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Marc Andreessen’s Signal messages suggest a16z’s due diligence process is sometimes subjective

October 4, 2022, 1:08 PM UTC
A message thread between Marc Andreessen and Elon Musk surfaced last week as part of the ongoing Musk-Twitter lawsuit.
Steve Jennings—Getty Images

The due diligence process may go on for months. Indeed, an Andreessen-backed founder recently told me it was the most stressful period of her life, as she handed over financials, source code, every legal document she had ever signed.

Or, if you’re Elon Musk, a $400 million check can fall in your lap as soon as you type out “sure.”  

Exhibit A: One of the most revelatory documents unearthed in the Musk-Twitter lawsuit last week included a text exchange on Signal between a16z GP Marc Andreessen and Elon Musk.

On April 25, Andreessen had messaged Musk on Signal: “If you are considering equity partners, my growth fund is in for $250M with no additional work required.”

“Thanks!” Musk responded about half an hour later. “Sure, would be great to have you as an equity partner.” 

Later that day, Andreessen emailed Jared Birchall, the managing director of Musk’s family office, and assured Birchall that he and David George (an a16z general partner who runs the firm’s growth investing team) were “speaking for the money” and “good to go,” lawsuit records show. 

As we know from Securities and Exchange Commission documents filed about a month later, Andreessen Horowitz ended up anteing up $400 million—or planning to, that is—into the Twitter deal, as part of the $7.1 billion sum investors like Sequoia, Brookfield, Binance, Oracle co-founder Larry Ellison, and others agreed to.

Oh boy, where to start? For one, it’s interesting to see venture capital investors like Sequoia or a16z take a more private equity-esque role in the marketplace as they blow up with LP dollars. Second, this exchange suggests that a16z’s due diligence process has become entirely subjective. (An a16z spokeswoman did not respond to an immediate request for comment for this story.)

While some founders can spend months jumping through hoops, other deals seem to pass muster with the simple blessing of a founding partner. It’s worth noting that Musk himself, who personally put quite a bit on the line to seal the Twitter deal, doesn’t seem to be one for due diligence either. He has repeatedly cited an alleged bot issue as the main reason he opted to back out of the Twitter deal, a problem that may have been uncovered initially upon further inquiry. 

Not to mention that the Andreessen-Musk exchange took place about four months before a16z said it was investing in Flow, the new seed-stage brainchild of WeWork founder and inspirer-of-documentaries Adam Neumann. The investment appears to be Andreessen’s largest first-time check of all time at a reported $350 million figure.

Let’s not forget: It’s not Andreessen’s $750 million in personal capital being thrown around. No, that capital belongs to its limited partners. I wonder how they feel about it.

Since we’re already on the subject of Musk, let’s talk some more. Here is a newly published list of investors who agreed to co-invest alongside Musk, as revealed in the legal filings (I feel like it’s worth pointing out that only one of the 21 co-investors on this list is a woman):

  • Scott Kupor, managing partner of Andreessen Horowitz 
  • Andrew Medjuck, founder of A.M. Management & Consulting
  • Ross Kestin, founding partner of Aliya Capital Partners
  • Patrick Patalino, general counsel of Baron Capital
  • Kaiser Ng, senior vice president of finance at Binance 
  • Nicholas Sammut and Nicholas Goodman of Brookfield Asset Management
  • Randall Glein, co-founder of DFJ Growth 
  • Chris Maher, Fidelity Management & Research Company
  • Vick Sandhu, general counsel of Honeycomb Asset Management
  • Ahmad Razi Karim, founder of Key Wealth Advisors 
  • Paul Marinelli of Larry Ellison’s trust
  • Peter Rahal, managing director of Litani Ventures
  • Ahmad Al-Khanji of the Qatar Investment Authority
  • Douglas Leone, global managing partner of Sequoia Capital
  • Daniel Strauss of Strauss Capital
  • Peter Avellone, founder of Cartenna
  • Katja Lake and Daniel Schwarz of VyCapital
  • Zachary Witkoff of Witkoff Capital
  • Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud

And, just for good measure and because it’s interesting (to me at least), here is a list of all the investors Musk’s Morgan Stanley bankers reached out to about potentially backing the deal, per the court records. Love a strong network.

  • Access Industries
  • Advent
  • Andrew Finn, Tim Urban, Quentin Koffey
  • Apollo
  • Aristotle Capital
  • ARK Investment Management 
  • Ashler Capital
  • Balyasny
  • BlackRock
  • Blackstone
  • Block.one (Michael Lubin)
  • BOND (Mary Meeker)
  • Brian Armstrong
  • Brinley Partners
  • California Regents
  • Capital Group
  • Carlyle
  • CDPQ
  • Centerbridge
  • Claure Group (Marcelo Claure)
  • Boston Management/Eaton Vance
  • ClearBridge
  • Clearlake
  • Coatue
  • Combs Enterprises
  • Cowbird Capital
  • CPPIB
  • Craft Ventures
  • D1 Capital
  • DaGrosa Capital Partners
  • Dash Wasserstein
  • Diameter
  • Dorilton Capital
  • Dragoneer
  • EL Acquisitions Steve Ellman
  • Emilio Masci
  • First Republic (Joe Gebbia)
  • Founders Fund
  • Francisco Partners
  • Frank McCourt
  • General Atlantic
  • General Catalyst
  • GIC
  • Gigafund
  • GoldenTree
  • Gregory Cohen (Rambleside)
  • Greycroft
  • Grok Ventures
  • GSAM
  • Guggenheim
  • Hellman & Friedman
  • Hither Creek Ventures (Zander Farkas)
  • HPS Partners
  • HRS Management
  • Iconiq
  • Insight
  • IVP
  • Jack Dorsey
  • Jill Smoller
  • John Catsimatidis
  • K5 Global (Michael Kives)
  • Ken Griffin
  • Ken Howery
  • Larry A Mizel
  • LAUNCH (Jason Calacanis)
  • Level Four (Joe Rogan)
  • Liontree
  • Long View (Crown)
  • Lutetia Capital
  • Marc Benioff
  • Mark Cuban
  • Mayor Bloomberg (Willett Advisors)
  • Michael Pollack
  • Mirae
  • MSD Partners
  • MSIM Private
  • MSIM Public
  • Naval Ravikant
  • Nelk (John Shahidi)
  • Nikesh Arora
  • Nikko Asset Mgmt. (Americas)
  • Norges
  • North Fifth Services (Bill Ford)
  • Nuveen (TIAA)
  • Oaktree
  • OTPP
  • Owl Rock (Blue Owl)
  • Palm Tree Crew
  • Paradigm (Matt Huang)
  • Pegasus Ventures
  • Peltz
  • Pershing Square
  • PIMCO
  • Pomegranate (Clay Whitehead)
  • Prometheus
  • Red Apple Holdings
  • Reid Hoffman
  • Reprogrammed Interchange 
  • Revere Capital
  • Revere Securities
  • Ross Gerber
  • Safra
  • Samuel Bankman-Fried (FTX)
  • Scott Nolan
  • Security Benefit
  • Senator
  • Sixth Street
  • Skip Capita
  • Skip Enterprises Pty 
  • Snowdevil Capital / Thistledown (Matt Cowin)
  • Softbank
  • Southpoint Capital
  • S.P. Hinduja Private Bank 
  • SRS Investment Mgmt.
  • T. Rowe Price
  • TCV
  • Teknecap
  • Thor Halvorssen
  • Thrive
  • Thrivent
  • TPG
  • UC Regents (Jagdeep Bachher)
  • University of Michigan
  • Veritas Capital
  • Viking Global
  • Warburg
  • Web3 Foundation
  • YLEM (Bastian Lehmann)

That’s all from me. See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Securiti, a Coyote, Calif.-based multi-cloud data protection, governance, and security company, raised $75 million in Series C funding. Owl Rock Capital led the round and was joined by investors including Mayfield and General Catalyst

- Liquid Death, a Santa Monica, Calif.-based beverage company, raised $70 million in funding led by Science Ventures

- Grow Therapy, a New York-based mental health care group, raised $45 million in Series B funding. TCV led the round and was joined by investors including Transformation and SignalFire.

- Loop, an El Segundo, Calif.-based electric vehicle charging infrastructure company, raised $40 million Series A-1 funding. Fifth Wall Climate and Agility Ventures led the round.

- Equi, a San Francisco-based alternative investment strategies platform, raised $15 million in Series A funding. Smash Capital led the round and was joined by investors including Company Capital and Montage Ventures.

- Exponential, a San Francisco-based DeFi investment platform, raised $14 million in seed round funding. Paradigm led the round and was joined by investors including Haun Ventures, FTX Ventures, Solana Ventures, Polygon, Circle Ventures, and others. 

- Polco, a Madison, Wis.-based local government community engagement platform, raised $14 million in a Series A funding. Mercury led the round and was joined by investors including BAT Ventures and Royal Street Ventures.

- LayerX, a Tel Aviv-based cybersecurity startup, raised $7.5 million in seed funding. Glilot Capital Partners, Kmehin Ventures, FinSec Innovation Lab, Enel X, Int3, GuideStar, and other angels.

- CoRise, a San Francisco-based live online upskilling platform, raised $3 million in seed extension funding. Greylock and GSV Ventures invested in the round.  

PRIVATE EQUITY

- Aspire Pharma, a portfolio company of H.I.G. Capital, acquired Morningside Healthcare and Morningside Pharmaceuticals, a Loughborough, UK-based pharmaceuticals provider. Financial terms were not disclosed.

- An affiliate of Peak Rock Capital acquired Spatial Business Systems, a Denver-based intelligent design software and spatial data integration solutions provider. Financial terms were not disclosed. 

- RF Investment Partners acquired a majority stake in InterCool USA, a Carrollton, Texas-based commercial and industrial refrigeration company. Financial terms were not disclosed. 

- Tech24, backed by HCI Equity Partners, acquired 1st Source Restaurant Services, a Lewisville, Texas-based repair services, preventative maintenance, and installation provider for foodservice, refrigeration equipment, HVAC, and plumbing. Financial terms were not disclosed.

EXITS

- Francisco Partners agreed to acquire bswift, a Chicago-based benefits technology and services provider, from CVS Health

- Halma acquired IZI Medical Products, an Owings Mills, Md.-based interventional radiology medical device company, from Shore Capital Partners. Financial terms were not disclosed. 

- Interpublic Group of Companies acquired RafterOne, a Portsmouth, N.H.-based multi-cloud commerce solutions provider on the Salesforce Platform, from BV Investment Partners. Financial terms were not disclosed. 

- Olympus Partners acquired EyeSouth Partners, an Atlanta-based eye care management services company, from Shore Capital Partners. Financial terms were not disclosed. 

OTHER

- Naver Corp. agreed to acquire Poshmark, a Redwood City, Calif.-based social e-commerce marketplace for new and secondhand items. A deal is valued at approximately $1.2 billion.

- Ligentia Group acquired VGL Solid Group, a Gdynia, Poland-based logistics operator. Financial terms were not disclosed.

- ZenBusiness acquired Ureeka, a remote-based growth-engine platform for small businesses to attract new customers. Financial terms were not disclosed. 

FUNDS + FUNDS OF FUNDS

- 83North, a London and Tel Aviv-based venture capital firm, raised $400 million for a fund focused on companies in Europe, Israel, and the U.S.

PEOPLE

- AE Industrial Partners, a Boca Raton, Fla.-based private equity firm, hired Charles Short as managing director and head of capital formation. Formerly, he was with Marathon Asset Management.

- John Curtius, a partner at Tiger Global Management, will leave Tiger in June to start Cedar Investment Management, a fund that will back early-stage startups in Series A through Series C rounds, according to a person with direct knowledge of the matter.

- Tiger Infrastructure Partners, a London and New York-based middle market investor, hired Danielle J. Hunt as chief corporate counsel. Formerly, she was with Allianz Global Investors

- Venrock, a Palo Alto-based venture capital firm, hired Ganesh Srinivasan as a partner. Formerly, he was with Confluent

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