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Summary:

Marc Andreessen, the prominent founder of Netscape Communications, and his longtime business partner, Ben Horowitz, are teaming up again — this time to spearhead a new $300 million venture fund, called Andreessen-Horowitz, that will invest in companies of all shapes and sizes — from very early […]

Marc Andreessen, the prominent founder of Netscape Communications, and his longtime business partner, Ben Horowitz, are teaming up again — this time to spearhead a new $300 million venture fund, called Andreessen-Horowitz, that will invest in companies of all shapes and sizes — from very early stage businesses that require a few hundred thousand dollars to late-stage companies that might require tens of millions. Marc had announced his intent to start the fund on “The Charlie Rose” show. (Watch the video.)

Marc and Ben have a simple objective for their new fund: use their nimbleness — the fund will have just two general partners — to invest in companies that meet their view of the world. “We are going to focus on products that we understand, which is essentially classic computer technologies,” Andreessen said. We met last week to discuss his new fund; I decided to focus our conversation about the web infrastructure. “There are a lot of changes in the (web and IT) ecosystem,” he said. “lots of interesting opportunities in the (web’s) backend.”

What The Web Is Saying
The New York Times Bits’ Blog: “Our secret plan is to watch what gets acquired and fund the next company,” Marc Andreesen tells the New York Times Bits Blog.
PE Hub: Andreessen and Horowitz, will not invest in “cleantech, energy, biotech, life sciences, nanotech, rocket ships, electric cars or space elevators.”
AllThingsD:“We are unafraid of investing in 400 people instead of 40 people…And we could invest $50,000 to $50,000,000.”
Venturebeat:A “new wave” of consumer electronics companies with most of their value in software will be targeted by the fund.
Sarah Lacy: Because there are just two of them, Horowitz and Andreessen won’t always take board seats. If they pick the right entrepreneurs, Andreessen argues they shouldn’t have to.

I agree — as I have often talked about in the past, as we hurl towards what is essentially an ultraband, always-connected and networked planet, there are enormous opportunities. Today’s technologies are woefully falling short of the needs of this new web. When I interviewed Facebook’s VP of Engineering, Jonathan Heiliger, who spoke at our Structure 09 conference, he bemoaned the lack of hardware to meet the needs of his fast-growing company.

It is hardly a surprise that Andreessen and Horowitz are taking a top-down and bottom-up approach to investing. Marc’s history of working with the web’s front end (Netscape and Ning) gives him the ability to understand the web layer. He also sits on the board of Facebook, a company that is helping redefine the future of the Internet.

Marc and Ben previously teamed up to form Opsware, an IT infrastructure management company that after a few setbacks evolved into a thriving venture that was eventually acquired by Hewlett-Packard for $1.6 billion. That gives the duo an opportunity to understand the changing innards of the Internet.

WebappVM, Apptio, ExtraHop and Good Data are some of their current investments in the infrastructure of the web. Marc said they would be looking at more investments in cloud computing startups. “We think that networking is going to follow the same curve as the workstation,” Andreessen said. Moore’s law is going to allow companies to build smart, next-generation devices that are based on a commodity infrastructure platform.

In the past, we have written about companies such as Vyatta, which are taking on Cisco by building an open-source router. This trend is only going to gather momentum, Andreessen argues. The edge networking devices will get a lot smarter, and that is going to open up opportunities. Andreessen and Horowitz believe that things will follow the same curve as Linux and Solaris. It took a long time for Linux to gain traction, but when it did, it eventually started to corrode Solaris. “Hardware will get a lot dumber and a lot cheaper, and software will become the key focus,” Andreessen said. His optimism stems from the fact that the networking stack is still built on 20-year-old ideas of the network and the infrastructure. Storage is one likely candidate for massive disruption. For instance, the emergence of solid-state storage offers immense opportunities both in terms of innovation and investment. (Related GigaOM Pro Report: Bringing Moore’s Law to the Data Storage Market. Content available only to subscribers. Subscribe to GigaOM Pro for $79 a year.)

Disclosures:

  1. I am a venture partner at True Ventures, an early-stage venture investment firm. True is also an investor in the parent company of this blog, Giga Omni Media.
  2. Allan Leinwand, founder of Vyatta, is an occasional guest columnist for GigaOM.
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