Andreessen Horowitz raises $1.1 billion machine age fund to back AI hardware and infrastructure

Andreessen Horowitz (a16z) has raised $1.1 billion for its new "Machine Age Fund", as the venture capital firm looks to accelerate investment in the physical infrastructure required to support the rapid expansion of artificial intelligence.

Andreessen Horowitz (a16z) has raised $1.1 billion for its new "Machine Age Fund", as the venture capital firm looks to accelerate investment in the physical infrastructure required to support the rapid expansion of artificial intelligence. a16z on Friday said the new fund will invest across the computer infrastructure underpinning AI, including chips, memory, networking and storage, as well as complete systems such as data centres, robotics and home AI appliances.

The firm said the growing demand for AI is putting pressure on existing supply chains and running into constraints related to physics and computer science, creating an urgent need for innovation across the infrastructure stack. It described the development as a "once-in-a-generation opportunity" to redesign these systems as platforms extending all the way to electricity. The scale of computing infrastructure required for AI has increased sharply, according to a16z. Compute density per rack has risen 28-fold from an H100 rack to a Rubin rack, while rack-level power requirements have moved from roughly 5-10 kilowatts to 100-250 kW for current systems. The firm expects rack power requirements to reach as much as 1 megawatt over the next three years.

Data centres are also expanding from facilities measured in tens of megawatts to campuses running into hundreds of megawatts and, in some cases, gigawatt-scale developments. Power supply is increasingly shifting beyond grid-only models to include behind-the-meter and captive sources, the firm said. a16z said the industry needs faster and more efficient systems, higher-bandwidth and lower-cost memory, scalable interconnects and power-efficient edge devices, alongside investments in cooling, materials, electrical infrastructure and real estate.

The firm noted that hardware startups have grown from a small share of its deal flow to more than 20 per cent over the past two years. While a16z is widely known for software investments, it has backed hardware companies including Skydio, SpaceX, Anduril and Waymo, as well as more recent AI infrastructure startups. The Machine Age Fund marks a16z's move to make hardware an "official motion" for the firm, with the venture capitalist saying its investment, talent, marketing and customer networks are now positioned to support founders building the next generation of AI hardware. (ANI)