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Oct 23, 2019

Andreessen Horowitz Managing Partner Scott Kupor Talks Venture Capital

“Most venture capital relationships last longer than the average marriage in the U.S.”

And because of that, nurturing those relationships is paramount to success, says Scott Kupor. Kupor, managing partner of venture capital firm Andreessen Horowitz and author of the best-seller “Secrets of Sandhill Road: Venture Capital and How to Get It,” has made relationships the differentiating factor for his business.

Kupor discussed his successful career and the rise of Andreesen Horowitz on Monday, Oct. 21 at the Kenan Center in Chapel Hill, as part of the Dean’s Speaker Series hosted by the Kenan Institute of Private Enterprise. The fireside chat with Kupor was led by Greg Brown, executive director of the Kenan Institute.

Saying that “Andreessen Horowitz’s money is no different than anyone else’s,” Kupor noted that the firm is unique in two respects: its partner base is made up almost entirely of former CEOs and founders, and of its 180 employees, close to 100 work on the post-investment side. Both things allow Andreessen Horowitz to provide guidance to founders and nurture the connection between investors and entrepreneurs beyond the initial investment.

Andreessen Horowitz currently manages roughly $10 billion in assets. But Kupor reflected on the firm’s precarious start in 2008 – right as Lehman Brothers filed for bankruptcy, helping to trigger the worldwide financial crisis. “It was,” said Kupor wryly, “not a good time to be starting a venture capital company.”

But Kupor and his partners were confident they could make some changes to the moribund venture capital market and ensure their success. Moreover, he said, the price and complexity of computer systems was dropping rapidly, considerably lowering the amount of start-up capital companies needed, making it easier to get the firm up and running.

In addition to discussing Andreessen Horowitz, Kupor provided a glimpse into the pages of his book. He said he didn’t set out to write one, but he kept hearing the same questions from entrepreneurs time and again. “Secrets of Sandhill Road” became Kupor’s answer to those questions, and a primer of foundational information on how the venture capital industry works.
One of the most surprising insights Kupor shared with his audience is that, when venture capital firms invest in startups, the companies they invest in fail about a third of the time. The important thing, said Kupor, is not how many successful companies you invest in, but rather what the “outlier tail looks like” – in other words, he said, “when you have a hit, it needs to be a big hit.”

So how does Kupor know if a company will be a success? First, he said he looks for what he calls “founder-market fit.” He looks for founders that are uniquely qualified to go after their market opportunity. He also searches for leaders who have some characteristic that will make investors and potential employees want to follow them. And, he said, at Andreessen Horowitz, “we invest in strength, not lack of weakness.”

To learn more about the Dean’s Speaker Series, click here.

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