

How Marc Andreessen makes Silicon Valley magic - DealisIN
http://gigaom.com/2012/02/02/marc-andreessen-horowitz-silicon-valley-startups/

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vm
Andreesen Horowitz gets more credit than it deserves for venture investing.
The group has only generated returns from its late-stage growth and PE
investments (Skype, Groupon, Zynga). Let me explain.

This article, for example, cites a16z's investments in iconic companies
Facebook, Twitter, Zynga, Groupon, Airbnb, Box, Fab.com and Pinterest - but
all of those were late-stage growth rounds or secondary purchases, where they
aren't going to add much value as investors.

Many of those growth rounds were won against competing VCs because a16z paid
the highest price and wrote the biggest check. Writing lots of big checks
allows you to quickly invest lots of capital and raise new funds. And stay in
the headlines.

It's not to say that those are bad investments. They're great investments.
It's just not venture investing or helping entrepreneurs build companies. You
know who else made late-stage investments in Skype, Groupon and Zynga, besides
a16z? Silve Lake, the mega-LBO fund. They're about as far from venture capital
as you can get.

In fact, a16z hasn't had a single notable exit from it's early-stage
investments. That's not to say that they won't - it's just too early to tell.

Don't get me wrong - the firm is lead by some of the most amazing
entrepreneurs ever. In fact, I would have trouble not taking a meeting with
them, just because I would want their feedback on my business. But they
haven't yet shown a track record of helping to mentor early stage portfolio
companies to successful outcomes.

And that's what VC is. Groups like First Round Capital, Union Square Ventures,
Sequoia and more, have exceptional track records working with early-stage
companies and deserve tons of credit for being amazing VCs. Andreesen Horowitz
isn't in the top-tier today.

Am I missing something about a16z's early stage track record? If so, please
let me know.

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SkyMarshal
For anyone who missed it, he did a really excellent presentation on VC at
Stanford last summer:

<http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2457>

