RESEARCH TRIANGLE PARK, N.C. – Founders need not necessarily beware in securing funding from entrepreneur and Internet pioneer Marc Andreessen.
As Andreessen has joked, he is moving to the “dark side” effective today in becoming a venture capitalist. And he is a bit of a contrarian when one considers the philosophy shared by Andreessen and co-founder Ben Horowitz as they launch a $300 million fund.
“A technology startup is all about the entrepreneurial team and their vision,” Andreessen says in a blog about the new firm Andreessen Horowitz. “Our job as venture capitalists is primarily to support entrepreneurs by helping them build great companies around their ideas.”
So that already seem to set Andreessen apart from many investors:
Item one: Andreessen, who helped develop the Netscape browser that so revolutionized the Internet, and Horowitz are “hugely in favor of the technical founder.” How many times have VCs put money into firms and as one of their first steps cast aside the founder into a CTO or chairman-without teeth role, his or her ownership diluted to they point the founder can’t fight back?
Item two: To further accent the point, Andreessen and Horowitz stress that they are “hugely in favor of the technical founder” and “strong technologists who know exactly what they want to build and how they are going to build it.”
Item three: To these VCs, it’s important that founders want to remain 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,” Andreessen said.
Item four: Their first priority is not an experienced, successful management team but “entrepreneurial vision,” although they stress it must be ‘clear.” Take a look at the investment landscape and see how many VC-backed firms have yet to exit or are treading water or are on life support as they remain focused on short-term revenue and customers rather than continued product R&D that made the entrepreneur and new venture such a hot investment at one time.
Item five: It’s the product, stupid. We believe that the product is the heart of any technology company,” Andreessen wrote.
Item five: As investors, Andreessen and Horowitz believe it is critical “to understand the product.” So they will still to their own knitting in making deals in companies they understand based on their own backgrounds as computer scientists. They won’t go after the “clean” and “green” deals nor life science or other such things as nanotech and space elevators. Modestly, Andreessen concedes: “We do not have the first clue about any of these fields.”
So what are their priorities – or “investment domain,” as Andreessen describes it?
To name a few:
• Consumer Internet
• Cloud computing
• Software as a service
• Business Internet
• Mobile software and services
• Networking storage
Item six: They have money, will travel. But they remain primarily focused on Silicon Valley because “venture capital is a high touch activity.” They also say it is not an accident that Google, Facebook and Twitter are in the Valley or nearby.
However, the right entrepreneur(s) with a hot product idea and a clear vision could bring Andreessen Horowitz east to the Carolinas and Georgia. Let’s hope they do.