Can a small venture capital firm make a difference?
Jul 6th 2009 7:00AM
Updated Dec 3rd 2009 12:33PM
Marc Andreessen, who helped start Netscape, and long-time partner Ben Horowitz have launched a $300 million VC fund to invest in tech companies. Compared to the billion dollar arsenals of other venture capital firms, it's an extremely small sum to make a dent in the market, and it may be too small for Andreessen to make any meaningful investments.
But Andreessen's philosophy is off-beat and it just may work. He was an early investor in Twitter, which initially raised just a few million dollars, according to The New York Times. He has also put capital into several other early-stage companies, all at a time when they probably needed only modest sums to get off the ground.
Whether the new Andreessen fund will work turns on a simple and very risky premise, which is that he can use brains and analysis instead of large sums of money to get significant stakes in companies that will be out-sized successes. Most venture firms put enough capital into new companies to get a relatively large stake and provide them money to make it though what could be two or three years of development and marketing.
Andreessen's approach will only work if he is the smartest guy in the room.
Douglas A. McIntyre is an editor at 24/7 Wall St.