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The Adventure Beyond Venture Capital

Venture capitalists place bets on industry-disrupting startups. But what if venture capital’s the industry being disrupted?

Andreessen Horowitz excommunicates itself

One of the most famous VC firms in Silicon Valley will no longer be (technically) a VC firm. Founders Marc Andreessen and Ben Horowitz told Forbes they’ve registered the entire company to become a registered investment advisor, or RIA.
Why become an RIA?
  • Crypto bets: You say crypto’s a bubble, Andreessen Horowitz says this feels like the early days of the internet—painfully slow, but you might meet a cool Estonian in a chatroom. The firm would like to invest more in crypto, but as a traditional VC, regulators limit its ability to make riskier bets.
  • Secondary transactions: Those regulations also hamstring VCs from doing other non-VC things, like acquiring equity in secondary transactions. That’s a missed opportunity for VCs as startups stay private longer.
Zoom out: On its way from VC to RIA, Andreessen Horowitz has become a unicorn farm. At least five of the billion-dollar companies in which it’s invested are in IPO mode: Airbnb, PagerDuty, Pinterest, Slack, and Lyft.
For it’s next act, the firm will reportedly announce a new growth fund of $2-2.5 billion in the coming weeks, its first as an RIA.

Now, meet a non-VC that never was a VC

Clearbanc, a fundraising alternative to venture capital, said yesterday it’ll be able to back startups with $1 billion in non-dilutive capital by the end of this year.
  • How it works: Clearbanc offers loans with a 6% fee instead of taking equity. But until you pay it back, it’ll take a percentage of your revenue.
  • Why it might work: Equity is precious, but Clearbanc co-founder Michele Romanow tells Axios that “40% of VC dollars in companies are spent on Google and Facebook ads.” Founders, we can see you cringing from here.
Bottom line: Just like any other industry, venture capital is subject to changing trends and new competitors.
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6 comments:

  1. Venture Capital seems like something one must be constantly learning the trends of.

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  2. Here I was thinking I have seen firms make the most important decisions. If some firms would like to invest more in crypto but as a traditional VC, regulators limit its ability to make riskier bets, it still looks like a good idea from my view.

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  3. Venture capital is subject to changing trends and new competitors. I've done a lot of research on it, and still working on more and the topic in itself is really interesting if you are into financial stuff.

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  4. Short but very useful, I must agree. After searching for some venture capital information to build on for my project, I have seen a lot. Even conflicting information or theories but I think once I have valid points, I am good.

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  5. Your blog has become one big resource for me whenever I need financial data or the likes. It has got good resources and it's amazing just how helpful they can become. Do keep it up.

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  6. Mitchell RichardsApril 20, 2019 at 2:39 PM

    Venture capital is definitely the way to go when looking for external funding. It's an easy way to acquire funding while being backed by a large institution.

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