Talk about moving quickly up the ranks. Andreessen Horowitz, which launched its first fund in 2009, is now the most sought-after venture capitalist for aspiring entrepreneurs in major technology hubs.
That, at least, is one of the conclusions from a survey carried out by law firm Dorsey & Whitney that asks 336 startup CEOs what matters most in their selection of investors. Responses show that there have been some changes in attitude among the group since the firm conducted a prior survey on the same topic in 2010.
Overall, respondents identified traditional VCs as their favored source of funding, though individual firm preferences varied a bit by geography. Among startup CEOs in the seven largest metropolitan areas for venture funding (the “metro group”), Andreessen Horowitz came in first place, followed by Sequoia Capital and Kleiner Perkins Caufield & Byers.
For the all others (the “non-metro group”), Sequoia ranked first, followed by Andreessen Horowitz and Google Ventures.
Ted Hollifield, the partner in charge of Dorsey’s venture capital practice, said he doesn’t find the firm selections surprising, given what entrepreneurs identified as their top criteria for an investor. Most were looking for deep pockets but also put a premium on operational experience and an industry that could prove beneficial in boosting their business.
“It resonates with the individual responses we were getting. They say they’re really looking for operating and technical expertise from their investors, but they’re also looking for some of the traditional VC strengths, like the ability to support and lead multiple rounds,” Hollifield says.
When one lines up those desires, he says, it makes sense Andreessen Horowitz would rank high, given its partners’ strong entrepreneurial and technical backgrounds, their connections, and their ability and willingness to invest large sums of capital. It’s also not surprising that Sequoia and Kleiner, also firms with those attributes, would also be up there.
A more surprising finding from the survey, Hollifield added, was the divergence between the metro group and non-metro respondents. Survey results indicate, for instance, that non-metros are not tapping traditional VC firms at the same rates as their metro counterparts. The percentage of non-metros that secured funding in the last 12 months from traditional VC firms also fell, from 17.1% in 2010 to only 7.5% in 2012.
Another difference was that the metro group tends to access incubators for early, but not subsequent, rounds, while the opposite is true of the non-metro group.
The survey respondents were either CEOs or founders from a range of technology sectors, spanning IT infrastructure, software, gaming, life sciences and cleantech. However the majority of participants were in the consumer Internet, mobile, cloud computing and SaaS sectors.
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