For more than a year, Andreessen Horowitz (a16z) has been quietly testing his own version of a startup accelerator; today its partners announced the official debut of the program.
In exchange for an unannounced equity stake, a16z START is offering up to $1 million in venture capital to early-stage founders. The checks are backed by a16z’s seed fund, a $400 million investment vehicle that closed in August 2021. Specific investment terms as discussed with final candidates.
On the relatively short application form for START, a16z names six categories – American Dynamics, Consumer, Enterprise, Fintech, Games and “Other” – in which founders are searched. The areas are broadly consistent with a16z’s spin-off funds, but surprisingly contain no mention of crypto, despite a16z raising a $2.2 billion vehicle for the sector last year.
“If you have dreams of starting a tech company — even if you haven’t come up with a mature idea and haven’t quit your job yet — we want to hear from you,” the company wrote on its landing page for the program. The Remote First program, which is constantly accepting founders, wants to connect people with consulting partners, potential customers or investors and of course other entrepreneurs, because networks are powerful.
Notably, there is no mention of a diversity mandate or a focus on the landing page. The company also does not say how long the program will run or who will oversee the startups. Additionally, while the company is offering up to double the $500,000 that famed accelerator Y Combinator is promising some of its startups, it hasn’t publicly disclosed whether part of its investment — like YC — will come in the form of a SAFE will take place without a cap that the company valuation will be determined in the next round.
TechCrunch reached out to Bryan Kim and Anne Lee Skates, the two partners who lead a16z’s START program, for more information, but we don’t have a response yet.
The newly announced A16z program is a formal foray into the earliest stages of entrepreneurship. While it has long had seed-funded companies, it has not worked with founders in the early stages. The thought within the company may be that instead of supporting the startups that graduate Y Combinator, why not get there before the accelerator ever does? It continues the trend of investors investing earlier thanks to the potential upside and a highly competitive seed market. In the case of a16z, I doubt we’ll see the institution move past the late stage like some tiger-like investors have, but it’s remarkable to see them finally catching up and moving to more pre-seed -Commit investments.
Last month, Sequoia similarly unveiled an accelerator focused on supporting early-stage “breakaway” 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 is not disclosing ownership goals.
The big question, or perhaps a stress test for the company, is whether a16z can convince high-profile founders to take on its capital and ownership aspirations, despite tons of hungry capital being thrown around, from crowdfunding to rolling funds. Today, there is even some debate about the obsolescence of “equity” as a means of attracting interesting founders to your community in advance. I wonder how investors feel about this. A16z has a notorious reputation for past successes and well-known partners, but is that enough for founders to trust them with first-check fundraising? And rather, will the early trials really unlock a new cadre of founders who otherwise would not have received funding from a Y-combinator or party round, or are they just taking a bite out of the same, homogenous cohort?