a16z raises $1.1B for Machine Age fund to build AI hardware
What's the deal? Andreessen Horowitz has raised $1.1 billion for the Machine Age fund, its first dedicated hardware-infrastructure vehicle. The fund will back AI processors, memory chips, networking equipment, data storage, robotics, and data centers — as general partner Raghu Raghuram put it, "things that are within the four walls of the data center."
Why now? a16z says AI infrastructure is hitting a wall, with every part of the hardware supply chain capacity constrained, from chips to memory to power. "Every time we have one of these technical epochs, it puts pressure on the infrastructure, but none of us have ever seen it this dramatic," said general partner Martin Casado.
What's the endgame? The firm wants to accelerate the physical buildout of AI, which it calls a "social and national imperative." Compute density per rack has jumped 28-fold from an H100 to a Rubin rack, and a16z argues the hardware industry's usual 20% to 30% annual growth cannot keep up with triple-digit demand.
Raghuram and Casado will lead investments alongside other partners. Casado, who also runs the firm's software-infrastructure fund, said the decision followed a surge in founder activity: hardware has grown from a sliver of a16z's deal flow to over 20%.
Some context: Fifteen years after Marc Andreessen declared "software is eating the world," the software-focused firm is pivoting to hardware. It has backed hardware before — including SpaceXDealroom has a profile for this one. Try Dealroom →, Anduril, Skydio, and Waymo — but "it was never a main focus," Casado said.
The fund is a small slice of a16z's more than $100 billion in assets. In January, the firm raised over $15 billion across several funds, including $6.75 billion for late-stage deals.
The signal: Venture capital is racing into AI's physical layer. Semiconductor and autonomous-machine startups have raised roughly $100 billion over the past year, per PitchBook, with Cerebras going public in May and Groq licensing its technology to Nvidia in a $20 billion deal. Casado dismissed talk of an AI bubble, saying that while some valuations may fall, overall demand remains strong.
Read more: a16z.com, TechCrunch, The Wall Street Journal
Image credit: Andreessen Horowitz
