Marc Andreessen: Too Many Startups Is a Good Thing

Startup accelerators like Y Combinator (see “The Startup Whisperer”) and 500 Startups are creating too many companies vying for investment dollars, and they can’t all survive, but that’s a good thing, according to Marc Andreessen, cofounder of venture capital firm Andreessen Horowitz and of the early Web browser company Netscape Communications.

Speaking Thursday at PreMoney, a San Francisco tech conference organized by 500 Startups, Andreessen said he believes one of the most positive outcomes of the rise of startup accelerators and seed funding in the technology industry is that many more people around the world are realizing it is possible to become an entrepreneur. Andreessen, who grew up in Wisconsin, said it never even occured to him to start his own company until he arrived in Silicon Valley.

The volume of young startups churned out by accelerator programs, he said, is so great that there are too many seed-stage companies, most of which won’t be able to go on to get venture funding. It’s arguable that would help him by giving him a stronger hand when negotiating deals, but Andreessen today focused on the broader benefits of many entrepreneurs starting companies. The circulation of so many ideas in an environment “like the ultimate petri dish,” he said, means even companies that don’t make it are moving the technology industry forward.