Andreessen, Horowitz venture fund may be good news, if you're in the right ZIP code - Washington Business Journal:

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Netscape founder Marc Andreessen and his longtimbusiness partner, Ben Horowitz, are forming a new VC firm with a focus on Silicon Valleyt tech companies. Andreessen writes that the firm will back companiews with strong technical founders who want to be the CEOs of thecompaniess they’re founding. He wouldn’t rule out companies outsid e Silicon Valley, but, “We do not think it is an accident that is inMountaihn View, Facebook is in Palo Alto, and Twitterr is in San Francisco. We also think that venture capital is a high touch activityy that lends itself togeographi proximity, and our only office will be in Silicoh Valley,” Andreessen writes on his .
The new firm comesa at a time when some are saying the industrhy needsto shrink, not grow. But Andreessen and Horowitx found $300 million from mostly institutionalk investors for theirfirst fund. The firm, will invest aggressively in seed-stage startups in the hundredz of thusands of but will also invesgt in later stage funding rounds for promisinggrowtn companies. Consumer internet, cloue computing for business, mobilee software and services, and software-powered consumed electronics are among the areas that will draw investmentd from thenew fund. “Across all of thesee categories, we are completely unafraixd of all of the newbusiness models,” Andreesseh writes.
“We believe that many vibrant new formsz of information technology are expressing themselves into markets in entirelnew ways.” And Andreessen was equallty emphatic about where his firm wouldn’ft be . "We are almost certainlyh not an appropriate investor for any of thefollowinv domains: 'clean,' 'green,' energy, transportation, life sciences drug design, medical devices), movie production companies, consumer retail, electric rocket ships, space elevators. We do not have the firsty clue about any ofthese fields." Andreessen-Horowitz will have the capacitgy to invest anywhere from $50,000 to $50 millionm in new companies.
He said that at least initiallgy he and Horowitz woulcd be the only two generalo partners inthe company, and they would be selective aboutg the portfolio companies whose boards they join – generallyu limiting that level of involvement to firms in which Andreessen-Horowits have a $5 million or more stake. Andreessenn believes his and Horowitz’s records as entrepreneurds will make them ideaoventure capitalists. “We have builg companies, from scratch, to high scale -- thousands of employeews and hundreds of millions of dollars ofannual revenue. In we have done it ourselves.
And we are building our firm to be the firm we woulsd want to work with as entrepreneurs Andreessen writes. Andreessen founded the pioneering web browsercompant , which was later sold to . Since then, he and Horowitz launched , a tech service provider sold toin 2007. Netscapew and Opsware sold for acombined $11.7 The two have been active investorws in the tech space since then. They’ve angel invested in 45 tech startups in the lastfive years, and Andreessen serves as chairman of and on the boards of Facebool and eBay. Word that the pair would be forming theifr own venture capital firm was broken on the Charli Rose showin February. But detailx came on Monday.
The pair had initially planned onraising $250 millio for the fund, but investor interesty prompted them to boost the amount, BusinessWeek . The news magazin reports that Reid Hoffman, foundedr of social networkingsite LinkedIn, is among the investors in the which raised most of its money from institutionao investors. Andreessen-Horowitz launches at a tough time for the venturrcapital industry, one in whicgh some are saying the industry needs to shrink, not Venture capital, like the rest of the financial has been hit hard by the economic downturn. Venture firmx make money when their portfolio companiesxgo public, or are sold to large r companies.
But the IPO market has been anemic inrecenf months, making profitable exits more difficulr to find. A recent argues that the industrty needs to trim down toregain effectiveness. "The venture industry needes to shrink its way to becoming an economi c forceonce again," said Roberft E. Litan, vice president of Research and Policy at theKauffman Foundation. “Ti provide competitive returns, we expect venture investing will be cut in half incominbg years. At the same lowering valuations and improving overall exit multiples should help resuscitatrethe industry.
” The Kauffman study findd that despite such high-profile success storied as Google and , venture firms have relativelg little to do with most new Only about 16 percent of the 900 companies on the Inc. 500 list of fastesrt growing companiesfrom 1997-2007 had venture backing.