Ever since Marc Andreessen formalized his startup investing by creating a firm, Andreessen Horowitz, back in 2009, the firm has been treated like one of Silicon Valley’s top startup investors.But in the last year or so, the whispers started: When will these guys back up all the hype?
Andreessen and his team of partners, lead by Ben Horowitz, have seen hundreds if not thousands of companies, and picked a dozen or so to invest in – and keep investing in – over the past couple years.
The question was: Would one of those startups funded by the firm sell or IPO, giving Andreessen Horowitz investors a return on their money?
The firm has scored some wins since its founding. It bought and then sold Skype, netting a big return. It was also an early investor in Instagram, which Facebook bought for $1 billion.
But the Skype deal was more of a private equity buyout than a venture deal, AH’s presumed specialty.
And, for justifiable reasons, Andreessen Horowitz opted not to continue investing in Instagram when it could have, favouring another startup in the same space.
So the question remained, when would Andreessen Horowitz show that it could identify a startup, fund it multiple times, and see it to an exit?
The answer, of course, was: yesterday.
That’s when Nicira, thrice-funded by Andreessen Horowitz to the tune of $17.7 million, sold to VMWare for $1.23 billion, netting Andreessen Horowitz an estimated $300 million return, paying back its entire 2009 fund.
This emperor is wearing clothes.
Business Insider’s Jay Yarow explains the significance of the deal and the implications of Andreessen Horowitz’s success:
Produced by Daniel Goodman
We covered the deal pretty closely:
- Ben Horowitz Explains Why Tiny Startup Nicira Was Worth $1.26 Billion To VMware
- VMware Buys Nicira For $1.26 Billion
- VMware Exec: $1.26 Billion For Nicira Was A Good Buy