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Though [Andreessen Horowitz] has invested in several New York-based start-ups, Mr. Farrell said, it sets the bar higher for them, largely because it believes they are less likely to succeed.
-Andreessen Horowitz Partner John O’Farrell in a May 2012 New York Times story

New York has a great tech scene and all that. We have capital, attention, a cool new college campus, strength in certain industries like media (and advertising), or fashion, or finance. We have Mayor Bloomberg. We have talent migrating out of Wall Street. We have Google and eBay. We have some exits, and even some IPOs, finally.

But there’s plenty we don’t have — Y Combinator, late stage capital, multiple generations of institutional knowledge, tentpole companies doing hardcore tech. One thing that’s been conspicuously missing, even as major Valley VC’s from Accel Partners to NEA, IVP and TCV set up satellite offices here, is a presence from Andreessen Horowitz. That the top Silicon Valley firm hired entrepreneur and angel investor Chris Dixon (who is a PandoDaily investor) as its first New York-based partner speaks to the growing influence of the scene here.

Yes, they moved Dixon away from New York. But with his first deal for the firm, he’s made a statement that you can’t take the New York tech out of the New York VC. Or something.

This week he’s led a $30 million investment in Shapeways, the 3D printing company with offices in Manhattan and a 25,000-square-foot factory in Long Island City. The deal follows a previous $17.3 million raised across several rounds of funding from Index Ventures, Union Square Ventures and Lux Capital, all of which participated in this round.

Shapeways is Andreessen Horowitz’s third largest New York deal after Foursquare and Fab. It’s also the first time Dixon has taken a board seat outside of the two companies he founded.

But most importantly, it’s the first time a West Coast VC has invested in 3D printing. “It hasn’t been a meme in Silicon Valley for whatever reason,” Dixon says. “I’m surprised we’re the first.” He compared it to Bitcoin, an area that investors are curious about, yet the companies operating there remain at the fringes of what’s hot in the Valley.

That’s what makes categories like Bitcoin or 3D printing interesting to invest in now, while many investors are debating whether they are hype or reality, Dixon says. “Once it crosses over to the center of the tech world its too late.

“There is trepidation, like, ‘Is it just something Wired magazine is talking about, but not actually real?’” he says, adding, “I personally think it’s real.” But that much was already clear — aside from the Shapeways deal, Dixon also led an investment in MakerBot for the venture fund he co-founded, Founder Collective. And unsurprisingly, MakerBot, the most well-known 3D printing company, is also based in New York.

To make a clear distinction: MakerBot and Shapeways approach the category with different businesses models: MakerBot makes and sells 3D printers that retail customers will have in their homes. Shapeways prints things for customers that can’t be printed at home, using larger, more complex printers and more advanced materials like metals. This is why it has two factories with plans to open more. To oversimplify with a comparison to 2D printing, if MakerBot is an at-home printer, Shapeways is the store that prints magazines and bound books.

To further mangle an already-bad metaphor, one might say that 3D printing is democratizing manufacturing the way the Internet democratized publishing. In other words, 3D printing upends physical stores just like the Web upended the way we create and consume media. Timing TBD — it’s still really, really early.

Shapeways will use its new capital to solve many of the prickly problems the young 3D printing industry faces, says CEO and co-founder Peter Weijmarshausen. The company needs to make it easier for product designers to upload designs and customize the existing designs in its database. Further, Shapeways needs to make even more materials available to be printed beyond plastics, metals and earthenware. Lastly, the company wants to help people to understand the possibilities of what can be done with 3D printing. Thus far, many of the products Shapeways prints could have been created with mass manufacturing, Weijmarshausen says, but he’s seeing an increase in projects that take advantage of uniqueness of 3D printing. One example is this Klein bottle bottle opener, which also a mathematical joke.

The 3D printing market is akin to the early days of accessing the Internet with modems, Weijmarshausen says. “Not many people are using (3D printing), and quite a few have heard about it but don’t know the relevance of it. We’re making sure it gets easier, just like with the Internet,” he says. Because 3D printing gives consumers input on the products they get, he would not be surprised if we will make 10 percent of all consumer products with 3D printing in the years to come.

The company’s biggest challenge is bringing up its margins, which is the curse of any ecommerce business. The 600,000 products created by 300,000 designers in Shapeways’ online shop, while impressive, still have to compete on price and speed with Amazon. Starting out was very expensive, Weijmarshausen says, but as the company scales up, its margins will increase. Innovating on the fringes takes money.

Hey, the first modems weren’t exactly cheap either.

Illustration by Hallie Bateman

  1. Andreessen Horowitz
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    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.

    1. Chris Dixon
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