Andreessen Horowitz announced that they have just raised $7.2B for the following venture strategies: American Dynamism ($600M), Apps ($1B), Games ($600M), Infrastructure ($1.25B), and Growth ($3.75B).
When Ben Horrowitz and Marc Andreessen started the firm in 2009, the conventional wisdom in Venture Capital was that in any given year, only 15 companies would ever generate $100M in revenue and those 15 companies would drive almost all of VC returns. At that time, the conventional wisdom was right. Venture Capital firms configured themselves to address a market of 15 important companies. This meant relatively small fund sizes and a small number of partners in a single fund was the optimal approach. Andreessen Horowitz began in exactly this way with a $300M fund and 2 General Partners.
Shortly after they started the firm, all that began to change. They saw the new world coming and wrote about it in 2011 in a piece called, “Software is Eating the World.” What he predicted then came true. In the past 10 years, nearly every significant business has been reimagined as a software company, and the market for these companies has, as a result, increased dramatically. Along the way, each submarket – American Dynamism, Apps (Consumer, Enterprise, Fintech), Bio+Health, Crypto, Games, Growth, and Infrastructure – has become as big as the original entire Venture Capital market.
As a result, to win in each category, they needed to expand from one great investor in each segment to a dedicated investing team with a differentiated platform in each category to help the best founders in those fields build amazing companies. Each area requires deep expertise, so it’s not wise to try to cross-train someone in, for example, Games and Infrastructure. More importantly, founders building AI foundation models need an entirely different set of networks and capabilities than founders building biotech therapies.
“To best serve the market, we created dedicated venture funds, each with its own team of experts and capabilities, specifically focused on each segment. We did this because we believe as former entrepreneurs that your investors really matter. A great investor with the right help, the right networking, and the right expertise at the right time can be the difference between success and failure.”
Featured image credit: Edited from freepik
