A New Venture Capital Fund That Acts Like Angels

Bill Warner Monday, July 06, 2009

Mark Andreessen and Ben Horowitz just announced a new $300 million venture capital fund that looks, smells and walks like an angel fund. Andreessen Horowitz is focusing on the best entrepreneurs, products and technologies in the industry. Read the details in BLOG.PMARCA.COM.

The founding principles make a difference

Their founding principles are extraordinary and may spell what could be a refreshing new model for venture capital firms:

  • Their claim is that technological advancement is at the core of human development. Although this is generally accepted, the founders’ backgrounds indicate how serious they are about moving technology forward.
  • Furthermore, technology change fosters continuous opportunity for even greater changes in the future. In other words, investors need to understand that this a continuum that will drive even greater advancements as new technologies are developed.
  • Here is the one that catches my eye. They say that the technology start-up is all about the entrepreneurial team and their vision. This kind of pokes a stick in the eye of the limited partners who mostly think it’s all about them. They obviously have investment partners who agree with this principle.
  • New companies today need a lot less money than they used to in order to get started. The services available on the internet today make it much easier to launch a company. Once a company is successfully launched, more money will be needed for market expansion.
  • Having the best possible team of advisors and investors to support an outstanding entrepreneurial team is also a refreshing principle. This firm can certainly bring the best of the best to support great entrepreneurs.
  • They cite the importance of trust in building a great company. This too is revolutionary and bodes well for a new attitude between venture capital and entrepreneurs.
  • They are not buying into the promise of clean tech, biotech, transportation, nanotech and life sciences, and will stick to their guns by investing exclusively in information technology innovation.
  • Just like angels, they will focus on their own geographic area of Silicon Valley.

Focus on start-ups

Their fund is huge. Nevertheless, they are building their firm on the idea that it should be the kind of firm they would want to work with when they were young entrepreneurs starting new companies.

They will invest anywhere between $50 thousand to $50 million, depending on the company’s stage of maturity. This will include start-ups with seed round financing as well as later stage financing rounds for high-growth companies.

Andreessen and Horowitz will be the only general partners of the firm, and will personally make investment decisions aided by a small staff of other professionals.

It’s all about the entrepreneur

They are looking for the best of the best in entrepreneurs who have a compelling vision about taking on a big market opportunity. They favor strong technologists who know what they want to build and know how to go about it. They also have the belief that the founder needs to be the CEO, and favor entrepreneurs who have that potential. They believe that the CEO skills can be developed.

They are all about the product and that companies are build around products. Investors need to intimately understand the company’s products. Surely, Andreessen and Horowitz are very capable of carrying out this principle.

It is exciting to see the emergence of this venture capital firm, run by two leading entrepreneurs and investors. Their ideas are refreshing and bold and may spell a new investment model for venture capital firms for the future.

Filed Under: Angel Investment, Financing a Company, Managing Business Financials



Bill Warner is the Managing Partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.

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