Co-founder and general partner Ben Horowitz explains, “Fund III is all about extending our capabilities to more disruptors and pioneers. We’re remaking the modern venture capital firm, and entrepreneurs are responding to our unique approach.”

The firm has raised $2.7 billion since its founding in June 2009. Its portfolio consists of 90 tech companies. These include Facebook, Twitter, Foursquare, Groupon, Digg, Instagram, Skype, Zynga, Pinterest, and Airbnb, to name a few.

The new funding should help aid some more future household names.

“Software is the catalyst that will remake entire industries during the next decade,” says co-founder and general partner Marc Andreessen. “We are single-mindedly focused on partnering with the best innovators pursuing the biggest markets.”

Horowitz wrote a lengthy blog post about not only the funding, but really history of the firm and an essay about its philosophies. For example, he writes:

Marc and I share a simple belief that became the basis for our new venture capital firm: in general, founding CEOs perform better than professional CEOs over the long term, and a venture capital firm that enables founding CEOs to succeed would help build the best companies and yield superior investment returns.

The firm says Fund III is available to be deployed immediately.

Unfortunately, this is exactly the scenario that our friend Rand Fishkin, the CEO and co-founder of SEOmoz, found himself in not long ago. In 2007, the company received venture capital funding from investment firm Ignition, and earlier this year, was approached by a number of firms interested in investing further.

Fishkin told us that the company had not planned on raising funding but that it began to get excited about the potential opportunity. During the bidding process, there was clearly one firm that stood out. Fishkin said it made them a good offer and the companies signed a term sheet.

As he explained, this is “usually a done deal unless the investment firm finds fraud of some kind.” However, three weeks after the signing, the investment firm pulled out. Aside from the fact that SEOmoz did not receive the funding, he said it was also hard to understand why it happened since the firm did not give a clear reason for its action.

“That experience was new for us,” said Fishkin. “I think folks tend not to write about the fact that even after a term sheet is signed, the investor can still pull out.”

Because he has always been very open about all things SEOmoz, Fishkin wrote a very detailed post, within legal bounds of course, about the entire experience. WebProNews asked Fishkin about why he felt so compelled to be open since most companies would not go to the extreme to find out what they could actually disclose.

He told us that transparency has always been a core value of SEOmoz and always would be. He believes that this includes both the good times and the bad times.

“There’s nothing up my sleeve,” said Fishkin. “It’s all out there.”

Is it possible for a business to be too transparent? What do you think?

Fishkin and SEOmoz take transparency very seriously and believe in being upfront about all matters, even when they involve finances and legalities that aren’t flattering.

“It’s one of the qualities that consumers and business customers appreciate so tremendously much these days,” pointed out Fishkin. “We’re getting a culture, it’s particularly in the technology world, that anticipates, loves, and rewards transparency.”

With this transparency, there is also a risk since investors may avoid SEOmoz in the future out of fear of being the subject of a blog post. Fishkin admits that this is a very real concern but said it was one that he was willing to take.

“It’s a risk that we feel comfortable with,” he said. “I would rather say I’m going to commit to our core values, we’re going to do it 100%, we will be transparent no matter the costs, rather than say… we’re transparent but only when it’s convenient for us.”

Even though SEOmoz didn’t receive the funding, no one can say that the company doesn’t stick by its values. The experience, however, has made the company hesitant about raising capital in the future.

“We’re going to go back to our original mission of not raising capital,” said Fishkin. “Maybe we’ll think about it again next year, but I sort of hope we don’t.”

“I’d prefer not to go through that process,” he added. “It takes a lot of time and energy away from running the business.”

If the opportunity were to come up again, Fishkin told us that he would like his company to be in a position in which it doesn’t need the funding, so that it could walk away if it wanted. Since most startups that are covered by the Silicon Valley media receive funding, he also said that he would try to create buzz around his company before he attempted another VC round.

Although the experience was difficult, Fishkin and SEOmoz have received a lot of praise and support for being transparent. Fishkin told us the praise is a “good consolation prize” but that it was a little “bittersweet.”

Going forward, he hopes that startups will be more aware of potential issues and that investors will be more cautious.

The funding comes from Baseline Ventures, Founders Fund, First Round Capital, SV Angel, Maples Investments and Freestyle Capital. CoTweet is used by brands like Whole Foods, Starbucks, Microsoft, JetBlue, Ford, Pepsi, Sprint, and Coca-Cola.

"Social media properties like Twitter give consumers incredible power to shape public perceptions of brands," said Steve Anderson, Founder of Baseline Ventures, who led the round and will join CoTweet’s Board of Directors. "CoTweet gives companies and their brands a set of tools to directly engage consumers and forge stronger bonds with them on the social networks they belong to, starting with Twitter."

Co-Tweet says companies can use its platform to:

- Engage people throughout your company — Share the job of being on duty. Tap the collective wisdom of people across functional areas like marketing, PR and customer service. Assign tasks and track follow-ups.

- Focus on the conversations that matter — Know when you need to jump in. Track your exchanges through simple case management. Schedule updates to make company announcements.

- Keep your brand human — Automatically include signatures in your updates to identify who’s talking and keep conversations personal.

"Social networks, including Twitter, have ushered in a new era of social CRM for businesses," said Jesse Engle, CEO of CoTweet. "We’re thrilled have such a prestigious roster of financial backers, whose background in this space gives us a distinct advantage in setting a course for continued success."

It will be interesting to see where the new funding takes CoTweet.  Recently, Twitter Co-founder Biz Stone discussed the use of the word "Tweet," with regards to Twitter’s copyright.

"We have applied to trademark Tweet because it is clearly attached to Twitter from a brand perspective but we have no intention of ‘going after’ the wonderful applications and services that use the word in their name when associated with Twitter," he said. "In fact, we encourage the use of the word Tweet. However, if we come across a confusing or damaging project, the recourse to act responsibly to protect both users and our brand is important."

According to CoTweet’s press release, Twitter is actually among the companies that use CoTweet, so I guess they’re safe.

Andreessen serves on the boards of both eBay and Facebook, and is a chairman of the board of Ning, which he also co-founded. His biggest claim to fame was co-founding Netscape.

Horowitz also has background with Netscape. There he ran several product divisions. He co-founded LoudCloud with Andreessen. This became Opsware, which was later acquired by HP. Horowitz served as vice president and general manager of HP’s Business Technology Organization Unit.

The new firm will focus on investments within the range of $50 thousand to $50 million. The duo also announced its first round of funding at $300 million aimed at entrepreneurs, products, and companies in the tech industry.

"Innovation is thriving despite the current economic climate," says Andreessen. "Ben and I are huge supporters of entrepreneurs and want to help turn today’s sparks of brilliance into the next big thing."

"We see venture investing as a company-specific exercise," says Horowitz. "Therefore, we are looking for the best entrepreneurs and companies regardless of stage."

Andreesen outlines some things they are looking for out of entrepreneurs and companies on his blog. They want motivated entrepreneurs, technical founders, founders that intend to be CEOs, and founders that understand their products.

The firm is looking to invest in categories like consumer Internet, business Internet, mobile software/services, software-powered consumer electronics, infrastructure and apps software, networking, storage, and databases.

The firm is NOT looking to invest in "clean", "green", energy, transportation, life sciences (biotech, drug design, medical devices), nanotech, movie production companies, consumer retail, electric cars, rocket ships, space elevators.

Just three new funds were able to attract cash in the first quarter of 2009.  In comparison, a full 10 funds received capital during the same period last year, and 21 made the list in the first quarter of 2007.

 

As for how the situation looks on a larger scale, an NVCA and Thomson Reuters release stated, "Just 40 venture capital funds raised $4.3 billion in the first quarter of 2009 . . . .  This level represented the smallest number of venture funds raising money in a single quarter since the third quarter of 2003."

The $4.3 billion dollar value wasn’t great, either, as more impressive sums were raised in seven of the eight previous quarters.

Companies should still plan on just looking out for themselves, then, and not count on any venture capital funds to come to the rescue.  Hopefully we won’t see too many innovative businesses wither as a result.

The new arm would likely focus on American companies, with David C. Drummond, Google’s chief legal officer and senior vice president in charge of corporate development, leading the operation.  Google’s prior experience in these matters comes from having invested in Indian VCs and creating an Indian enterprise investment company.

 David C. Drummond

Any expansion would make for an interesting move to say the least.  Google’s wealth and power might cause some startups to trip over themselves competing for its support.  That same wealth and power might cause others to run away so that they aren’t overtaken for less than the price of a regular acquisition.

Regardless, though, Jessica E. Vascellaro reports, "Google executives previously have bandied about the idea of launching a venture-capital unit, and the plans could still fall through."

So, even as YouTube got a new pal late yesterday, we may not see an end (or slowdown) in Google-related acquisition announcements anytime soon.

TheFunded.com put together the list based on its members’ ratings of the individuals.  Certain rules (VCs "must have been rated by over five separate Members . . . must have a rating average at or above a score of four out of five," and so on) try to keep things fair, and the list gets updated on a weekly basis.

 TheFunded’s Top-Rated VCs

However, Matt Marshall notes, "This ‘top-rated’ list is highly subjective.  TheFunded has drawn many members dissatisfied with the venture capital funding process, and who have an ax to grind – and so many members tend to be critical in their reviews.  Still, since the top-rated VCs need a ratio of at least five favorable reviews to every negative one, the list consists of those who have managed not to piss off too many entrepreneurs."

At the momemt, Eric Archambeau of Wellington Partners holds the number one spot.  Peter Solvik of Sigma Partners is number two, and Rob Theis of Scale Venture Partners comes in at number three.

It’s not hard to imagine some VCs planting positive reviews to bring in business, while others may eventually sabotage their own ratings to reduce inquiries to a manageable level.  Good luck to both them and the cash-seekers.

Mahalo CEO Jason Calacanis, formerly in charge of Netscape, former owner of Weblogs, Inc. who sold to AOL for a reported $25 million, has the answer for startups worried about getting through economic hard times: lots and lots of money.

He’s a Fordham alum, so you know where to send your contributions.

Not known for his silver tongue, the Brooklyn-native reportedly replied to a small, perhaps slightly inebriated group of SES New York karaoke goers’ concerns about the economic disaster the US is headed for with some sage-like advice.

Nate Westheimer contributes:
 

“Are we f**ked?” I asked Jason, in reference to this tailspin economy’s impact on Internet startups.

His reply:

“I’m not. I raised enough to last me for years. You should too. Now. If you can.”
 

Ah yes, advice reminiscent of the author of Ecclesiastes when he wrote "money answers everything." That same author was a bit down on life in general, much like perhaps the entrepreneurs out there who see money as though staring at a baseball in a gutter just beyond reach. But thanks for the tip. 

Nate’s probably a bit fairer about it, noting that if one can raise some venture capital, even if it means giving up some control, it might be a good idea. But I can’t help being reminded of Calacanis poopooing on SEO in a room full of SEOers, or telling the Digital Slob’s insanely hot Russian model wife and podcaster, Olga Timakova (yes, this Olga) that nobody wanted to hear her talk.

Sigh. And people give him money. Maybe Hillary’s right; well-spoken just isn’t what it’s cracked up to be.

While you’re chewing on that solution to save your business, rolling pennies for gas, clipping coupons, and getting the oil changed in your, well, let’s call it "respectable" automobile, note also that luxury car sales are way up, so somebody’s making money, right?

Gap? What gap?

Note also that the HuffingtonPost seems to have surpassed the Drudge Report in terms of traffic, perhaps indicating that record numbers, like your humble author, are joining that ever-expanding "Used to be Republican" party. 
 

To show a fragmented and partial timeline, this comes after the announcement that an Indian version of YouTube would launch, the designation of Orkut as an Indian “youth icon,” and a companywide celebration of India’s 60th year of independence.  The most relevant story occurred in July, though, when Google joined the Band of Angels.

That organization helped bring Google closer to startups in India.  The Indian Angel Network and Ventureast TeNet Fund II, with which the search giant is now becoming involved, should do something similar.  And this seems like a very good idea.

Brian White writes, “[J]ust like innovation hotbed Israel, India is set to churn out just as many world-changing innovations as any other country in existence if the support tools and monetary infrastructure are in place to foster that type of environment.  Google’s ability to seek out funding opportunities for unique creations is unique in and of itself.  It will probably want to buy those creations once a workable business product or service is available.”

Given Google’s relationship with India, that’s not likely to be a problem.

“We literally have a hundred different ideas for tools, search analytics, tracking, guides, resources and more and we’re in a position to recruit help from the best and brightest the industry has to offer… but, we can’t do it alone,” Rand said in his lengthy discussion of the news.

Ignition Partners and Curious Office will be the entities partnering to infuse SEOmoz with venture capital. Rand promised to discuss both VCs in future Whiteboard Friday posts.

The various investment processes, including due diligence, should be over by October, according to Rand. During that time, SEOmoz will formalize, with a board of directors that could include former Google Webmaster Central guru Vanessa Fox, now part of real estate tracker Zillow.

Prior to starting the VC process, SEOmoz’s site architect Matt Inman decided to leave the company. Rand said his departure and the forthcoming venture investment were unconnected.

By the numbers, Rand noted SEOmoz has over 1,200 premium members who access the kind of content the investment should help the site continue to develop.

“While we’re planning to be conservative with the investment (none of the standard, blow-through-the-money-in-6-months then ask for more), we will be able to take some risks and invest in projects that don’t have a guaranteed outcome,” Rand said.