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You raise an interesting point, but I think the data actually makes my point. Firstly, I think you should count the "majority" of their investments as where th

You raise an interesting point, but I think the data actually makes my point. Firstly, I think you should count the "majority" of their investments as where the majority of their money goes. If they had one fund with a billion dollars, and $400 million went into Uber and $400 million went into a Facebook, but $200 million went into 90 tiny companies, I would argue that they are 80% (800/1000) late stage and not 2.2% (2/90) late stage. Secondly, what they call the round is kind of arbitrary. Consider that many (most? traditionally?) VC funds earmark around $5 million for all rounds in a company. They may put in $100k pre-product, $1 million after market fit and so on. AH put $25 million in Clinkle's "seed" round. Imagine how valuable Clinkle must have been at that point. Nonetheless, I think this shows that they are making much larger, much later investments than the "traditional" VC, and for reasons that Marc has talked about in public. Of course he wishes he had got into successful companies even earlier. Everyone wishes that. I wish I had got into AirBnB in the Series A. So do you, presumably. He fully concedes he is not as good as Peter Thiel (a, who is?, and b, this is his example) at going for the really early stage company and prefers to go in later. Its just really hard to tell which of 1500 companies is going to make it big, but it is much easier to guess that most of 20 big companies are going to get bigger.

jasode 10y ago
>Of course he wishes he had got into successful companies even earlier. Everyone wishes that. Unfortunately, I made it sound like MA's thoughts about Airbnb was a generic "invest earlier means more money" cliche. I intended to show how AirBnb contrasted with Oculus VR. They passed on the early rounds for those 2 companies for different reasons. For AirBnb Series A, Andreesen didn't understand the value. It was a gap in knowledge/imagination about what AirBnb could be. It was not because of a "we're a late-stage not Series A investor so come back when others have already invested in you". For Oculus Rift Series A, a16z got the value of it, but they weren't sure about it gaining traction while the company was trying to solve the motion sickness issues. They let the other VCs take on that risk and they knew ahead of time they'd pay more to get in on the next fundraising round. Based on their actions and interviews, it's possible that AH's primary investment thesis is Series B or later but I'm not sure you can beat Sequoia and Benchmark with wait-&-see late-round investing at sky high valuations. Those other VCs hunt aggressively to get in on Series A. Part of the prestige for a VC firm is to be seen as a leader and not a follower.
- inputcoffee 10y ago
  I will just re-iterate that the letter of the round is not as important as the valuation, and the amount invested, in determining what "stage" the investment is. I accept that they passed on the two different Series A rounds for two different reasons, although I am not sure what lesson I can draw from that. In terms of your last comment, yes they absolutely cannot beat the returns of the early stage investors (whatever Series that may be), but presumably they're compensated by lower risk, which is the main point I was trying to make.

jasode 10y ago

>Of course he wishes he had got into successful companies even earlier. Everyone wishes that. Unfortunately, I made it sound like MA's thoughts about Airbnb was a generic "invest earlier means more money" cliche. I intended to show how AirBnb contrasted with Oculus VR. They passed on the early rounds for those 2 companies for different reasons. For AirBnb Series A, Andreesen didn't understand the value. It was a gap in knowledge/imagination about what AirBnb could be. It was not because of a "we're a late-stage not Series A investor so come back when others have already invested in you". For Oculus Rift Series A, a16z got the value of it, but they weren't sure about it gaining traction while the company was trying to solve the motion sickness issues. They let the other VCs take on that risk and they knew ahead of time they'd pay more to get in on the next fundraising round. Based on their actions and interviews, it's possible that AH's primary investment thesis is Series B or later but I'm not sure you can beat Sequoia and Benchmark with wait-&-see late-round investing at sky high valuations. Those other VCs hunt aggressively to get in on Series A. Part of the prestige for a VC firm is to be seen as a leader and not a follower.

inputcoffee 10y ago
I will just re-iterate that the letter of the round is not as important as the valuation, and the amount invested, in determining what "stage" the investment is. I accept that they passed on the two different Series A rounds for two different reasons, although I am not sure what lesson I can draw from that. In terms of your last comment, yes they absolutely cannot beat the returns of the early stage investors (whatever Series that may be), but presumably they're compensated by lower risk, which is the main point I was trying to make.