Last August, Netscape founder turned venture capitalist Marc Andreessen decided he wanted to invest in private companies such as Facebook and Twitter. So, over a six-month period, he tapped his Silicon Valley connections to snag stakes in these fast-growing Web businesses.
While many of his rivals say he overpaid, his eagerness to invest has helped ignite the Valley's latest Web boom. "We wanted to get these deals done because we had a strong feeling [the market] would heat up fast," Andreessen, 39, told The Wall Street Journal. "When push comes to shove, would you rather be in the winners?"
Investors like Andreessen, who heads the firm Andreessen Horowitz, are changing the way venture capital works by buying shares in private deals and not banking on a company to go public. In November, his firm spent $50 million to buy Facebook shares that valued the company at $35 billion, more than triple its 2009 valuation of $10 billion.
The deal was an inflexion point, the Journal reports. Within weeks, Goldman Sachs and an investor group put $1.5 billion into Facebook, valuing it at $50 billion.
For more on Andreessen and his new methods, see The Wall Street Journal.