It’s been less than six months since Andreessen Horowitz, the valley’s hottest new venture capital firm, announced its $650 million second fund. You and I could probably scrape by for quite a while on that kind of change, but on Wednesday, general partner John O’Farrell said the firm has raised a new, $200 million “co-investment fund.”
All told, Andreessen Horowitz — which won’t even mark its second anniversary until July — now has $1.2 billion under management.
O’Farrell explained on the firm’s blog that the new fund will be invested exclusively in outfits where Andreessen Horowitz already has invested. And invest it has — in more than 30 companies, at up to $100 million a pop, O’Farrell wrote. (That includes, of course, controversial secondary-market investments in Facebook and Groupon, which have shaken up the traditional VC model of investing directly in early-stage companies.)
O’Farrell noted that some of the firm’s portfolio companies have a voracious appetite for capital in order to hire, make acquisitions and expand internationally. Andreessen Horowitz believes the best way to meet those needs — and not have to share equity with other investors — is “being able to write a check for whatever amount is required.”
O’Farrell also implied that such cash infusions can help companies fend off the need to go public. We’ll see how this plays out down the road.
Also trumpeting a new fund this week was Insight Venture Partners, which said it’s closed two new funds worth a combined $2 billion. Insight is based in New York City but has holdings in the valley, including Twitter, Flipboard and Chegg.
As with Andreessen Horowitz, one of those new funds is strictly for co-investments in larger deals. The news continued the steady drumbeat in recent weeks of new $1 billion-plus venture funds, and I hear another will be announced any day now.
Angels among us: Mountain View legal heavyweight Fenwick & West on Thursday will release its first Angel/Seed Financing Survey, riffing off the quarterly Venture Capital Survey the firm’s been putting out since 2002.
The new survey looks at more than 50 Internet, digital media and software companies that raised angel financing in Silicon Valley or Seattle last year. The survey defined angel investment as a company’s first round of financing from $250,000 to $2 million, led by a professional investor (as opposed to the proverbial “friends and family”).
Fenwick partner Barry Kramer, who worked on the survey along with cohort Steve Levine, noted that the seed-financing environment has undergone big changes in recent years, in part because social and Internet companies can get up and running with far less cash than firms in other tech sectors.
Added Levine: “Angel financings have become more sophisticated and larger.”
The report found that angel funds or individual angels led 76 percent of the financings, while traditional venture-capital funds led less than a quarter. That certainly jibes with conversations I’m having these days about how return-minded VCs are steering further away from seed funding.
To read the full survey results, visit www.fenwick.com/angelsurvey.
Elsewhere, HP this week announced it’s teaming with the Angel Capital Association, a trade group for about 7,000 angel investors, to provide its members and portfolio companies “access to business opportunities, developer programs and” (of course) “HP product discounts.”
At the annual ACA Summit that wrapped up Wednesday in Boston, a Pennsylvania medical-device company called INRange won the inaugural “HP Startup Central” award. As such, INRange gets something called an “HP technology makeover.”
Does that mean TV’s Ty Pennington will be standing out on the company’s front lawn screaming, “GOOD MORNING”?
In other news: Virtual gaming giant Zynga this week announced it had hired the founders and employees of Austin-based MarketZero, which plays in the online poker space. It was Zynga’s 11th acquisition in 11 months, though terms weren’t disclosed.
Interestingly, the company went out of its way to note that it was only swiping the 16-member MarketZero team, not acquiring their existing business. Zynga says that business, including online portal PokerTableRatings, will continue under new ownership while the MarketZero folks get to work improving Zynga Poker.
Meanwhile, Andrew and Marcus Ogawa, the brothers who run Menlo Park VC firm Quest Venture Partners, tell me their online campaign to raise $1 million for earthquake relief in Japan has hit its goal, and only three weeks after launch. The brothers, you may recall, ran the campaign in tandem with CrowdRise, the “social funding platform” cofounded by actor Edward Norton.
Contact Peter Delevett at 408-271-3638 or pdelevett@mercurynews.com. Follow him on Twitter @mercwiretap.
