Andreessen on $1.5B fund: 'The opportunities seem very large'
Keeping the startup world on fire, Andreessen Horowitz, backer of such names as Zynga, Facebook, Twitter, Foursquare, and Groupon, just closed a $1.5 billion fund.
The team of Marc Andreessen and Ben Horowitz, a duo since the go-go Netscape days of the mid-1990s, is on fire.
Today, their 3-year-old venture capital firm, Andreessen Horowitz, announced that it has closed its third fund--this one, $1.5 billion, brings the total amount they've raised to $2.7 billion, which isn't bad for a time when VC returns have been lackluster, at best.
Andreessen Horowitz now has stakes in 90 consumer and enterprise businesses, including some of the hottest names in tech: Zynga, Facebook, Twitter, Airbnb, Foursquare, Box, Groupon, Fab, Uber, and on and on.
"We're responding to the opportunity, and the opportunities seem very large," Andreessen told CNET. "We're seeing a lot of very smart entrepreneurs now able to go after markets that just weren't available before."
The reason: the spread of smartphones and broadband penetration. It all comes back to what Andreessen describes as software eating the world--in which software companies are able to redefine and chip away at existing industries at lightening speed.
"It's just more and more of the software-eats-the-world theme," he said, referring to a discussion we had in December. "We're seeing entrepreneurs targeting industries that were not available--health care, academia, real estate, politics--take your pick."
While Andreessen Horowitz has made a ton of investments, most of those are seed stage investments of $50,000 to $100,000. Those investments are like dating, said Andreessen, because what the firm really is looking for is that unusual founder who can become the next well-known CEO.
"We think the Mark Zuckerberg, Bill Gates, Larry Ellison model works very well," Andreessen said. "And we've built our firm to work with entrepreneurs like that...Our whole process is to find the special ones."
That's what makes Andreessen Horowitz different from traditional Silicon Valley VC firms: They're not looking to replace the founder with a "professional" CEO.
Instead, they're looking to find the person who has what it takes, and then groom him or her. Ben Horowitz writes about this process in a blog post today called, Why Has Andreessen Horowitz Raised $2.7B in 3 Years?
So far, Andreessen Horowitz's biggest success was its investment in Skype, which ended up getting bought by Microsoft. That was part of the firm's first fund. The second fund has investments in biggies like Facebook, Twitter, Groupon, and Zynga. Andreessen Horowitz has been criticized for getting into some of those companies late, but Andreessen says the valuations have risen since investing in them.
And the upcoming Facebook IPO is almost certain to help.
Overall, though, it's too early to call the strategy a success. "We just don't have the results on most of the money," Andreessen said.
The impact, however, is unquestionable: The startup boom is raging on.