Andreessen Horowitz raises $1.1 billion for AI infrastructure fund

Prominent venture capital firm Andreessen Horowitz says it has raised $1.1 billion for its newest artificial intelligence infrastructure fund.

The “Machine Age Fund” will invest in AI computer infrastructure such as chips, memory, networking and storage, the firm said in a blog post on Friday, and will also include data centers, robotics and home appliances.

In an interview with Bloomberg News, Andreessen Horowitz general partner Raghu Raghuram said that the fund, which is a haul of new capital instead of a carve-out of the firm’s $15 billion venture fund from earlier this year, is a response to the demand for more physical technology to support AI startups’ needs.


The venture firm argues that advances from AI workloads are driving dramatic increases in computing demand and creating bottlenecks across existing hardware and supply chains.

“If you walk around San Francisco, talk to any company: They’ll tell you that the only thing holding them back is a lack of AI computing capacity,” Raghuram said.

The new fund will primarily be invested into early stage startups, with some capital reserved for more mature companies. Raghuram, who previously served as the chief executive officer of major cloud infrastructure company VMware, said Andreessen Horowitz decided to raise a new, separate fund because physical investments often come with different needs, including unique underwriting and larger initial capital requirements.

For chip companies, for example, he said that investments could be even larger than a model maker at inception.

“These companies have to turn the design into a prototype of a chip or networking system,” he said. “And that takes quite a bit of money.” He pointed to recent deals like AI startup Groq’s reported $20 billion licensing deal with Nvidia Corp. and AI infrastructure company Cerebras Systems Inc.’s public debut as an example of how, despite larger capital needs, there are still timely exits for successful technology.

The need for more AI infrastructure was also highlighted earlier this week during an earnings call for Nvidia when CEO Jensen Huang said demand for the company’s chips is growing beyond 70% in fiscal year 2028 but is constrained by supply.

While Andreessen Horowitz has a long history of software investments, the firm says it has always paid attention to hardware, recently backing multiple hardware companies such as Unconventional AI, Mind Robotics, and previously investing in SpaceX.