Photo: Joanne Wan
In March 2010, Andreessen Horowitz invested $250,000 in ex-Googler Kevin Systrom’s new startup.Called Burbn, the startup’s plan was to create an “HTML5 version of Foursquare,” according to a report from GigaOm.
Two years and one pivot later, Burbn – now a photo-sharing app called Instagram – sold to Facebook yesterday for $1 billion.
After a couple of rounds of dilution, AH’s stake was down to 7% by the time of the sale, according to a source close to the firm.*
Turning $250,000 into $70 million is a 280X return in two years – a classic venture home run.
Even more amazing: AH’s return could have been much bigger.
The company declined to invest in Burbn during later rounds of funding because when it became Instagram, it became a competitor to PicPlz, another startup in the AH portfolio.
*This source also tells us that Marc Andreessen, an AH principle, recused himself from discussions about the acquisition on the Facebook board, which he sits on.