An Internet legend is launching a boutique venture-capital firm in Silicon Valley. Marc Andreessen, cofounder of Netscape Communications, has teamed up with Ben Horowitz, his Netscape colleague, to form Andreessen Horowitz. The firm's first fund totals $300 million.
Andreessen Horowitz draws on the duo's experience as successful engineers and entrepreneurs to create a VC firm with the needs of today's technology startups in mind. The firm will make investments ranging from $50,000 to $50 million.
"Innovation is thriving despite the current economic climate," said Andreessen. "Ben and I are huge supporters of entrepreneurs and want to help turn today's sparks of brilliance into the next big thing."
A New Approach to Funding
Andreessen Horowitz described a "new philosophical approach" to venture-capital investing: Rather than being bound by tight restrictions on investment size or stage focus, the firm is open to committing any amount, up to $50 million, at various stages of a company's life.
"We see venture investing as a company-specific exercise," Horowitz said. "Therefore, we are looking for the best entrepreneurs and companies regardless of stage."
The firm will focus on investing in startups in the technology sector, including consumer Internet companies, cloud computing, networking, enterprise applications, and social-media businesses. Andreessen and Horowitz may take board seats in their portfolio companies.
Who Is this Dynamic Duo?
Andreessen and Horowitz are no strangers to investing in startups. Since 2004, they have acted as angel investors for more than 45 companies, including Aliph (Jawbone), ExtraHop, LinkedIn and Twitter.
"We've had some time to test our investment approach and support great entrepreneurs," said Andreessen. "After years of angel investing, we decided to go pro and raise a fund."
Andreessen currently serves on the boards of eBay and Facebook, and is chairman of the board of Ning, which he cofounded and launched in 2005. Best known as the coauthor of Mosaic, the first widely used Web browser, later renamed Netscape Navigator, Andreessen's experience also includes his work as CTO of AOL, as well as chairman and cofounder of Web infrastructure company Loudcloud, later named Opsware and acquired by Hewlett-Packard.
Horowitz cofounded Loudcloud with Andreessen in 1999 and served as CEO of the company. He was most recently vice president and general manager of Hewlett-Packard's Business Technology Organization Unit. Before Loudcloud, Horowitz ran several product divisions for Netscape and was in various marketing roles at Lotus Notes.
A Seasoned Investment Team
"Andreessen is like the actor becoming the director, as opposed to someone coming out of film school and making a film without any practical experience. He's very seasoned," said Greg Sterling, principal analyst at Sterling Market Intelligence. "He favors the founder/CEO to run the company, as opposed to the replacement CEO who's brought in once a business gets to a certain level of visibility and success. That's an interesting perspective."
As for the timing, Sterling points to the cliché that down markets are the best time to invest because opportunities abound. Investors have confidence in Andreessen, Sterling said, because he's got a proven track record.
"The idea of being a VC is a challenging one because most VCs are losing money. It's easy to find a lot of seemingly promising startups, but it's hard to figure out what's going to succeed and why. Andreessen has a really good handle on that," Sterling said. "He's as likely to succeed as anyone out there today."