Andreessen Horowitz is a Silicon Valley venture capital firm. Unlike most other Silicon Valley venture capital firms, however, Andreessen Horowitz doesn’t struggle to raise new funds. Instead, institutional investors virtually beg for the privilege of participating.
It can’t be long until other VCs film a series of video spots talking about how “I wanna be like Marc.”
Today the Menlo Park-based firm announced that it has closed its third fund with $1.5 billion in capital commitments. That includes a $900 million general fund and a $600 million parallel fund, with management fees required on both (last time around, Andreessen Horowitz only charged management fees on the general fund).
For context, the average American venture fundraise last year netted just $107 million.
It’s also a big jump in size for Andreessen Horowitz, which raised a total of $950 million for its first two funds combined. Marc Andreessen says that part of the increase is to allow for a longer investment period of two-to-three years, rather than the 13 months or so that it took to invest Fund II.
Beyond that, no major investment strategy changes are on tap. The firm still plans to focus on early-stage and growth equity tech investments inside the U.S., with the possibility of participating in larger transactions like the 2009 carve-out of Skype from eBay Inc. (EBAY). It also is pulling back a bit on later-stage “pre-IPO” rounds, but could revisit the area if macro economic conditions cause mutual funds to retreat.
Andreessen also pushed back a bit against his firm’s reputation for overpaying — a knock that comes from both competitors and even some of his own limited partners.
“We were heavily criticized for overpaying for Skype, and then we did deals like Facebook and Twitter and Gorupon and Zynga and even Jawbone,” Andreessen says. “But there were strategic reasons to invest in those companies, and some people got confused between valuation and strategy. Since July, though, we haven’t participated in anything you’d probably characterize as having a very high valuation. We even have a slide showing 40 impressive names we passed on last year, half due to valuation. I think it’s largely a lagging reputation.”
One Andreessen Horowitz limited partner tells me that the firm’s fundraising success is largely predicated on its extraordinary access. “They don’t yet have the returns of an Accel or a Sequoia, but they are in the same sorts of deals,” he says. “It’s just a matter of time.”
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