Venture capital firm Andreessen Horowitz (a16z) has announced the raising of $1.1 billion for its newly established 'Machine Age Fund'. The fund is designed to accelerate investments in the physical infrastructure required to support the rapid expansion of artificial intelligence.
According to the firm, the new capital will be deployed across the computer infrastructure underpinning AI. This includes foundational components such as chips, memory, networking, and storage, as well as complete systems like data centres, robotics, and home AI appliances.
a16z stated that the rising demand for artificial intelligence is putting significant pressure on existing supply chains and running into physical and computer science constraints. This dynamic has created an urgent need for innovation across the entire infrastructure stack, presenting what the firm described as a once-in-a-generation opportunity to redesign these systems up to the level of electricity supply.
The scale of computing infrastructure required for AI has increased sharply in recent years. Data provided by the firm shows that compute density per rack has risen 28-fold from an H100 rack to a Rubin rack. Meanwhile, rack-level power requirements have moved from roughly 5 to 10 kilowatts up to 100 to 250 kW for current systems, with expectations that rack power requirements could reach as much as 1 megawatt over the next three years.
Data centres are also undergoing a major structural expansion, moving from facilities measured in tens of megawatts to campuses running into hundreds of megawatts, and occasionally gigawatt-scale developments. In response, power supply models are shifting beyond traditional grid-only sources to include behind-the-meter and captive sources.
The firm highlighted several areas needing investment, including faster and more efficient systems, higher-bandwidth and lower-cost memory, scalable interconnects, power-efficient edge devices, cooling technologies, materials, electrical infrastructure, and real estate.
While a16z is historically known for its software investments, the firm noted that hardware start-ups have grown from a small share of its deal flow to more than 20 percent over the past two years. Past hardware investments by the firm include companies such as Skydio, SpaceX, Anduril, and Waymo, alongside newer AI infrastructure start-ups.
The launch of the Machine Age Fund marks a formal transition to make hardware an official investment focus for the venture capital firm, positioning its investment, talent, marketing, and customer networks to support founders building next-generation AI hardware.
"The allocation of $1.1 billion specifically for hardware and physical infrastructure underscores a critical shift in the technology sector. As artificial intelligence models scale, the primary bottlenecks are no longer just algorithmic, but physical—spanning power, cooling, and compute density. For founders and investors, this highlights a growing opportunity in foundational hardware, moving beyond purely software-driven business models to address deep engineering and infrastructure challenges." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
