Bubblicious. Mark Andreesen is making big bets on the next tech IPO rally.

Posted on May 10, 2011

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From the Wall Street Journal, 5/10/11

A Venture-Capital Newbie Shakes Up Silicon Valley

 By PUI-WING TAMGEOFFREY A. FOWLER and AMIR EFRATI

MENLO PARK, Calif.—As a newly minted venture capitalist, Marc Andreessen, co-founder of Netscape, aimed for nothing less than big. “Whale” size, as he puts it.

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Associated PressGame On: Marc Andreessen, right, talking to Zynga CEO Mark Pincus at the Allen & Co. media conference in July. Andreessen Horowitz invested in the social-games maker in 2009.

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Like other investors here, he’d been eying Web companies with explosive growth and global star power. But acquiring shares in tech titans like Facebook is tricky. Most are closely held and don’t trade on a public stock market. Interlopers can’t simply waltz in.

So Mr. Andreessen set out to make his own rules—maneuvering his way into hot private deals at huge cost.

Some of his more established rivals weren’t amused. They complained about the lofty prices he paid, and about being shut out of the action.

“Hate away,” says the unfazed Mr. Andreessen.

The onslaught began last August, after Mr. Andreessen—along with partners Ben Horowitz and John O’Farrell—drew up a “harpoon” list of companies to target.

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Over a six-month period, Mr. Andreessen tapped his formidable network of Silicon Valley connections to snag stakes in Facebook Inc., micro-blogging service Twitter Inc. and deals-site Groupon Inc. Other investments include social-game developer Zynga Inc. and Internet-telephone company Skype SA. In the process, he helped to ignite Silicon Valley’s latest Web boom and the burgeoning market for private-company shares.

“We wanted to get these deals done because we had a strong feeling [the market] would heat up fast,” says Mr. Andreessen, who heads the firm Andreessen Horowitz. “When push comes to shove, would you rather be in the winners?”

Just over a decade ago, Silicon Valley minted millionaires through a reliable venture-capital formula: invest in a nascent company for cheap and grab a large stake in the firm. The next step was to build the company up so it could go public, at which point the start-up’s illiquid shares would convert into stock market gold.

Now, investors like Mr. Andreessen are challenging that equation. Initial public offerings of start-ups have been damped by regulatory issues and the headaches associated with being a public company. Last year, venture-capital-backed IPOs totalled 46, down from 210 in 2000, during the peak of the tech bubble. Private companies like Facebook have said they are in no rush to go public.

The 39-year-old Mr. Andreessen, meanwhile, is in quite the hurry. In November, Andreessen Horowitz spent $50 million to acquire Facebook shares in a private deal that valued the social-networking company at $35 billion, more than triple its 2009 valuation of $10 billion.

Read more: CLICK HERE for the full article WSJ -Venture-Capital Newbie Shakes Up Silicon Valley – 5-10-11  or visit WSJ Online.  http://online.wsj.com/article/SB10001424052748703362904576218753889083940.html#ixzz1Ly1s7Emc

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Posted in: News, Venture Capital