When Andreessen Horowitz raised $300 million for its debut fund last year, I suggested that it was too much money. Actually, I said the original $250 million target was too large – particularly for a two-partner firm that said initial investment sizes would average around $500k.
And my argument still makes sense to me. At least in theory.
The reality, however, is that AH has already invested most of its stash — including a giant check for the Skype carve-out — and added staff. Moreover, Marc Andreessen has become even more influential in Silicon Valley, while Ben Horowitz has emerged from his famous partner’s shadow by penning one of the smartest VC blogs around. All of this adds up to AH becoming the hottest VC firm this side of Sequoia.
It also means that AH is back in market for a second fund. Multiple LP sources tell me that the target is $650 million, which the firm says would enable it to make multiple Skype-type bets.
Normally, I would bet against AH being able to raise this much money. It’s more than twice what it got just a year ago, and the fundraising market hasn’t really improved too much. Moreover, AH will have to answer questions about why it burned through its cash so fast, and if even more staff is needed (since raising Fund I, AH has added one investment partner and brought PR star Margit Wennmachers in-house). And then there are all of Andreessen’s extra-curricular activities (HP and Facebook boards)…
But AH just isn’t a normal firm. Which means I’d either bet against my gut instinct, or maybe just sit this one out…
AH declined to comment, citing SEC restrictions (natch)DON'T MISS IT! After two successful conferences on the East Coast, we’re bringing our LPs and fund managers to San Francisco for the first annual Emerging Manager Connect West on May 11. Don’t miss out on insightful panels and great networking! CLICK HERE for details.