1.5 is small compared to the war chests Apollo, KKR and the like amass, but it's huge for a VC accustomed to writing smaller checks. Average US VC find is 107mm.
They're either going to be doing way more deals or shifting some of the fund focus to later stage. I expect the former, given that investors seem to like the granularity of separate venture and growth funds to pick from.
According to Fortune, there are management fees required on the full $1.5B. It's a huge fund (same article pits the average American venture fund at $107mm), but given the fees and the assumed ease of the fundraising process, it's easy to understand why they went this far.
For all the tension between Andreessen and Icahn, they share one quality that few investors can claim. When Icahn buys AAPL and let's people know, the lemming effect allows him to profit merely from announcing his own optimism (note he doesn't sell off of this, but his shares are still more valuable). At this point, a16z essentially has the same star power. Their blessing can give a serious push to companies pursuing an IPO or acquisition, to the point that the boosted exit value overweighs any "overpaying" a16z might do on the entrance.
I think you can attribute at least some of the decline to this. Only $400mm came from cash with additional shares possibly being issued based on performance. While this alone may not be a good reason for a long investor to drop shares, if it signals something about Zuckerberg's acquisition strategy going forward, then some investors may be expecting future dilution from new acquisitions. Furthermore, structure of share classes within FB also makes Zuckerberg's whims about this sort of strategy more influential to FB's direction than it would in another company.
They're either going to be doing way more deals or shifting some of the fund focus to later stage. I expect the former, given that investors seem to like the granularity of separate venture and growth funds to pick from.