The entry of Marc Andreessen and Ben Horowitz into the venture capital industry is one of the fresher infusions of thought in quite some time. They are superstars and raised a $300m fund in an instant last year.
The puzzling thing to me was the pace at which they invested it: In under a year the firm has already invested half of the $300m and has set aside another $60m for follow on investments in current companies. That means they are on the fundraising path once more.
I love the firm’s stage-agnostic approach (which lent it to place large bets on firms like Skype that were hugely mis-priced by the public markets) and I am guessing now that Marc and Ben have given limited partners a taste of what’s to come they’ll raise a large amount of capital that will mean that fund raising is not an annual event.
The firm’s central concept of a handful important technology companies being produced each year is absolutely correct. And they have the conviction and talent to really put a large amount of capital to work (vs traditional VC which is all about increasing the number of partners but sticking to the same $ amount which is now stuck in the middle of the road – too large for early-stage and too small for growth equity).
I am guessing someone will adapt the financial parlance of barbell VC ($.5-$2m on the early stage and then $20-100m later stage investments) sooner or later but it’s one that is suited to today’s market where it’s cheaper to start and prove a startup but just as expensive to scale it and to fill the gap in liquidity events where public investors want nothing to do with small IPOs.
