Andreessen Horowitz makes bold donation to philanthropy

Partners pledge to donate half their lifetime earnings to charity

Financial trends and news by Steven Loeb
April 25, 2012
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In an announcement that rings similar to Giving Pledge, organized by Warren Buffet and Bill Gates to encourage the world's richest to give half their fortunes to charity, partners of one of the most high-profile VC firms in Silicon Valley said they are donating at least half their lifetime earnings to philanthropic causes. 

The six partners of venture capital firm Andreessen Horowitz made the pledge, starting with a $1 million gift to six charities, the firm announced on its blog Wednesday.

Ben and Felicia Horowitz are donating to Via Services, a charity that helps people with disabilities and special needs. Jeff and Karen Jordan are giving to Ecumenical Hunger Program, a Palo Alto based charity that provides families with emergency food and clothing. John O’Farrell and Gloria Principe chose Second Harvest Food Bank,  one of the largest food banks in the country. Marc and Laura Andreessen chose Fresh Lifelines for Youth, which is dedicated to ending gang violence. Peter and Martha Levine are donating to Canopy, a charity to benefit urban forests. Scott and Pamela Weiss are giving to The Shelter Network, which helps homeless people find housing and shelter.

"We are fortunate to work with some of the best entrepreneurs and technologists in the world, and in the process help create great and valuable companies," wrote the partners on the company blog. "That activity, done well over decades, can generate a lot of money that can then be productively deployed philanthropically back into the society that makes it all possible.  We love participating in this process, and we hope that our philanthropy can, over time, help make the world a better place."

The way it will work is that the partners will donate half their management fees and carried interest for their entire venture capital career.  

How much will it pledge?

Menlo Park, Calif-based Andreessen Horowitz has only been around since 2009, but it is already a top VC firm, raking in siginificant management fees. It secured a $1.5 billion fund in January, announcing it had raised $2.7 billion in three years.

And, while the company doesn't publicly report its returns, it's already had a significant exit in Instagram. Andreessen Horowitz initially invested $250,000 in Instagram, eventually making $78 million off the investment, a 312-times return. Andreessen Horowitz has already returned $288 million to its investors.

The firm is also invested in some notable winners. It invested $27 million in Pinterest, led a $112 million round for Airbnb, invested $80 million in Twitter, was involved in a $180 million round for Zynga and led a $40 million round for

The firm was also involved with a consortium made up of Silver Lake, Joltid Limited and the Canada Pension Plan Investment Board, who, together, purchased Skype from eBay for $2 billion in 2009. In May 2011, they sold Skype to Microsoft for $8.5 billion.

How charitable is Silicon Valley?

Andreessen Horowitz is following in the footsteps of some other big name venture capitalists and entrepreneurs. 

Facebook founder Mark Zuckerberg also promised to give the majority of his fortune away to charity, as did venture capitalist John Doerr. VC Mike Moritz gave a donation of $50 million to his alma mater, Christ Church, Oxford and PayPal co-founder Peter Thiel has set up the Thiel Fellowship, which gives $100,000 grants to 20 people under 20 years old so they can grow their ideas. Wall Street business magnate Warren Buffet gave $1.78 billion to charity last year. 

The gold standard for charity is still Bill Gates, who set up the Bill & Melinda Gates Foundation with his wife, which has so far given out over $26 billion in grant money. 

Andreessen Horowitz did not return our request for comment.

For an excellent discussion on charitable giving, read What will you do with your billions on the blog.

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