Last week we wondered why top venture capital firm Andreessen Horowitz had invested in two competing startups, photo sharing apps Instagram and Picplz, wondering if this might even mean that one of them is being acquired.
That speculation has been vehemently denied by Instagram, and now Andreessen Horowitz General Partner Marc Andreessen has given his answer to the issue of investing in competing startups on question and answer site Quora.
Basically: back when Andreessen Horowitz invested in Instagram, they weren’t about photo sharing, and now that they’re invested in two competing companies, they can only help out one of them.
We invested in the seed rounds of both companies when they had different strategies (Instagram at the time was called Burbn and had a different plan) and therefore there was no conflict at that time. As their products evolved and as Burbn became Instagram, they ended up doing very similar things, so we developed a conflict and therefore can only invest in one of them going forward. We are fans of both entrepreneurs.