Why LPs might gladly invest in Andreessen Horowitz despite unfavorable comparisons to Sequoia and Benchmark
Rolfe Winkler wrote a piece in the WSJ about A16Z's returns in which he says they “lag behind Sequoia, Benchmark and Founders Fund.” — Scott Kupor of A16Z responded …
Context & Ripple Effects
Rolfe Winkler's WSJ performance report put hard numbers on the comparison: A16Z's first three funds returned 2.6x, 2.3x, and 1.7x, behind Sequoia, Benchmark, and Founders Fund. Scott Kupor answered publicly, and Mark Suster's post makes the LP-side case for backing the firm anyway — that headline multiples miss what a scaled platform buys you.
The arc since then reads as vindication of that argument: a16z raised a $2B fund in 2019 while registering its employees as financial advisers to make riskier bets, its investment team grew faster than Sequoia's or Accel's through 2021, and by the recent deep dive into a16z the firm held stakes in 10 of the top 15 private companies by valuation.
First-order effects
- LPs deciding whether to re-up in A16Z's next fund must weigh Winkler's per-fund multiples against Kupor's counterargument that deal access, follow-on capacity, and network value justify premium commitments.
Second-order effects
- Because Sequoia and Benchmark own the returns benchmark, A16Z is pushed to compete on structure rather than marks — the path that led to registering staff as financial advisers so the firm could take balance-sheet-style crypto positions inside a traditional fund.
Third-order effects
- If the pattern holds, top-tier VC consolidates around platform-scale firms whose headcount and brand compound independently of any single fund's multiple — exactly the trajectory from the 2016 lag to stakes in most of today's largest private companies.
The trend: Venture LPs are increasingly underwriting scaled platforms on network effects and follow-on reach rather than per-fund return multiples, letting firms like Andreessen Horowitz grow past the benchmarks that once ranked them.