Insider Brief
- Andreessen Horowitz raised $1.1 billion for a new Machine Age Fund focused on AI hardware and infrastructure, including chips, memory, networking, data centers, robotics and edge devices.
- A16z said rising AI demand is pushing computing density, rack power and data-center scale beyond current infrastructure limits, creating investment opportunities across memory, interconnects, cooling, electrical systems, materials and power-efficient edge hardware.
- The firm said hardware startups now account for more than 20% of its deal flow, while suppliers accustomed to 20% to 30% annual growth may need to expand at triple-digit rates to keep pace with demand.
Andreessen Horowitz has raised $1.1 billion for a new Machine Age Fund focused on the hardware and infrastructure needed to support AI, including chips, memory, networking, data centers, robotics and edge devices.
The venture firm, known as a16z, said the fund will invest across the AI infrastructure stack as computing demand pushes against existing supply-chain, physics and computer-science limits. The strategy ranges from semiconductors and storage to complete AI systems, including data centers, robotics and home AI appliances.
“The common thread among all of these layers of the AI stack is that they are all hitting the wall of today’s supply chain capability, and the limits of physics and computer science,” the firm said in a blog post penned by founder Ben Horowitz, along with Martin Casado, Raghu Raghuram, David Ulevitch, and David George. “So there is an urgent need for innovation and investment, and a once-in-a-generation opportunity to rearchitect them as platforms, all the way down to the electricity.”
The firm said the Machine Age Fund makes hardware an official investment focus at a16z.
“We’re excited to make hardware an official motion for a16z and announce the Machine Age Fund to support it,” a16z noted. “Our GTM, talent, and marketing machine that we’ve built at a16z is now ready to serve hardware founders. And the a16z network has exceptional access to customers, suppliers, and everybody else that’s relevant, for a new age of hardware reinvention.”
Innovation Requires Infrastructure
A16z pointed to rapid increases in computing and power requirements, including that compute density per rack has increased 28-fold from an H100 rack to a Rubin rack, while rack power has risen from roughly 5 to 10 kilowatts to 100 to 250 kilowatts and could reach 1 megawatt over the next three years. Data centers are also expanding from tens to hundreds of megawatts, with some campuses reaching gigawatt scale. A16z said operators are increasingly supplementing grid power with behind-the-meter or captive sources.
The fund will also target higher-bandwidth memory, faster interconnects, power-efficient edge devices and the cooling, materials, electrical systems and real estate needed to support AI infrastructure.
A16z said the buildout will require faster and more efficient computing systems, higher-bandwidth memory, more scalable interconnects and lower-power edge devices, along with additional cooling, electrical infrastructure, materials and real estate.
“The hardware industry supply side is used to growing 20% to 30% per year at most; not the triple-digit growth that’s needed to catch up with demand,” the firm pointed out. “This will change, quickly.”
A16z said hardware startups now represent more than 20% of its deal flow, up from a relatively small share several years ago. Recent investments include Unconventional AI, Nexthop, Volta, Atoms, Heron Power and Mind Robotics, while earlier hardware-related investments include Skydio, SpaceX, Anduril and Waymo.
