Andreessen Horowitz's $100 million bet on developers

July 9, 2012: 5:14 PM ET

Silicon Valley's masters of sexy tech investments are betting on something less glitzy -- but just as vital.

FORTUNE -- Andreessen Horowitz has invested in hot social media companies like Facebook (FB), Airbnb, Pinterest and Twitter. But the venture capital firm's newest and largest best is on a far less sexy startup that you've probably never heard of: GitHub.

In simple terms, GitHub is an online repository for developers to store and collaborate on code. It's been called a "Facebook for geeks." Managers can also log in and track changes that are made along the software development process. But while GitHub has implications for non-programming needs, it's mainly a tool for developers. In other words, if you can't tell code from gibberish it's probably not on your radar.

Up until now, San Francisco-based GitHub hasn't taken any outside money. This afternoon, the startup is announcing not just any financing round, but a whopping $100 million investment from Andreessen Horowitz -- the largest the firm has made to date.

Why so much cash? Because GitHub has 1.7 million users and 300% year-over-year revenue growth, all with little sales or marketing efforts, says Andreessen Horowitz general partner Peter Levine. "They have the largest repository of source code on the planet," says Levine, who will now sit on GitHub's board. "We think this kind of investment certainly is warranted given their position in the market."

But another reason for investing in GitHub is the firm's belief that software will be core not just to Silicon Valley companies but to all industries across the world. Who will lead the way? Developers, of course.

"The GitHub premise helps to accelerate the development of source code," says Levine. "This is a much-needed catalyst for developers."

GitHub CEO Tom Preston-Werner says the money will be used to push an initiative called "GitHub Everywhere," which aims to bring the platform to students, small businesses and large enterprises alike. Preston-Werner also wants GitHub to work for different kinds of people, like designers and technical writers, in addition to developers. The company currently has about 100 employees and will continue hiring, though they have not set a target headcount.

"Every software developer in the world should know the name 'GitHub,'" says Preston-Werner. "It should become a household word for people in the software space."

Even if it expands beyond a programming tool, GitHub will never have the mass appeal of other Andreessen Horowitz investments like Facebook or Twitter. But developers are a loyal bunch -- that is, of course, assuming GitHub can stick to its roots despite its newly padded bank account.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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