Andreessen Horowitz, one of Silicon Valley's most reputable venture capital firms, announced Tuesday that it has raised a $650 million fund. At a time when venture capital is just starting to restore its former health, the size of the fund is all the more compelling because the firm that raised it is so young.
The firm was created in June 2009 as a joint venture between Ben Horowitz, co-founder and early CEO of Opsware (which sold to HP in 2007 for $1.6 billion in cash), and Marc Andreessen, the man credited with creating the first Web browser, Mosaic.
Andreessen Horowitz first closed a $300 million fund near the time of its founding. That money has since been invested in several well-known startup companies, including Digg, Foursquare, Skype and Zynga.
Impressively, the firm says it raised this second fund in just three weeks' time, a quarter of the three months it took to raise half the capital a year ago. All of the original investors and some new ones joined the second fund.
The only question now is which startups the firm will fund with its second round.
With some sources saying microblogging darling Twitter is considering another big round of funding somewhere in the $200 million range, it's tempting to think that Andreessen Horowitz would like to get a slice of that pie. (Russian firm Digital Sky Technologies, major funder of Facebook, Groupon and Zynga, is another possibiity).
The firm is no stranger to late-stage deals, having contributed $50 million to Skype (a deal that compromised a sixth of the firm's entire first fund). Andreessen Horowitz would indeed repeat the decision with another late-stage company, as long as the two investors really felt confident in the business' future.
On the other hand, Marc Andreessen doesn't sound like he's ready to spend a third of the new fund on just one company.
"I don't expect it will be [spent] as fast," he said of the second fund.
More likely, we'll be seeing startups raising less than $50 million rounds from Andresseen Horowitz.
For example, the last company to be funded by the firm was Kno, a digital textbook company that closed a $46 million equity and debt financing round, led by Andreessen Horowitz with participation from Silicon Valley Bank and TriplePoint Capital. Before that, Apptio, a SaaS business provider, raised a $16.5 million Series C round, led by Shasta Ventures with help from all current investors including Andreessen Horowitz, Greylock Partners and Madrona Venture Group.