Yesterday, in his most recent Substack post, Andrew Chen, Managing Director of Andreessen Horowitz (aka a16z), posited that the moves being made by VC megafunds make sense if trillions of dollars of venture capital addressable value (VCAV) is considered.
Chen opines that there are two ways tech eats the world, and this results in VCAV:
Market creation or aggregation results in VCAV, exemplified by the success of trillion-dollar companies, Tesla and Uber, that have squeezed entire industries.
The value of VCAV is increasing over time, growing the pie that VC megafunds are investing in.
Chen also clarifies that this is not a post about megafunds, but that their actions mirror the moves made by Blackstone, Vanguard, and other early investors in capital regime shifts.
The post concludes with the reasoning that if you believe technology companies will displace sclerotic incumbents in industries ranging from defense to accounting to manufacturing, then the VCAV pie will increase exponentially, and the moves of megafunds will make sense.
