Andreessen Horowitz rides the wave of Silicon Valley IPOs
Venture capital firm’s co-founders feel vindicated after gatecrashing investment world
A decade after gatecrashing Silicon Valley’s most exclusive party, Ben Horowitz is sounding vindicated.
The venture capital firm he set up with Netscape co-founder Marc Andreessen has long drawn detractors — not least over what rivals claimed was a willingness to bid up the valuations of the most promising early-stage tech start-ups to uneconomic levels.
After the stock market debut of ride-hailing company Lyft at the end of last week, Mr Horowitz was ready with a response: “It doesn’t look that way in retrospect, now does it.” The IPO turned his firm’s investment, estimated at around $100m, into a holding worth more than $1bn, even after a 12 per cent share price drop on Monday. “It’s not easy to make $900m,” he added.
Andreessen Horowitz has never been too concerned about antagonising others in the clubby world of venture capital. Breaking into a narrow sphere where personal networking is key and returns are disproportionately concentrated in a small number of the most successful firms was never going to be easy.
“People are always going to bark at us because we’re always beating them,” Mr Horowitz said. “When you get beaten by the same people over and over again, you talk smack. But that’s OK, that’s just the name of the game.”
The firm has had big “exits” from its investments before, notably last year’s sale of code sharing site GitHub to Microsoft, bringing it about $1bn worth of Microsoft stock (like all VCs, it also has had its share of disappointments, among them one-time internet stars such as coupon marketing site Groupon, gaming company Zynga and Foursquare, the location-sharing app, that never lived up to the hopes).
But in the round of big tech initial public offerings that is expected to follow Lyft, Andreessen Horowitz stands to come out as one of the main winners. It was an early investor in several, leading the second, or “B” rounds, of financing for business messaging service Slack, social media site Pinterest, and PagerDuty, a business software company in which it holds a stake worth up to $250m, based on the indicated IPO pricing. It also led the B round for accommodation-booking site Airbnb, which has also been eyeing a stock market listing, though not before next year.