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This shift is yesterday's news. Given their size, brand and PR, however, when Andreesen Horowitz does it, they get an article in the WSJ. The reality is that

by asanwal 13y ago

This shift is yesterday's news. Given their size, brand and PR, however, when Andreesen Horowitz does it, they get an article in the WSJ. The reality is that tons of VCs have already migrated away from consumer startups.[1][2] Data to support above [1] 84% of 2013's largest exits in tech have been to enterprise companies - http://www.cbinsights.com/blog/trends/enterprise-tech-consumer-exit http://www.cbinsights.com/blog/trends/enterprise-tech-consum... [2] 70% of 2013's largest tech financings have been to enterprise - http://www.cbinsights.com/blog/trends/venture-capital-enterprise-consumer http://www.cbinsights.com/blog/trends/venture-capital-enterp... Disclaimer: I'm a co-founder of CB Insights - the firm that put out this research.

sillysaurus2 13y ago
Looking at 2013 exits (or financings) is missing the mark. VC is a game of 1000x returns. And those returns have come from companies like FB, Google, etc. Most of the value of YC's portfolio come from Dropbox and Airbnb. All of these companies are decidedly consumer companies.
- asanwal 13y ago
  Sorry if my point was not clear. The article suggests a new insight into the venture landscape by A16Z given their shift away from consumer startups. Just trying to point out that the shift has already happened among VCs towards enterprise so this is not new. Whether enterprise is a better area for VCs or not is a separate argument.
- _lex 13y ago
  It's likely that Dropbox probably makes way, way more money from enterprise than from it's consumer business.
  - ivv 13y ago
    Google and FB, too, make most of their money from enterprise customers.
    - CaveTech 13y ago
      This is only true if you blindly ignore the fact that enterprise customers are willing to give them money because of their consumer backing. If consumers backed away from FB and Google, their enterprise customers would be following them out the door. Clearly this makes them consumer oriented businesses.
  - xivzgrev 13y ago
    Yes - Box showed them that :)
- pmarca 13y ago
  Recent enterprise home runs -- VMWare, Salesforce.com, Workday, SuccessFactors, 3Par, Data Domain, ... there have been a bunch. Just recently Palo Alto Networks, Fireeye, a bunch of others.
- 7Figures2Commas 13y ago
  > VC is a game of 1000x returns. That's not true. Today, a lot of funds, particularly larger ones, are placing bigger bets on companies in later rounds, which is arguably a smarter strategy than trying to place lots of small bets earlier in the hopes that you'll get lucky and discover the Facebook or Twitter and have put enough into it to make your big percentage return a big absolute dollar return. Taking Twitter as an example, its last round of funding in 2011 reportedly entailed a $9.25 billion valuation according to PitchBook. If its valuation at IPO is north of $20 billion, as some expect, the investors who poured $400 million into the company in 2011 would more than double their investment. If you look at Twitter's S-1, a lot of the biggest stakeholders were investors in Series C and beyond.
  - xivzgrev 13y ago
    "...placing bigger bets on companies in later rounds, which is arguably a smarter strategy..." Is it necessarily a smarter strategy? To me just seems this is the latest swing of the pendulum up and down the risk/reward curve. If factors change in 5 years, their "smart strategy" could begin to include more emphasis on consumer A's.
    - adventured 13y ago
      It's a smarter strategy at times I would say. For example, when the Fed is intentionally inflating a stock market bubble ala right now. That provides an excellent window to ride the public market to massive valuations completely unsupported by fundamentals (eg LinkedIn, Tesla, Splunk, Twitter, Facebook etc). It's all fun and games until the stock market crashes again.
- jacques_chester 13y ago
  Sample bias. http://chester.id.au/2013/01/05/on-selling-to-consumers/ http://chester.id.au/2013/01/05/on-selling-to-consumers/
Axsuul 13y ago
Can you list which enterprise companies had these large exits?
pmarca 13y ago
It is also worth noting that this follows a major drought in enterprise startups. I don't have the numbers (you might know) but enterprise startup activity took a gigantic dip after the 2000 crash when large enterprises en masse all but stopped buying new enterprise technology from new companies.

by asanwal 13y ago

sillysaurus2 13y ago

Looking at 2013 exits (or financings) is missing the mark. VC is a game of 1000x returns. And those returns have come from companies like FB, Google, etc. Most of the value of YC's portfolio come from Dropbox and Airbnb. All of these companies are decidedly consumer companies.

asanwal 13y ago
Sorry if my point was not clear. The article suggests a new insight into the venture landscape by A16Z given their shift away from consumer startups. Just trying to point out that the shift has already happened among VCs towards enterprise so this is not new. Whether enterprise is a better area for VCs or not is a separate argument.
_lex 13y ago
It's likely that Dropbox probably makes way, way more money from enterprise than from it's consumer business.
- ivv 13y ago
  Google and FB, too, make most of their money from enterprise customers.
  - CaveTech 13y ago
    This is only true if you blindly ignore the fact that enterprise customers are willing to give them money because of their consumer backing. If consumers backed away from FB and Google, their enterprise customers would be following them out the door. Clearly this makes them consumer oriented businesses.
- xivzgrev 13y ago
  Yes - Box showed them that :)
pmarca 13y ago
Recent enterprise home runs -- VMWare, Salesforce.com, Workday, SuccessFactors, 3Par, Data Domain, ... there have been a bunch. Just recently Palo Alto Networks, Fireeye, a bunch of others.
7Figures2Commas 13y ago
> VC is a game of 1000x returns. That's not true. Today, a lot of funds, particularly larger ones, are placing bigger bets on companies in later rounds, which is arguably a smarter strategy than trying to place lots of small bets earlier in the hopes that you'll get lucky and discover the Facebook or Twitter and have put enough into it to make your big percentage return a big absolute dollar return. Taking Twitter as an example, its last round of funding in 2011 reportedly entailed a $9.25 billion valuation according to PitchBook. If its valuation at IPO is north of $20 billion, as some expect, the investors who poured $400 million into the company in 2011 would more than double their investment. If you look at Twitter's S-1, a lot of the biggest stakeholders were investors in Series C and beyond.
- xivzgrev 13y ago
  "...placing bigger bets on companies in later rounds, which is arguably a smarter strategy..." Is it necessarily a smarter strategy? To me just seems this is the latest swing of the pendulum up and down the risk/reward curve. If factors change in 5 years, their "smart strategy" could begin to include more emphasis on consumer A's.
  - adventured 13y ago
    It's a smarter strategy at times I would say. For example, when the Fed is intentionally inflating a stock market bubble ala right now. That provides an excellent window to ride the public market to massive valuations completely unsupported by fundamentals (eg LinkedIn, Tesla, Splunk, Twitter, Facebook etc). It's all fun and games until the stock market crashes again.
jacques_chester 13y ago
Sample bias. http://chester.id.au/2013/01/05/on-selling-to-consumers/ http://chester.id.au/2013/01/05/on-selling-to-consumers/

Axsuul 13y ago

Can you list which enterprise companies had these large exits?

pmarca 13y ago

It is also worth noting that this follows a major drought in enterprise startups. I don't have the numbers (you might know) but enterprise startup activity took a gigantic dip after the 2000 crash when large enterprises en masse all but stopped buying new enterprise technology from new companies.