[vonklaus]

Just like in a venture portfolio, the venture industry is characterized by a few big winners. While the industry in general may lose money, a few firms consolidate most of the profits of the entire industry. AH is one of the smartest firms, and one of the first to push the philosophy that "it is easier to train a technical founder to be ceo, than a ceo to be a technical founder".

This was one of the firms that lead the founder first philosophy, and is run (obviously) by well known entrepreneurs. They atrract top talent (founders) like the article says, and gain great positioning in rounds, and in the ecosystem.

> if most of these founders put their money in standard index funds, they would have better returns adjusted for risk, but without all of the publicity that they crave.

The market typically delivers ~10% on average[0], while you are correct that their isn't a lot of transparency, AH almost certainly beats 10% annually. Another top VC/Angel is Chris Sacca. I have heard that his initial fund which was heavily in twitter, was single or double digit millions and is now worth over 1 billion dollars. So key firms do have outsize gains.

As to the MA tweet

> "When the market turns, and it will turn, we will find out who has been swimming without trunks on. Many high burn rate companies will VAPORIZE."[1]

This is not about a bubble, but individual companies not focusing on business fundamentals. In a climate where raising money is easy, he is pointing out these companies grow without underlying businesses. The grow big enough to sell advertising/information is not sustainable, as everyone was made painfully aware of in the 90's and 00's. Vanity metrics and valuations mean nothing if you are not profitable (or even generating revenue), and it will be apparent if there is a funding freeze.

[0]http://quicktake.morningstar.com/index/IndexCharts.aspx?Symb... * This has the 10 year around 8.3

[1]http://www.businessinsider.com/marc-andreessen-on-startup-bu...

[jtzhou]

> AH almost certainly beats 10% annually.

AH was started in July 2009, at the start of a bull market. Since that period, the S&P 500 has had an annualized return, with dividends reinvested, of 17.2%. http://dqydj.net/sp-500-return-calculator/ This is significantly better than AH which has much greater single-sector risk (early stage/small cap, Bay Area, technology companies with little to no earnings). And AH at least by many sources is a "best-of-the-best" VC, so woe to the less successful VC's.

Whether they are good at intangibles, such as training future CEO's, providing jobs to highly-networked individuals, and encouragement to founders, is less relevant from an investor's standpoint.

[ajju]

"This is significantly better than AH which has much greater single-sector risk"

Are you saying a16z will make less than 17.2% per year in average returns on the years 2009-2015? Want to bet?

[ironchef]

That information is definitely not public, so he's just guessing. One could look at some of a16z's hits and show they have done well at least in some cases. 50 mil into skype which they made into an estimated 150 - 170. They were one of nicira's biggest backers who sold to vmware for north of a billion. They were investors in Facebook, etc.

[dylanjermiah]

Any source on AH's returns from 2009-present?

[bsbechtel]

There is also no guarantee that top firms such as A16Z and Chris Sacca will continue to achieve the returns they've gotten over the past several years. Have the top venture funds of the 90s and early 00s continued to achieve the returns they got then?

[foobarqux]

> AH almost certainly beats 10% annually

If so, why don't they publicize their annual returns?

[joshu]

It's hard to know what the return is on any fund that is immature. Companies that exit early tend to return far, far less than companies that exit later. Check back around the 7 year mark.

[foobarqux]

> a few firms consolidate most of the profits of the entire industry.

The problem is you don't know which ones beforehand.