Serial entrepreneur Marc Andreessen and his longtime investing partner Ben Horowitz have closed on a $300 million venture fund that aims to invest in mostly seed-stage deals, mostly in Silicon valley, and that will be focused on “anything based on computers,” Andreessen told peHUB.
The eponymously named Andreessen Horowitz fund, whose only GPs are Andreessen and Horowitz, will not invest in “cleantech, energy, biotech, life sciences, nanotech, rocket ships, electric cars or space elevators,” said Andreessen.
Instead, he and Horowitz will be seeking out the most interesting opportunities in “consumer Internet or what we call business Internet: software as a service and related things [and] cloud computing.” Andreessen added that the pair, both computer scientists by education, would also invest in hardware and software — “so, networking, storage, servers, databases and all sorts of related things around that.”
The new fund’s deal size range — $50,000 to upwards of $50 million — may be the most unusual aspect of the its approach. Andreessen said it will give the team the flexibility it needs to back the best companies, whenever in their life spans that he and Horowitz come across them. “We’re on the hunt for new franchise companies,” said Andreessen, which he explained as a “company that gets to $100 million in revenue a year.” Ideally, he said, “We’ll find them at the seed stage and help develop them. Failing that, if we screw that up, we’ll then, as we say, ‘correct our mistakes’ and go into a later round.”
Andreessen, who’s of a mind that 15 “franchise” companies are founded every year, added, “Our view is when you find one of those franchises — or a company that you think can be one of those franchises—you want to invest as much as you can both in time and effort across as many rounds as you can.” Otherwise, he said, “you fail [as an investor].”
Unsurprisingly, the firm’s LPs — including Horsley Bridge Partners — can expect to see many more seed-stage investments than anything else in the fund. In fact, Andreessen says the new fund is “working on two [deals] right now, one of which we’re close on and one that’s further away.”
Andreessen and Horowitz have helped fund 43 seed-stage companies as a “hobby” since 2006, amassing stakes in, among others, Aliph, the San Francisco-based maker of the Jawbone headset, which is backed with $42.5 million from Khosla Ventures, Sequoia Capital, Mayfield Fund, and angels; advertising network SocialMedia in San Francisco, which has raised $10 million so far including from Charles Rivers Ventures and IDG Ventures; and Qik, a Redwood City, Calif.-based company that enables cell phone users to stream live video and that has raised $4 million from angels, including Salesforce CEO Marc Benioff.
Going forward, Andreessen suggests Andreessen Horowitz’s first fund may back anywhere between 60 to 80 nascent startups, companies young enough and with few enough employees that “we often advocate the companies not even have boards.”
A seed-stage company’s “mission in life, in our view, is to find product-market fit, meaning it has successfully discovered and built a product that people want to buy, [and that it’s in the process of speculating on total market size],” he said. “Until it does that, all the rest of the company-building stuff doesn’t make any sense.”
Horowitz and Andressen first met in the earliest days of Netscape, which Andreessen famously cofounded after engineering the first widely-used Web browser at the University of Illinois at Urbana-Champaign. Horowitz, one of Netscape’s first employees, went on to cofound the software company OpsWare with Andreessen, where Horowitz long served as CEO. Opsware sold to Hewlett-Packard in 2007 for $1.6 billion.
More recently, Andreessen — who also sits on the boards of Facebook and eBay — cofounded Ning, a software startup whose platform allows users to build their own social-networking Websites. Ning has raised $104 million over the last five years, including from individual investors, Allen & Co., and Legg Mason Wood Walke.DON'T MISS IT! Now in its 10th year, PartnerConnect Midwest is bringing you 300 attendees, over 400 private ExecConnect meetings between LPs and GPs, and three insightful tracks including Buyouts Funds, Buyouts Deals and Co-Investments. REGISTER TODAY!