The VC Model Fast Changing

Rocky Balboa (Photo credit: Wikipedia)

Andreessen Horowitz has been shaking things up. They write checks, that's still the primary thing they do, but they do that and about 11 other things for the companies they invest in. Over the past few years angel investing has been fundamentally disrupted, and the VC game is also being disrupted fast. That's a good thing.

Transcript: The keys to Andreessen Horowitz's success

Partners are fined $10 for every minute they are late to a meeting, a punishment that reinforces the belief that at Andreessen Horowitz, entrepreneurs deserve respect. ..... Having raised three funds worth more than $2.7 billion--and investments that have included Facebook, Skype, Groupon, and Instagram--Andreessen Horowitz quickly has become one of the most influential firms on Sand Hill Road. ..... founders make the best CEOs .... professional CEOs have these incredible networks. They know people in the press and customers and executives and all these guys they can bring into the company. So we thought the firm ought to build the definitive network for Silicon Valley so that when a founder comes in, we can give him a network that's better than any professional CEO ..... if you take out administrative staff, and you take out back office, that gives you about 45 operating professionals in the firm who aren't general partners. And there's no other firm in this industry that has anywhere close to that. You know, other firms might have three or four. We have 45. ..... these 40-some people are extremely expensive. They're cost centers. ..... in CAA, the way they were able to build a platform is the talent agents didn't take any salary for the first several years, and they used the commissions that they got from the actors and actresses and screenwriters to kind of build the platform. .... you won't see us doing things like biotech or clean tech or, you know, we're not degreed in material sciences ..... we have software-based startups in industries as diverse as agriculture, real estate, financial services, education

The Rise Of Company Builders

Certain operators are foregoing the traditional path of joining a traditional VC to instead create a studio-like holding operation. By doing so, they remain engaged with the grit and grassroots challenges of building a startup. They remain company builders......... a “new asset class” in the VC world .... Even VC giant Andreessen Horowitz is building an army of marketers, business development execs, recruiters and more to help aid in the creation of startups. .... because it is so easy to build startups these days, that there is a need for models that allow companies to leverage certain functions like sales and marketing, hiring, legal and more .... built and scaled sales teams across a number of industries and companies ..... the value of a shared platform of data, analytics and monetization tools. Betaworks has a layer of tools that its companies, which include Chartbeat, Bitly and others, all use. He compares this to the movie studio model, where companies like Disney and Universal create individual movies but have a layer of services in-house that promote films, and provide other functions across these various content plays. ....... if an entrepreneur is a coding genius, Andreessen will work on helping with go-to market strategies, marketing, recruiting, and more ..... The traditional VC model is predicated on the fact that failure happens in the marketplace. But our model is a more flexible platform for innovation. If things don’t look like they will work out, we can easily pivot because there hasn’t been as much capital and investment put in ..... the traditional VC model doesn’t allow VCs to go as in-depth in the trenches with entrepreneurs as with the studio model. .... it is very difficult for someone who isn’t really close to the company to add value on a regular basis ..... a class of entrepreneurs who don’t need to participate in the studio model. ..... Science takes mid-to-high, double-digit equity in their startups (compared to Y Combinator’s 7 percent). All models are different in terms of how they are breaking down equity allotments, but it can be daunting to give away that amount of equity and it begs the question of whether this is entrepreneur-friendly. ...... when Apollo Creed retired from professional boxing, but then decided to coach Rocky Balboa against Clubber Lang

Related articles

• The Truth About Business Plans - Do You Really Need One?
• Transcript: The keys to Andreessen Horowitz's success
• Reading Between the Lines: VCs and Their Websites
• New Andreessen Horowitz VC Chris Dixon Speaks!
• ANDREESSEN HOROWITZ: Here's The Magic Formula For Building Massive Companies [DECK]
• How To Find The Right Investors For Your Startup
• Can Mike Maples, Josh Kopelman, and other seed investors retake the term "Value Add"?
• Go West, Young Geek: Chris Dixon on Why He Became a Silicon Valley VC at Andreessen Horowitz and More! (Video)
• The Entrepreneur's Guide to Selecting a Venture Partner (And Avoiding Killing Your Business)
• Silicon Valley 2.0: The Evolution Of The VC Industry