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The most successful startup investor
How Marc Andreesen built the most influential VC firm
Investor Briefcase
December 02, 2024
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Marc Andreessen is one of Silicon Valley’s most influential investors. After creating a billion dollar startup at 24, he co-founded one of the most well-known venture capital firms, Andreessen Horowitz (a16z) which manages over 45 billion dollars in startup investments. From early investments in Facebook, Airbnb and Slack, Andreessen has become Silicon Valley’s most successful founder turned investor.
This week, we explore how Andreessen built a reputation as one of the most successful startup investors, and the playbook of how he places bets on future startups.
🦄 Creating a billion-dollar startup twice
🏛️ Building Andreessen Horowitz (A16Z)
🧠 His Playbook for Startup Investments
— Investor Briefcase Team
Marc Andreessen’s career began in 1993 at the University of Illinois, where he co-created Mosaic, the first graphical web browser. Before Mosaic, the internet was largely inaccessible to anyone without deep technical expertise. Mosaic changed the internet from a tool for researchers into a platform for the masses, making it easily accessible to navigate without code.
Mosaic caught the attention of Jim Clark, founder of Silicon Graphics, who teamed up with Andreessen to improve and launch Mosaic into the commercial market under the name Netscape. Netscape Navigator became the most popular internet browser of its time and the startups 1995 IPO valued the it at over $2.9 billion.
At just 24 years old, Andreessen had become one of the most successful founders in Silicon Valley, with no intention of stopping there.
“Bringing Mosaic to life was about simplifying something complex. Startups should only be created for one reason, and that is to solve a problem.”
As Netscape’s dominance faded to Microsoft’s launch of Internet Explorer, Andreessen decided to pivot and created Loudcloud in 1999, later rebranded as Opsware. This startup became the early days of cloud computing, and Opsware was later acquired by Hewlett-Packard in 2007 for $1.6 billion. By then, Andreessen had proven his ability to not just envision the future of internet startups, but also knew what it took to execute.
After two successful exits, Andreessen shifted his focus from founder to investor. In 2009, he co-founded Andreessen Horowitz with Ben Horowitz, aiming to address a gap in the venture capital industry. While most VCs only provided funding, a16z aimed to become a full-service partner for startups.
A16z built a 200-person team to offer hands-on support in areas like hiring, coding, marketing, and sales. The firm’s operational approach changed how founders viewed venture capital, making it one of the most founder-friendly firms in Silicon Valley.
“The best ideas always have investors chasing them, the key is to get them to answer the door, and money isn’t always the answer.”
They first needed to raise capital for their new VC, and raising $300 million for their first fund during the financial crisis was a bold move. However, Andreessen and Horowitz persuaded investors with their belief in long-term, technology-driven growth.
“The difference between good investors and great investors is the ability to see what others don’t.”
The results came quickly, and a few years into backing tech startups, a16z had become an early investor in everything from Facebook, Airbnb, Coinbase, and Slack. These early wins positioned a16z as a top-tier VC firm and one of the largest in the world, with over $43 billion in startup investments.
Marc Andreessen has built a reputation as one of Silicon Valley’s most influential figures, with a personal net worth estimated at over $1.9 billion. His approach centres on identifying exceptional founders, markets ready for disruption, and startups with the potential for long-term dominance.
“Execution matters more than the idea.”
Andreessen is driven by the belief that great founders are the start of great ideas. He prioritizes individuals with technical expertise, resilience, and the ability to execute. It is therefore that a16z often invests in founders that are rejected by other investors, purely focused on the quality of their ideas, rather than their ability to pivot and innovate.
“The key to success in investing is not predicting the future, but partnering with those who will create it.”
His decisions on the type of startups to invest are guided by his ability to recognize industries undergoing structural change. He invests in areas where technology can create exponential value, avoiding trends and instead, focusing on foundational shifts. His firm was one of the first to launch a crypto division for their investments, as well as betting large on AI and machine learning.
“Great companies aren’t built overnight, and they are not an obvious success when they are first created.”
Andreessen’s disciplined decision-making has helped turn a16z into a model for modern venture capital. Partially guided by his own success in building two unicorn startups, a16z has been able to stay at the front of major startup trends from social media apps and AI to crypto and space startups. With a long-term vision, only time will tell if any of their new investments are the right bets for the future.
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> Reid Hoffman in Airbnb: Hoffman, the co-founder of LinkedIn, invested in Airbnb during its early stages, providing mentorship and resources.
> Max Levchin in Yelp: Levchin, the co-founder of PayPal, was an early investor in Yelp, supporting the company's growth in the online review space.
> Sean Parker in Spotify: Parker, the co-founder of Napster, invested in Spotify, aiding its growth in the music streaming industry.
> Alexis Ohanian in Instacart: Ohanian, the co-founder of Reddit, invested early in Instacart, supporting its rise in the grocery delivery market.
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