How Marc Andreessen makes Silicon Valley magic

http://gigaom.com/2012/02/02/marc-andreessen-horowitz-silicon-valley-startups/

by DealisIN • 14 years ago

31 2 14 years ago

gigaom.com

SkyMarshal• 14 years ago

For anyone who missed it, he did a really excellent presentation on VC at Stanford last summer:

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2457

vm• 14 years ago

Andreesen Horowitz gets more credit than it deserves for venture investing. The group has only generated returns from its late-stage growth and PE investments (Skype, Groupon, Zynga). Let me explain.

This article, for example, cites a16z's investments in iconic companies Facebook, Twitter, Zynga, Groupon, Airbnb, Box, Fab.com and Pinterest - but all of those were late-stage growth rounds or secondary purchases, where they aren't going to add much value as investors.

Many of those growth rounds were won against competing VCs because a16z paid the highest price and wrote the biggest check. Writing lots of big checks allows you to quickly invest lots of capital and raise new funds. And stay in the headlines.

It's not to say that those are bad investments. They're great investments. It's just not venture investing or helping entrepreneurs build companies. You know who else made late-stage investments in Skype, Groupon and Zynga, besides a16z? Silve Lake, the mega-LBO fund. They're about as far from venture capital as you can get.

In fact, a16z hasn't had a single notable exit from it's early-stage investments. That's not to say that they won't - it's just too early to tell.

Don't get me wrong - the firm is lead by some of the most amazing entrepreneurs ever. In fact, I would have trouble not taking a meeting with them, just because I would want their feedback on my business. But they haven't yet shown a track record of helping to mentor early stage portfolio companies to successful outcomes.

And that's what VC is. Groups like First Round Capital, Union Square Ventures, Sequoia and more, have exceptional track records working with early-stage companies and deserve tons of credit for being amazing VCs. Andreesen Horowitz isn't in the top-tier today.

Am I missing something about a16z's early stage track record? If so, please let me know.

How Marc Andreessen makes Silicon Valley magic

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