Andreessen Horowitz raises $650 million fund

Ronny Kerr · November 3, 2010 · Short URL: https://vator.tv/n/1351

Foursquare, Skype and Zynga investor could be courting Twitter next

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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.

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What is Twitter?

Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests. 

Where did the idea for Twitter come from?

Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.

How is Twitter built?

Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes. 

We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.

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What's next for Twitter?

We continue to focus on building a product that provides value for users. 

We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.