Photo: Om Malik via Instagram
All right, this is total speculation but bear with us here.Picplz, a mobile, social photo-sharing site, just announced they raised $5 million from venture capital firm Andreessen Horowitz, whose general partner Marc Andreessen will take a seat on their board. A mobile, social photo-sharing site?
Instagram, who raised $300k in seed funding from… Andreessen Horowitz?
Most VCs try very hard not to invest in competing companies, because of the obvious conflicts of interest — and most entrepreneurs know not to try to raise money from VCs who have already invested in competitors. And this isn’t just custom — board directors have a legal fiduciary duty to the shareholders whose board they sit on. So, what gives?
The most likely answer, points out entrepreneur and superangel Ouriel Ohayon on Twitter, is that Instagram is being acquired.
So who’s the most likely acquirer? Probably Facebook. Instagram founder Kevin Systrom is a former Googler, which Facebook likes, and actually previously worked at a startup that Facebook acquired. Facebook likes acquiring small, interesting companies like Instagram for their talent.
If so, that would probably be bad for all the early adopters who love Instagram, as Facebook usually shuts down the startups it acquires and uses the people for other parts of its organisation.
What about the potential conflict of interest? Andreessen Horowitz has a reputation among VCs for “willing to go a bit further than others in tolerating potential conflicts of interest” among its investments, according to Brad Stone’s recent profile on the firm for Bloomberg. (For instance, one of its partners sits on Facebook’s board, while it’s also the main investor in Foursquare, a Facebook competitor.)
In this case, that may be overblown: Andreessen Horowitz invested in both PicPlz and Instagram’s seed rounds, but back then, “Instagram” didn’t exist, and its founders were working on a different project called Burbn. The team has since pivoted to be more in direct conflict with PicPlz. And now that Andreessen Horowitz has led PicPlz’s Series A, it seems unlikely to participate in Instagram’s next round.
Any other ideas?