stack allows us to move further, faster.”

This last company is especially interesting, for a couple reasons…

First off, Rigetti is not necessarily a biotech company. Instead, Rigetti is focused on building quantum computers that can be applied to anything from food production optimization to financial modeling. But their primary target is the huge biotech industry.

The second and more notable reason Rigetti is interesting is that a16z already invested in this company through its previous biotech fund.

And guess who is going public via a sure-to-be-lucrative-for-early-investors SPAC (special-purpose acquisition company) very soon?

That’s right… Rigetti.

In the coming years, there will be medical breakthroughs that we simply cannot comprehend.

Breakthroughs like 3D-printed organs, cures for previously incurable diseases and even reversing the aging process. Quantum computing, AI and other technological advancements will completely rock the entire medical world…

And we’ll be there to invest along the way — early.

On the date of publication, Cody Shirk did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

By focusing on megatrends that will shape the future, Cody Shirk uncovers generational wealth in the private investing space. To make sure you never miss Venture Capital Digest, click here to subscribe.

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