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Late-stage, growth-stage companies need more loving than ever, so this firm's saving up
Only five months after unveiling a $650 million fund, Ben Horowitz and Marc Andreessen’s young but esteemed venture capital firm Andreessen Horowitz has created a new $200 million co-investment fund intended to supplement larger, growth-stage funding rounds.
Twitter, Foursquare, Zynga--these are just a few of the most famous companies Andreessen Horowitz has invested in.
The firm’s original fund from November was designed to be doled out in chunks ranging in size from $50,000 to $100 million, for seed-stage startups to late-stage monoliths. And that’s how it’s played out since, with over 30 companies raising money from the fund so far. Many recent deals for Andreessen Horowitz, however, have been tilted toward later-stage companies that necessarily required considerable chunks of funding to solidify and accelerate their growth.
“These companies have a substantial need for capital,” explains John O’Farrell, General Partner at Andreessen Horowitz,” they’re hiring aggressively, expanding internationally, making acquisitions, investing in facilities, pouring money into marketing—all to double down on their success and win the entire market. Often, they want to meet their needs with one new investor. The size of their market opportunity allows for very attractive returns for the investor they choose to work with.”
Instead of being used as a completely alternate or separate fund, then, the co-investment fund will be used in tandem with the earlier fund for bigger rounds.
From the established and well-known to up and coming, from hardware for consumers to software for the enterprise, startups and businesses funded by Andreessen Horowitz truly run the gamut. Here are some of the biggest funding rounds graced with the firm’s participation in the past couple months:
March 2011: Jawbone, creator of bluetooth headsets, wireless speakers and more, raised $49 million from Andreessen.
February 2011: Box.net, cloud storage for the enterprise, raised $48 million in a Series D round led by Meritech Capital Partners, with Andreessen, a repeat investor.
February 2011: Mobile gaming startup TinyCo raised $18 million in Series A funding led by Andreessen.
February 2011: This really wasn't a funding round, but Andreessen Horowitz invested over $80 million in Twitter by purchasing stock in private secondary markets, a spokesperson at the firm has confirmed.
In addition to its new funds and latest investments, the firm has also been expanding its internal team. Most recently, Scott Weiss and Peter Levine have joined Marc Andreessen, Ben Horowitz and John O’Farrell as partners.
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Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users. Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist. The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel. Zynga is headquartered at the Chip Factory in San Francisco. For more information, please visit www.zynga.com.
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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.
How do you make money from Twitter?
There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.
In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet.
At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.
Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.
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.