* Andreessen Horowitz fund raises $300 mln
* Plans to invest in wide spectrum $50,000-$50 mln
* Expects to fund 60-80 start-ups annually
By David Lawsky
SAN FRANCISCO, July 5 (Reuters) - Well-known Internet
entrepreneurs Mark Andreessen and Ben Horowitz have raised $300
million for a new venture capital fund, declaring they plan to
avoid the danger of forcing start-up companies to make money
too soon.
Shunning a quick investment return may sound
counterintuitive at a time when other venture capitalists are
scratching for cash or being forced to shut down, but
Andreessen and Horowitz beg to differ.
They point to dozens of start-ups they had a hand in -- but
more important for fundraising may be Andreessen's fame as
founder of the world's first Web browser company, Netscape.
Horowitz was an executive there as well.
Andreessen-Horowitz -- dubbed "A to Z" -- has only two
general partners, an unusually high cash-to-investor ratio.
"We have designed our charter so we can invest in a range
anywhere from $50,000 to $50 million," Andreessen said. "We can
invest in early stages, we can invest in classic venture rounds
where you might invest $5 million or $8 million, we can also do
late stage. It's what we call full spectrum," he said.
Venture capital is a long-haul journey, with investments
often lasting seven years or more before a company can make
money. The $300 million is designed for a 10-year run, and
Andreessen said that it could stretch out even longer for some
companies.
Silicon Valley and the West Coast are full of successful
companies, from Intel Corp (INTC.O) to Cisco Systems Inc
(CSCO.O) and Google Inc (GOOG.O), but they are tough to pick.
The venture capital industry crashed in 2001 when the
dot-com bubble burst and has never recovered to the levels of
the late 1990s. With fewer initial public offerings, the
industry has languished except for a few successful firms.
Andreessen said he would not be surprised if more than half
of the 700-plus venture capital funds in Silicon Valley
eventually close up shop, which he said would be good for the
industry.
"That's what should happen. It's not just that there are
400 extra venture funds. It's that they are funding 4,000 extra
companies, none of which will ever amount to something," he
said. "Maybe half those firms won't be able to raise funds in
the next 10 years."
Andreessen said about 15 companies a year founded in
Silicon Valley will go on to have revenue of $100 million
annually. He wants to figure out early which those are.
"They generate all the venture returns. Those are the
companies that matter. If you do not get into those companies,
you fail," he said.
Andreessen cited as a success one of the companies that he
and Horowitz invested in two years ago, Aliph, maker of the
popular bluetooth headset Jawbone. "They're doing more than
$100 million in revenue," he said.
Horowitz and Andreessen envision making as many as 60 to 80
investments at the low end of the spectrum, and spending the
majority of their cash on 10 to 15 companies.
Most of their investments will be in Silicon Valley and
make use of their expertise in computers and the Internet,
including cloud computing, network storage, servers and
databases.
Before forming their new firm, Horowitz and Andreessen
invested in 41 companies, either singly or together. They
include social media companies like Twitter, Digg and
Linked-In, and Rightscale -- which helps companies use the
Internet cloud.
(Reporting by David Lawsky and Anupreeta Das, editing by
Tiffany Wu, Richard Chang and Matthew Lewis)
