A16z's new $1.1B fund admits hardware is eating the world, too

A16z's new $1.1B fund admits hardware is eating the world, too

Fri, August 28, 2026 at 11:54 PM GMT+3 2 min read

With its latest $1.1 billion fund, Andreessen Horowitz is getting physical (with AI).

The firm announced that the Machine Age Fund will invest "into all of the computer infrastructure on which AI runs, including chips, memory, networking, and storage," and that this includes "full systems for running AI: from data centers to robotics to home AI appliances."

General partners Martin Casado and Raghu Raghuram will lead the new strategy, which will target both early- and growth-stage companies. Partners from a16z's Infrastructure, American Dynamism and Growth funds will also invest from the new vehicle.

The fund represents a doubling down on its expansion into hardware investments, especially the AI infrastructure bets it has made in defense.

"Dedicated hardware and robotics funds have existed for years, but when one of the largest firms in venture stands up a fund specifically for that, you pay attention," said PitchBook fund strategies analyst Nick Rescigno. "Advances in physical AI are making hardware capable of things that weren't achievable a few years ago."

Hardware startups now make up more than 20% of the firm's deal flow, the firm said. That includes Nexthop AI, a startup building network switching equipment for AI workloads, which a16z backed in March when the company raised a $500 million Series B. The next day, the firm announced it had co-led alongside Accel a $500 million Series A for Mind Robotics, an AI robotics startup spun out of EV maker Rivian.

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The firm's AI hardware and infrastructure checks have mostly concentrated in defense. It led the 2016 Series A for self-flying drone startup Skydio and has invested in the company multiple times. Since 2017 it has been an investor in Shield AI, which builds software that lets jets and drones fly without pilots. And in 2019, a16z wrote its first check into the autonomous weapons company Anduril.

Hardware has long been out of favor with VCs due to heavy upfront capital costs, long build cycles, and thinner margins relative to SaaS. But the current AI competitive landscape has made investors more willing to look for new opportunities.

"We have been hearing from very early-stage VC investors who are keenly aware that new features from the LLMs could wipe out certain application software AI companies overnight," said Kaidi Gao, senior VC analyst at PitchBook. "Naturally, investors have been seeking risk hedging, which includes strategies like investing in 'AI-safe' companies and in the infrastructure layer. This explains why hardware companies, which used to garner less investor traction due to high front-load cost and long buildout timeline, are getting more popular these days."

This article originally appeared on PitchBook News