(Bloomberg/Kate Clark) — A few weeks ago, about 150 people gathered in the courtyard of Paris Hilton’s $63 million chateau-style mansion in the Los Angeles enclave of Beverly Park. They sipped cocktails, picked at poolside sushi and played poker while a DJ mixed beats. What looked like a Hollywood soiree was, in fact, a networking night for participants and alumni of Speedrun, the relatively unknown startup accelerator run by venture capital firm Andreessen Horowitz.
The celebration in SoCal signals a new approach for Andreessen Horowitz, often called a16z. The firm has traditionally waited until startups had some traction before writing checks. With Speedrun, it’s making a foray into pre-seed investing, positioning itself as a cool younger sibling to Y Combinator, the two-decade-old Silicon Valley institution that helped launch companies like Stripe Inc., Airbnb Inc. and Instacart Inc. But where Y Combinator has long been defined by overnight hackathons and scrappy nerds, Speedrun is targeting a more creative demographic.
“The brand is loud, fun, different,” said Samira Behrouzan, an a16z marketing partner who was previously the head of marketing for Zedd, a German DJ. Behrouzan, who describes her role as Speedrun’s “vibes curator,” said that to cut through in a crowded venture market, she thinks of the program more like a fashion label than a bootcamp. “If people identify with that, then we want them to choose us.”
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A16z is hardly the only major player chasing the youngest startups. Beyond the dozens of existing accelerators like Y Combinator and 500 Global, and the many firms focused exclusively on early-stage bets, VC megafunds including General Catalyst and Sequoia Capital have also been expanding into pre-seed investing, hoping to find the best deals before their competitors.
“As venture has gotten more competitive, it has become harder for these funds to get in these companies at the A or the B, which used to be the entry point,” said Gaurav Jain, co-founder of the pre-seed firm Afore Capital. These big funds don’t want “to be the third bite at the apple or even the second bite at the apple. The ultimate goal in venture is to be the first bite at the apple.”
Access
For a16z, the official move into very early-stage investing is also an exercise in brand-burnishing. Co-founder Marc Andreessen has described the firm as a media company that monetizes through investments. Naturally, the accelerator doubles as a marketing strategy to capture founders’ attention at company inception.
“The firm wants to invest in the best founders that are building generational companies,” said a16z general partner Jonathan Lai. “We want to work with them over the course of their whole life, when they’re graduating from college, and they are trying to figure out what to do next, and they decide that they have a startup idea, we want to be there for them at those moments.”
A16z, which manages about $75 billion in assets, has invested $180 million into 150 Speedrun companies over the last 18 months — a sum larger than the entire war chest of an average VC fund, according to PitchBook data. It was one of the most active pre-seed, seed and Series A investors in the second quarter, PitchBook data show, while still ranking among the busiest late-stage investors.
The name “Speedrun” comes from gaming, where players race to finish as quickly as possible. Originally conceived as a gaming accelerator in 2023, it quickly broadened its scope to all categories of startups. The 12-week program has graduated four cohorts so far, alternating its location between San Francisco and Los Angeles, and will wrap up its fifth next month. Classes have expanded from 35 companies in the first batch to 67 in the current one.
That’s a much smaller group than recent Y Combinator classes, which also happen more frequently. To keep up with the speed of change in the artificial intelligence era, Y Combinator last year expanded its number of annual cohorts from two to four. Its spring batch alone had about 150 companies.
Speedrun’s smaller size could appeal to founders. A spokesperson for the program said the firm received 14,000 applications for the fifth cohort, and accepted fewer than 1%. (Y Combinator has also said its acceptance rate is about 1%.) Speedrun’s participants include fintech startup Coverd, sports AI company Hooper, a digital puppeteering studio called Sans Strings and a visual search engine for fashion called Lekondo.
A16z also offers an unusual slate of events for its Speedrun cohorts. Earlier this summer, participants dressed up in tuxedos and ball gowns for an evening at the Magic Castle, a famed members-only magician’s club in Los Angeles. At another recent gathering, the investor Cyan Banister, co-founder of Long Journey Ventures, guided founders through a meditation. Later this month, Speedrun founders will convene again for a murder mystery dinner.
“The founders that choose us are looking for that white-glove experience and they want to work with a16z at the earliest possible stage,” said Josh Lu, a partner at a16z.
Speedrun offers founders a similar deal to Y Combinator, investing up to $1 million, including $500,000 upfront for 10% of the company, plus another $500,000 set aside to invest in the startup’s next round if it happens within 18 months. (Y Combinator offers startups $500,000 upfront — a $125,000 chunk for a 7% stake in the company, and the other $375,000 set to convert into equity in the startup’s next round.)
Speedrun also sells access. A16z has a hefty operations staff, including its famous co-founders Andreessen and Ben Horowitz, who have made appearances at accelerator events. It’s brought in founders from portfolio companies like Figma Inc.’s Dylan Field and DoorDash Inc.’s Tony Xu.
One potential risk for Speedrun participants is what happens after the program is over. If a16z decides not to continue funding one of its pre-seed bets, it forces a founder to explain to other investors why the deep-pocketed firm walked away. A would-be investor might wonder, “Why is this fund not leading the Series A?” said Jain, the pre-seed investor at Afore. “They’ve got a massive pool of capital. That is a question people ask, and we ask founders.”
Jain also questioned whether the firm would truly dedicate substantial resources to tiny companies over time. The Speedrun team insists they will.
“This is an undertaking we take really seriously,” said a16z’s Lu. “Especially during a tech super cycle like we think AI is. What better time to do something like this?”
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