MENLO PARK, Calif. — Last year, when Marc Andreessen set up shop on Sand Hill Road, the tree-lined home to Silicon Valley’s venture capital firms, he was already a big name.
A Midwestern transplant, Mr. Andreessen was a founder of Netscape, which made the first popular Web browser, and Opsware, which Hewlett-Packard bought for $1.6 billion. But he wanted to prove that he could become one of the storied venture capitalists who invest in the next big thing.
In 16 months, Mr. Andreessen’s firm, Andreessen Horowitz, which he started with Ben Horowitz, also a founder of Opsware, has earned a solid reputation among entrepreneurs because it helps founders run their companies. It has also managed to break into the top ranks of venture capitalist firms by investing in some of the most competitive deals, like Foursquare and Zynga.
On Wednesday, Andreessen Horowitz cemented that status when it announced that it had raised $650 million for its second fund. The amount is unusual and all the more remarkable because the firm is so new.
Although it is too early to judge the firm’s financial success, Andreessen Horowitz represents a new breed of venture capitalist that is financing new kinds of start-ups. These firms are shaking up an industry in need of change because returns for the decade ended in June were negative 4.2 percent.
Venture capitalists in Silicon Valley are finding that the competition for the best deals is again highly competitive. The valuations of start-ups are soaring, up fourfold in the last year, Mr. Andreessen said, which means that investors have to pay more to buy pieces of companies.
The fiercest competition is for very early-stage, or seed, investments in entrepreneurs just starting out, which is typically for relatively small amounts of money — $25,000 to $200,000.
This kind of investing has been growing rapidly while venture investing over all has slowed. In the three months that ended in September, overall financings shrank 7 percent, to $4.8 billion, from the same period a year earlier, but investments in companies raising money for the first time ballooned 60 percent, to $1.2 billion, according to PricewaterhouseCoopers and the National Venture Capital Association.
Mr. Horowitz and Mr. Andreessen are two of the major players in this new wave of early-stage financing, known as superangel investing. Unlike typical angel investors, who invest their own money in fledgling companies as a hobby, superangels invest their money and other people’s money as a full-time job.
The two are also simultaneously at the forefront of a second trend — superangels going pro and becoming venture capitalists by also investing in more mature companies and building a firm instead of investing alone.
These venture capitalists, which also include firms like Floodgate, First Round Capital and True Ventures, could reshape Silicon Valley. Meanwhile, established venture capital firms like Greylock Partners and Kleiner Perkins Caufield & Byers are following the trend by starting seed investment funds within their firms.
Mr. Horowitz and Mr. Andreessen decided to expand into a venture capital firm last year, after they had invested $4 million in 45 start-ups, among them Twitter; Qik, a live mobile video company; and Aliph, the maker of Jawbone headsets.
Without an office or staff, they were spending their days holding meetings in the lounge of the Rosewood Sand Hill hotel, a hot spot for tech types, “ordering club soda and peanuts from the same waitress for seven hours,” Mr. Andreessen said. So they raised $300 million from outside investors and opened an office next door to the Rosewood.
They envisioned their firm as one serving as a training camp for start-up executives. They sought companies with the technical founder still in charge. But they wanted that person to learn how to be a chief executive, in large part because founders are more willing to sacrifice short-term gains for long-term ideas, they said.
The philosophy is evident from the moment someone walks into Andreessen Horowitz’s lobby, which is filled with computer programming guides and biographies of tech entrepreneurs — a touch in keeping with the firm’s carefully crafted image.
“Conventional wisdom in venture capital has been that when the business has to scale, you bring in the professional team,” Mr. Horowitz said. “We think it’s easier to develop a founder into being a great C.E.O.” He pointed to companies where the founders remained in charge, like Amazon.com, Microsoft and Intel.
Still, Andreessen Horowitz does not entirely eschew executive shake-ups. Several of its portfolio companies, including Skype and Digg, have new chief executives since it invested.
The two financiers help founders learn to be executives by writing long blog posts on topics like how to hire the right executives or how to lay people off, and talking them through issues like confrontations with employees or meltdowns from stress.
The key, they said, is that unlike other venture capitalists with finance backgrounds, they have worked as executives. So has their third investing partner, John O’Farrell, previously an executive at the smart grid company Silver Spring Networks.
They are also staffing their firm with people who focus on recruiting and marketing products from start-ups.
While other venture firms also do this, some venture capitalists have earned a poor reputation for paying lip service to the idea that they take a hands-on role at companies when they do nothing more than show up for board meetings.
At Andreessen Horowitz, for instance, six staff members visit college campuses to meet promising engineering students and get to know executives in the field, building a network that portfolio companies can pluck from. In the last year, they have placed 73 people in companies.
But the firm, and others who have hired experts like recruiters and marketers to assist their portfolio companies, are waiting to see whether the tactic works. After all, in many cases the personal advice from people like Mr. Andreessen is the main draw.
That might also be the biggest key to the firm’s rapid rise in Silicon Valley. “Their names carry weight in and of themselves,” said Ted G. Wang, a partner at the law firm Fenwick & West who focuses on start-ups and venture capital. “Who wouldn’t want to have Marc or Ben’s imprimatur on your company?”
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