What Is Venture Capital Now Anyway?

The opposing paths taken by two powerful firms — Benchmark and Andreessen Horowitz — embody a profound debate about the future of an industry that funds and fosters American innovation.

Three decades ago, five men formed a venture capital firm on Sand Hill Road in Silicon Valley with a simple pitch: Small is beautiful.

Their firm, Benchmark Capital, planned to stick to venture capital’s traditional playbook. It would write tiny checks to invest in private technology companies and help them succeed with guidance and connections. It would resist the urge to become bigger over time. Benchmark’s founders even quoted Voltaire: “God is not on the side of the big arsenals, but on the side of those who shoot best.”

Fourteen years later, two entrepreneurs set up shop across the street with a very different plan. They established Andreessen Horowitz, a venture capital firm that would do more of everything — raise more money, do more deals, make more noise and flash more attitude. Ben Horowitz, one of the firm’s founders, called his creation the “anti-Benchmark.”

Since then, Andreessen Horowitz has expanded in every direction. It created funds focused on cryptocurrencies, defense and other tech, managing a total of $44 billion. It became a registered investment adviser, meaning it could own public stocks and cryptocurrencies. It hired 80 investment partners and opened five offices. It publishes eight newsletters and seven podcasts, and has more than 800 portfolio companies. It recently added private wealth management services. There are persistent rumors that it will go public.

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