From Andreesen Horowitz blog announcing their massive rise to power in Silicon Valley. source: http://bhorowitz.com/
Since Marc and I founded Andreessen Horowitz three years ago, we have raised $2.7 billion.
That statement begs a few questions. The two most obvious are:
Why did such a new venture capital firm raise so much money?
How did such a new venture capital firm raise so much money?
They raise that much money for multiple reasons: 1) the fees are great 2% per year for 10yrs and 2) they can invest in the hottest deals without regard for price and valuation and 3) they could use the money as a barrier to entry against other firms
Also they have been vertically integrating in services for entrepreneurs that were traditionally market based and not tightly integrated in the firm. They want to own the services market for entrepreneurs and want to own it end to end.
It’s a land grab philosophy and one with the notion of founder friendly at the core.
I personally have no problem with their model and if I could do it that way I would. The key to success for that model (and in our own little way at SiliconANGLE Labs) is to provide VALUE and create opportunity, jobs, wealthy, and other society benefits.
The old notion of VC is certainly changing and a new generation of folks are creating the future.