While insisting he is not eager to take the firm public, Marc Andreessen, co-founder of a16z (Andreessen Horowitz), has said he aims to build it into an enduring company.
On the Invest Like the Best podcast, Andreessen condemned the traditional venture capital partnership model, which he sees as flawed as it relies on a small group of founding father’s expertise and holds little lasting value once they retire.
To transition a16z from a traditional VC partnership model to a more structured, scalable business would involve adopting practices seen in long-lasting financial institutions, such as, J.P. Morgan and Blackstone—focusing on structured management, scalability, and long-term sustainability.
The goal, he explains, is to ensure a16z continues to operate and support founders across multiple generations—moving beyond the limitations of the traditional VC model, which relies heavily on individual partners. By doing this, Andreessen believes a16z would maintain its position as a leading investor and avoid the interpersonal conflicts that often plague partnerships.
Criticisms of the VC partnership model include: unrealistic growth expectations placed on startups, potential for misaligned incentives between founders and investors, a focus on short-term profits over long-term sustainability, pressure to make quick decisions that might not be in the best interest of the company, and the loss of control for founders due to giving up equity to investors; essentially, the model can incentivize rapid growth at the expense of a company’s long-term health and founder autonomy.
In 2019, Vinod Khosl, founding CEO of Sun Microsystems and founder of Khosla Ventures, told Sam Altman: “90% of VCs do not bring any value to startups, and 70% even harm them.” If they continue to chase the next billion-dollar unicorn, they miss opportunities to invest in more sustainable businesses, Khosla explained. By shifting focus from short-term gains and quick exits to long-term company building and sustainable growth for portfolio companies, VCs can support startups in achieving steady, manageable growth that aligns with their long-term vision. They can also broaden their investment criteria to include startups with various business models, not just those with the potential for explosive growth.
By shifting focus from short-term gains and quick exits to long-term company building and sustainable growth for portfolio companies, VCs can support startups in achieving steady, manageable growth that aligns with their long-term vision. They can also broaden their investment criteria to include startups with various business models, not just those with the potential for explosive growth.
