Marc Andreessen Becomes Gigantic Angel

Marc Andreessen announced on his blog that he and his investing partner Ben Horowitz have funded an investment pool to the tune of $300 million for the purpose of investing in technology start-ups.

The investment philosophy of the new firm, Andreessen-Horowitz, more closely resembles the behavior of an individual angel investor, backing firms with relatively small amounts (typically under $10 million) and giving entrepreneurs the benefit of their experience without necessarily taking a formal management or board role, than traditional venture firms that typically invest $25 million and more, significantly diluting founders’ stakes and taking on major management responsibilities. The partners, both of whom have extensive experience working on the infrastructure side of the Web, are more likely to have interest in start-ups that could provide infrastructure support to emerging cloud-based businesses and software vendors than in those software vendors themselves.

Om Malik also predicted that Andreesen and Horowitz, who teamed up to create OpsWare, an infrastructure management vendor which they sold to HP in 2007 for $1.6 billion, will probably invest heavily in companies that address a “woeful” shortfall in the infrastructure needs of the new social Web.

Andreesen himself defined the company’s scope as comprising:

consumer Internet, business Internet (cloud computing, “software as a service”), mobile software and services, software-powered consumer electronics, infrastructure and applications software, networking, storage, databases, and other back-end systems.

Andreessen, currently the chairman and co-founder of social network platform vendor Ning and co-founder of defunct browser vendor Netscape, said the new firm will give more weight to companies run by technology founders. Andreessen clearly believes that leadership skills can be taught, but technological vision and entrepreneurial spirit cannot. Andreessen wrote that he and Horowitz

are hugely in favor of the founder who intends to be CEO. Not all founders can become great CEOs, but most of the great companies in our industry were run by a founder for a long period of time, often decades, and we believe that pattern will continue. We cannot guarantee that a founder can be a great CEO, but we can help that founder develop the skills necessary to reach his or her full CEO potential.

Andreesen said the fund will invest anywhere from $50,000 to $50 million on start-ups, “depending on the stage and the opportunity,” reflecting a widely-held belief that start-ups today require less capital to get going than their predecessors, thanks to cloud-based infrastructure that can be rented to suit growing capacity needs rather than acquired up-front. Andreessen wrote,

many of the best new technology companies require far less money up front to build the first product, but far more money later to scale into today’s enormous global market, as compared to historical norms.

Andreesen also said he would continue in his various roles as chairman of Ning, and board memberships at Facebook and eBay.