Andreessen Horowitz Launches New $ 400 Million Seed Fund

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Leading venture capital firm Andreessen Horowitz today revealed it is launching a new $ 400 million fund to support early stage startups.

The move follows a significant increase in venture capital investment in the first six months of 2021.

Andreessen Horowitz, unofficially known as a16z, is seeking to support teams of startups in “all areas of technology” through the new fund, the firm detailed in a report. blog post. Andreessen Horowitz is no stranger to supporting start-ups: he was among the early investors in large enterprise software companies such as Databricks Inc., Apptio Inc. and Okta Inc., to name a few companies. portfolio.

The company also has a solid track record of supporting consumer tech startups. Andreessen Horowitz led a $ 112 million fundraiser for Airbnb Inc. in 2011 at a valuation that was believed at about $ 1 billion at the time. Today, Airbnb is publicly traded and has a market capitalization of almost $ 100 billion.

Due to his strong investment track record, Andreessen Horowitz’s launch of the new seed fund is good news for start-ups. Andreessen Horowitz, general partner, Martin Casado, told TechCrunch in a maintenance before the announcement that the venture capital firm typically makes investments of around $ 6 million for the early stage startups it supports. The firm also provides support to companies alongside capital.

“This will include access to training and content, an advisory group of peer companies and a network specifically geared towards seed companies,” Andreessen Horowitz said in the blog post announcing the fund today. In addition, the venture capital firm offers “help with early hiring, early product design, early marketing and growth efforts, and of course, white-glove access to the most extensive customer network. of the sector ”.

Casado said that seed funding rounds have already accounted for about half of Andreessen Horowitz’s startup investments since 2020. By creating a fund specifically dedicated to supporting early stage startups, the company would seek to improve internal processes it has in place to make such investments and ensure that “investors are properly rewarded for the associated risk”.

The fund is the latest of several announced by Andreessen Horowitz in recent quarters. Previously it spear a $ 2.2 billion fund in June to support cryptocurrency businesses. At the end of last year, Andreessen Horowitz installation a $ 1.3 billion investment vehicle to support start-ups working in consumer, business and financial technologies.

Casado said Andreessen Horowitz’s decision to double the number of early stage startups is part of a larger industry trend. Investments in new startup teams have picked up “dramatically” over the past three years, said the investor, who previously co-founded software-defined networking pioneer Nicira. It was acquired by VMware Inc. for $ 1.2 billion.

Overall, venture capital activity has grown significantly over the past year. Funding for startups hit a record high of $ 288 billion in the first half of 2021, according to Crunchbase search, more than double the $ 110 billion invested last year.

Part of the reason for the increased investor enthusiasm may be that the number of large exits has also skyrocketed. According to Crunchbase, more venture-backed startups went public this year with market capitalization above $ 10 billion than in 2020. Higher valuations of the initial public offering mean bigger returns for companies venture capital.

Andreessen Horowitz was among the top five most active venture capitalists in the first half of 2021, along with Accel, General Catalyst, Tiger Global and Insight Partners. It is estimated that over $ 6 billion was invested in approximately 3,500 early stage startups during the six-month period. Because Andreessen Horowitz is a leading player in the venture capital ecosystem, his decision to launch a dedicated seed fund could send a strong signal to other investors.

Picture: Andreessen Horowitz

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