For more than a year, Andreessen Horowitz (a16z) has quietly piloted its own take on an accelerator for early-stage entrepreneurs; today, its partners announced the program’s official debut.
In exchange for an unannounced percentage of ownership, a16z START offers early-stage founders up to $1 million in venture capital. The checks are powered by a16z’s seed fund, a $400 million investment vehicle that closed in August 2021. Specific investment terms, such as ownership stake or how the firm decides what specific fraction of $1 million to invest, is not yet disclosed publicly and will be discussed with final candidates.
On the relatively brief application form for START, a16z names six categories — American dynamism, consumer, enterprise, fintech, games and “other” — within which it’s looking for founders. The areas largely line up with a16z’s carved-out funds, though surprisingly don’t include a mention of crypto, despite a16z raising a $2.2 billion vehicle for the sector last year.
“If founding a technology company is a dream of yours—even if you don’t yet have a fully formed idea and haven’t yet quit your day job—we want to hear from you,” the firm writes in its landing page for the program. The remote-first program, which accepts founders on a rolling basis, wants to connect folks with partners for advice, potential customers or investors and, of course, other entrepreneurs, because networks are powerful.
Notably, there is no mention of a diversity mandate or focus on the landing page. The firm also does not specify how long the program runs or who is mentoring the startups. Further, while the company is offering up to twice the $500,000 that famed accelerator Y Combinator now promises some of its startups, it has not divulged publicly whether part of its investment will come — as with YC — in the form of an uncapped SAFE, meaning that the company’s valuation will be determined in the next subsequent round.
https://techcrunch.com/2022/03/30/demo-days-definitely-amplify-a-brand-but-not-the-one-youd-think/
TechCrunch reached out to Bryan Kim and Anne Lee Skates, the two partners running a16z’s START program, for more information, but we’ve yet to hear back.
A16z’s newly announced program is its formal foray into the earliest stage of entrepreneurship. While it has long seed-funded companies, it has not worked with founders at the formation stage. The thinking inside the firm may be that rather than backing the startups that graduate Y Combinator, why not get there before the accelerator ever does? It continues the trend of investors going earlier and earlier when it comes to investing, thanks to the potential upside and a grossly competitive seed market. In a16z’s case, I doubt we’ll see the institution ditch the late stage like some Tiger-like investors have, but it’s remarkable to see it finally catch up and commit to more pre-seed investing.
Last month, Sequoia similarly debuted an accelerator with an emphasis on backing early-stage “outlier” founders from across Europe and the United States. Cohorts of about 15 startups will go through eight-week sessions and, similar to a16z, Sequoia plans to invest $1 million in accepted founders and doesn’t disclose ownership targets.
The big question, or perhaps stress test, for the firm is if a16z can convince high-quality founders to take its capital and ownership targets despite tons of hungry capital being thrown around, from equity-crowdfunding to rolling funds. These days, there’s even discussion that “equity” as a way to upfront attract interesting founders to your community is outdated. I wonder how investors feel about that. A16z has a notorious reputation, given past successes and well-known partners, but is that enough for founders to trust them with first-check fundraising? And rather, will the first checks be truly unlocking a new cadre of founders who otherwise wouldn’t have received funding from a Y Combinator or party round, or is it just taking a bite of the same, homogenous, cohort?
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