If Anyone is Reinventing the Venture Process
- November 29, 2012
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If anyone is reinventing the venture capital process, it would have to be Andreessen Horowitz (a16z for the spelling challenged or localization-software-inclined). A recent post by Chris Dixon underlines that fact, as he announces that he’s joining their firm:
Earlier this year I got to meet the a16z team and observe the operation directly. There are over 60 people at the firm. Only six people do traditional VC activities: investing, joining boards, and helping out. The rest are exclusively focused on helping entrepreneurs.
The “startup idea” behind a16z is: instead of spending the bulk of the fund fees on partner salaries, spend it on operations to help entrepreneurs. There is a marketing team (=helps you get noticed), a talent team (=helps you recruit), a market development team (=helps you get customers), and a research team (=helps you figure stuff out).
Spending time there, I had the same feeling I have whenever I meet a great startup: “This is obviously the future, why didn’t someone do it before?”
Based on Chris’ angel investing, entrepreneurial activity, and commentary online, he’s going to be a great addition to the team. What I found most interesting about the post however, was the approach to venture investing.
Chris emphasizes the teams: a marketing team, a talent team, a market development team, and a research team. Reading between the lines, I see: a better process for startup marketing, a better (already baked) process for recruiting for startups, a better process for market development, and a better process for researching the sticking points that slow startups down.
What’s it all about? Better process, and better focus for the startups – you focus on your core mission of the business you’re in and what you have to do to capture it – while someone else hands you a good-enough recruiting process that is far superior to what you would do on your own time, for example.
Assuming these teams are great, this is a big leg up for a16z investments. There are other VC’s that offer these kinds of services, who don’t excel at them. If their investments rely on those common services they’ll fail. Sounds like Chris (and lots of other entrepreneurs) is (are) convinced that a16z performs these processes really well.