Exclusive: Andreessen Horowitz Drops Out of Funding Race for Foursquare
In an unusual move for a venture firm chasing a hot start-up, Andreessen Horowitz said it has dropped out of the race to be an investor in social location company Foursquare.
In an interview tonight, Ben Horowitz, partner in the high-profile VC outfit he helms with Marc Andreessen, said enough was enough related to the intense media and other machinations, which have included talks to be acquired by Yahoo, around the deal.
“We withdrew our funding offer to Foursquare and we are out,” said Horowitz in an interview with BoomTown. “This is playing out too much in public and clearly someone has an interesting agenda here, so this is not something we want to participate in.”
In addition–after making an offer three weeks ago at valuations lower than have been reported, though he would not specify the exact number–Horowitz said he felt the company had conducted a “process that is very long and undefined.”
Indeed, it is not clear what is going on, and the situation is rife with speculation about what Foursquare and, specifically, its founder and CEO, Dennis Crowley, will do.
Foursquare’s board met last week about the acquisition offer by Yahoo, which priced the start-up at just above $100 million.
The board turned that offer down flat, according to sources at both Foursquare and Yahoo.
But (YHOO) is still interested, sources said, and seems willing to raise its bid.
Also still in the running: Gideon Yu of Khosla Ventures, an Andreessen Horowitz rival, and perhaps several others.
In large part, the decision about what to do rests with Crowley, who controls a large chunk of the shares of the start-up.
Many think he might be inclined not to sell Foursquare to a large company, preferring to take venture funding instead, remaining independent and turbocharging the fast-growing status-update service.
Crowley already sold another start-up he founded, Dodgeball, to Google (GOOG) several years ago and had a very bad entrepreneurial experience.
Perhaps that’s why he and Foursquare have so far been very slow to take any of these lucrative offers, despite the fact that the service is still small (about one million users) and unprofitable.
But even in dropping out, Horowitz underscored his admiration for Foursquare, noting that Andreessen Horowitz considered it a great investment.
“If the process was changed, we still like the company,” said Horowitz. “But since it has been long and undefined, it is prone to manipulation.”
It’s an astounding thing for a VC to say on the record, of course, and entirely true.
If you want more of Horowitz, please enjoy this most excellent video interview I did with him last week in Silicon Valley: