My partner Ben Horowitz and I are delighted to announce the formation of our new venture capital firm, Andreessen Horowitz, and our first fund — $300 million in size — aimed purely at investing in the best new entrepreneurs, products, and companies in the technology industry.
Between the two of us, Ben and I have started three companies directly, created many new products and services, run operating businesses at high levels of scale, angel invested in 45 tech startups in the last five years, and served on a broad cross-section of company boards with some of the best entrepreneurs and investors in the industry. Through all this, we have worked closely together for 15 years, and we could not be more excited to extend our partnership into venture capital.
In undertaking this new mission, our core principles include:
- Technology and its advancement is absolutely central to human progress. Entrepreneurs who create new technologies and technology companies are improving the standard of living of people worldwide and unlocking amazing new levels of human potential.
- While broad investor psychology whips wildly between euphoria and depression, technology change not only continues but is accelerating. In fact, we believe that technology change cascades — each new generation of technology contains within it the seeds for even more profound advances to come. And, technology change creates continuous opportunity to build important and valuable new companies.
- A technology startup is all about the entrepreneurial team and their vision. Our job as venture capitalists is primarily to support entrepreneurs by helping them build great companies around their ideas.
- The process of building a new technology company is changing rapidly. For example, many of the best new technology companies require far less money up front to build the first product, but far more money later to scale into today’s enormous global market, as compared to historical norms. We intend to not only embrace these changes but drive them forward as hard as we can.
- Building a great company is a team sport — including the selection of the best possible set of investors and advisors for a specific opportunity. We have been lucky enough to work with many of the industry’s best investors, advisors, mentors, and coaches over the last 15 years, and we look forward to continuing to be a great partner to all of them.
- Trust is essential to building a great company. Trust requires the highest standard of ethical conduct, which we will strive hard to achieve and maintain.
- While there are many exciting new entrepreneurial opportunities in fields like energy and transportation, there continues to be gigantic opportunity in information technology — which is where we will focus.
- And, while there are many extremely bright and capable entrepreneurs all over the world, there continues to be a special magic to Silicon Valley — which is where we will focus.
We will hang our hat as a firm on the fact that both of us have extensive direct entrepreneurial and operating experience. We have built companies, from scratch, to high scale — thousands of employees and hundreds of millions of dollars of annual revenue. In short, we have done it ourselves. And we are building our firm to be the firm we would want to work with as entrepreneurs ourselves.
Here are some more specifics about how we will operate:
- We have the ability to invest between $50 thousand and $50 million in a company, depending on the stage and the opportunity. We plan to aggressively participate in funding brand new startups with seed-stage investments that will often be in the hundreds of thousands of dollars. But we will also invest in venture stage and late stage rounds of high-growth companies.
- We also have the ability to participate in a variety of investment structures, including but not limited to buying founder shares, investing in public stocks, and contributing to leveraged buyouts. We do not have a goal to do any of these things specifically, but rather we will be maximally flexible to suit our investing strategy to the opportunity.
- Ben and I will be the only General Partners in the firm, at least to start. We may add a small number of additional General Partners in the future, but we are not assuming that will be the case. We will also build a professional staff to support us in our efforts and to help our portfolio companies in various ways. However, we will not have associates or other General Partner-track junior positions.
- Ben and I will go on boards of companies in cases where we are investing serious money — generally, $5 million or more, although there could be exceptions in both directions. We will generally not go on boards of raw startups — in fact, in many cases, we don’t even think today’s raw startups should have boards.
Here are some more specifics about what kinds of entrepreneurs and companies we are looking for:
- Above all else, we are looking for the brilliant and motivated entrepreneur or entrepreneurial team with a clear vision of what they want to build and how they will create or attack a big market. We cannot substitute for entrepreneurial vision and drive, but we can help such entrepreneurs build great companies around their ideas.
- We are hugely in favor of the technical founder. We will generally focus on companies started by strong technologists who know exactly what they want to build and how they are going to build it.
- We are hugely in favor of the founder who intends to be CEO. Not all founders can become great CEOs, but most of the great companies in our industry were run by a founder for a long period of time, often decades, and we believe that pattern will continue. We cannot guarantee that a founder can be a great CEO, but we can help that founder develop the skills necessary to reach his or her full CEO potential.
- We believe that the product is the heart of any technology company. The company gets built around the product. Therefore, we believe it is critical that we as investors understand the product. We are ourselves computer scientists and information technologists by experience and training; therefore, we plan to focus on products in the domain of computer science and information technology.
- Here are some of the areas we consider within our investment domain today: consumer Internet, business Internet (cloud computing, “software as a service”), mobile software and services, software-powered consumer electronics, infrastructure and applications software, networking, storage, databases, and other back-end systems. Across all of these categories, we are completely unafraid of all of the new business models — we believe that many vibrant new forms of information technology are expressing themselves into markets in entirely new ways.
- We are almost certainly not an appropriate investor for any of the following domains: “clean”, “green”, energy, transportation, life sciences (biotech, drug design, medical devices), nanotech, movie production companies, consumer retail, electric cars, rocket ships, space elevators. We do not have the first clue about any of these fields.
- We are primarily but not entirely focused on investing in Silicon Valley firms. We do not think it is an accident that Google is in Mountain View, Facebook is in Palo Alto, and Twitter is in San Francisco. We also think that venture capital is a high touch activity that lends itself to geographic proximity, and our only office will be in Silicon Valley. That said, we will happily invest in exceptional companies wherever they are.
If you have read this far, thank you very much for your interest in our new firm — we will keep you updated over the months and years to come by blog!