Why might a16z go public?
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Why might a16z go public?
Venture capital firms have long been too small to go public, but that could now change.
Navigating Web3 tides with focused insightsAuthor: Berber Jin
Translation: TechFlow
Venture capital firms have long been too small to go public, but that may be about to change.
The venture capital landscape is undergoing massive upheaval, with several firms emerging that match public companies in scale and structure. The most prominent among them is Andreessen Horowitz (a16z), which I predict could begin preparing for an IPO as early as next year.
Going public would accelerate a16z’s current expansion trajectory.
Over the past three years, a16z has raised $12 billion, making it one of the largest fundraisers among Silicon Valley venture firms, and it plans to raise another $6.5 billion. Its investment team has grown by 170% over the last four years, reaching 70 members—surpassing rivals such as Sequoia Capital and Accel. It has also deliberately increased its fund allocations in specific sectors like cryptocurrency, biotech, and gaming.
Lessons Learned
a16z’s rapid growth over the past three years means it now meets the size requirements for going public, allowing its founders to more aggressively compete for private tech deals.
Jay Ritter, a finance professor at the University of Florida who tracks IPO markets, said: “Most small firms don’t see going public as optimal because there are fixed costs involved—for example, insurance for board members. But a16z may now be large enough to make an IPO feasible.”
There are real-world precedents for such a move. Between 2007 and 2012, private equity firms including Blackstone, Apollo Global Management, KKR, and Carlyle Group all went public.
Last year, their stocks outperformed the broader market. And according to a first-time report from The Wall Street Journal, deal giant TPG recently hired JPMorgan Chase and Goldman Sachs to advise on an IPO for its venture capital division.
An IPO could provide a16z with fresh cash to invest in private companies, ease fundraising pressure, and help the firm retain ownership stakes after going public. A spokesperson for a16z declined to comment.
To compete with deep-pocketed investors like Tiger Global Management, which traditionally focus on public equities, other venture firms have been restructuring. Last week, Sequoia Capital announced a new fund structure that extends how long it can hold public stocks. Under this arrangement, a new entity called the Sequoia Fund will hold shares and serve as the sole limited partner for Sequoia’s future “sub-funds”—its traditional venture funds.
But a16z’s potential public listing goes far beyond Sequoia’s approach, potentially opening the door to billions in public investor capital—a direction consistent with the vision of its two founders, Ben Horowitz and Marc Andreessen. The duo launched the firm over a decade ago, shaking up the slow-moving venture industry with a model inspired by Hollywood talent agencies. In 2019, they restructured the firm as a registered investment adviser to enable broader investments in assets like cryptocurrency.
If foreign shareholders acquire significant stakes, the IPO could also enhance a16z’s global profile. The firm could use proceeds from stock sales to fund acquisitions of other asset managers or expand into new businesses like debt lending—similar to how Blackstone used its shares to acquire GSO Capital Partners in 2008.
After going public, Ben Horowitz, Marc Andreessen, and other top partners could monetize their ownership stakes. In recent years, several venture firms have experimented with arrangements involving selling shares to outside investors, using some proceeds to pay general partners and fund growth initiatives. Bloomberg first reported that New Enterprise Associates sold about 15% of its stake last year to an investor group led by Wafra (backed by Dyal Capital Partners and Kuwait). According to The Wall Street Journal, General Catalyst sold a stake to Goldman Sachs Group in 2018 for $200 million.
"Scale, Growth, and Margins"
a16z currently manages $19 billion in assets, up from $7 billion just three years ago. While this amount is modest compared to peers—TPG, also in private equity, manages over $100 billion—it signals rapidly rising profitability for a16z.
Mark Goldberg, a partner at Index Ventures, said: “The largest [venture capital] funds are operating with financial metrics that make them genuinely attractive to public markets.” He declined to comment specifically on a16z, adding: “Their scale, growth, and margins are on par with their best portfolio companies.”
Assuming a16z charges a conservative 2% management fee on assets under management—other firms like Benchmark charge higher rates—it would generate $380 million annually from its $19 billion in managed assets. This figure excludes carried interest—the share of profits retained by a16z from its funds—whose performance has already been boosted by public holdings such as Coinbase.
Publicly traded private equity firms also profit from fees and carry. They’ve raised more capital in recent years, leading to higher revenues. Blackstone’s private equity division generated $1.8 billion in revenue from January through September, up from $747 million during the same period the previous year. This increase stems from higher management fees and performance-based income, driven by growing its private equity assets under management from $189 billion 12 months earlier to $231 billion by September.
a16z operates more like a corporation than most venture firms. It has dedicated marketing, operations, and talent teams to support founders in its portfolio. Its partners manage distinct funds with autonomy—including specialized funds in crypto and biotech. This corporate structure contrasts with more traditional venture firms like Greylock Partners and Index Ventures, which remain partnership-based, with all decision-making power concentrated among a few partners.
Katie Haun, co-chair of Andreessen’s crypto fund, said at The Information’s recent Women in Tech, Media and Finance Summit: “We’ve gained significant independence—we can operate alongside the crypto team and build it as we envision.”
A founder of a startup backed by a16z said the firm’s structure resembles that of a mature software company. Marc Andreessen’s ambition—to follow in the footsteps of banker J.P. Morgan and build a large, enduring financial institution—implies it will eventually issue public stock.
However, going public comes with well-known downsides. a16z would face greater reporting obligations, including disclosures about fund performance—information venture capitalists typically prefer to keep confidential. One reason publicly traded private equity stocks have languished for years is their corporate structure: they often use partnerships rather than C-corporations, which have different tax implications.
Yet private markets are expanding. Many venture firms may need to grow quickly to stay competitive—and thereby reach the scale required for public listing.
Just as Blackstone’s June 2007 IPO prompted other private equity firms to go public, a16z’s potential listing could inspire others like General Catalyst to follow suit. Just last week, Sequoia Capital explicitly stated it had no intention of going public—but that stance might not last long.
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