How Andreessen-Horowitz Picked Its First Cloud Investment

How Andreessen-Horowitz Picked Its First Cloud Investment

On Monday, the cloud application management service Okta announced that it had secured a $10 million series A investment earlier this year led by Andressen-Horowitz. Okta allows companies to control their users, applications, and data both in the cloud and behind the firewall.

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Following the announcement, Ben Horowitz updated his blog with an explanation for the VC firm's decision to back Okta. It's a notable investment for two reasons: Firstly, Okta's funding marks Andreessen-Horowitz's first investment in the sector. As the firm has backed startups like Foursquare and Zynga, the move is a strong signal. And secondly, Horowitz himself was the founder and former CEO of Loudcloud, one of the original cloud computing companies. "I am," he writes, " considered somewhat of a domain expert in all things 'cloud.'"

As Horowitz notes, "our investment thesis starts, as always, with the entrepreneur." Okta's founding CEO Todd McKinnon ran Salesforce's engineering team, and Horowitz describes him as one of the most astute engineering managers he's ever worked with.

McKinnon and Okta's skill is being used to address what Horowitz calls "the cloud identity problem," a problem that is different in the cloud than it is on-premise. Problems that have long been resolved - access to email, files, printers - remain issues in the cloud.

Horowitz says, "I really like the market, because the cloud identity market will likely become the cloud management market. Given that those current markets combined are between $10B and $20B (depending on what you count), the resulting market will be extremely large."

While the Andreessen-Horowitz backing of Okta bodes well for the startup's success, this positive investor statement is another strong endorsement for the expanding cloud sector as well.