Andreessen And Horowitz Explain Why The Firm’s Partners Are Donating Half Their VC Income To Charity

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In the grand tradition of industry barons — but not so much venture capitalists — the six general partners at Andreessen Horowitz are donating at least half of the income from their investing activities to philanthropy. The firm has already been turning heads up and down Sand Hill Road, but this move might cause some whiplash.

Sure, American capitalists have been donating large portions of their wealth since the 19th century. And sure, the newest generation of tech titans, like Bill Gates and Mark Zuckerberg, are following in their footsteps. But VCs have not traditionally done so, at least at the firm level; major philanthropy in the industry has mostly come from individuals, like John Doerr and Michael Moritz.

And some investors may be more philosophically opposed. There’s a school of thought in Silicon Valley that goes something like this: the products built by companies are what make the biggest impact, and nonprofits are less efficient. So invest back into companies and you’ll help the world more than anything else you could try.

I talked to Marc Andreessen and Ben Horowitz today about the announcement, to hear why they believe charity is the best way for them to contribute to the world more than they already have.

“We didn’t have any exotic hobbies like polo or something or when we started the firm,” Horowitz explained, so instead, they’d both already gotten involved in giving, having come off a huge $1.6 billion exit with Opsware among others (check out this New York Times article from last year for more on Andreessen’s efforts).

It was more recently that one of the partners, Scott Weiss, brought up the giving-half idea — something that Gates, Warren Buffett and others have been promoting in recent years. The firm, whose partners are all very successful entrepreneurs, got on board. And not just because of the direct impact. “It was about the culture we wanted to create here,” Andreessen added,” something that anyone who aspires to the same goals can see.”

We’ll see which other firms also make this move.

I brought up the for-profit school of thought. “It’s true that there’s a lot of value created for society by these companies,” Horowitz responded, “but people outside of high tech make huge contributions to it — teachers at local schools, police… it’s broad. But the way money works it that most of it goes to people like us. We think by giving back, we keep the ecosystem going in a positive way.”

Andreessen seconded the role of philanthropy in capitalism. “It’s a great American tradition. We’re one of the most capitalist of the advanced countries, with job creation and destruction at four times the rate of most European countries. And for the last 150 to 200 years, a lot of the most successful people in capitalism have giving back. Even some of the limited partners in our fund are philanthropic organizations created 100 years ago by entrepreneurs who were extremely successful –and sometimes ruthless. Silicon Valley itself was based on Stanford, a university created by a ‘robber baron.’”

The first parcel of money will go towards six local charities below:

* Ben and Felicia Horowitz: Via Rehabilitation
* Jeff and Karen Jordan: Ecumenical Hunger Program
* John O’Farrell and Gloria Principe: Second Harvest Food Bank
* Marc and Laura Andreessen: Fresh Lifelines for Youth
* Peter and Martha Levine: Canopy
* Scott and Pamela Weiss: The Shelter Network

[Image of Andreessen and Horowitz via Forbes.]