Why Venture Capital Teams Should Look More Like Basketball Squads
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The Basketball Team Theory of Venture Capital
There's a reason why your best brainstorming sessions happen with a handful of people around a table, not a conference room packed with fifty. Andreessen Horowitz cofounder Ben Horowitz has built an entire investment philosophy around this idea, and it traces back to a conversation with legendary investor David Swensen in 2009.
"An investing team shouldn't be too much bigger than a basketball team," Horowitz explained on Tuesday's episode of the A16z podcast. He's not talking about the entire roster here—he means the starting five. "A basketball team is five people who start, and the reason for that is the conversation around the investments really needs to be a conversation."
It's a counterintuitive approach for a firm that's grown into one of venture capital's giants. But Horowitz insists that Andreessen Horowitz has maintained this structure by organizing into small, specialized investment verticals. These teams stay lean enough that actual dialogue can happen, not just presentations where everyone nods politely and checks their phones.
The firm also encourages cross-pollination. When investment themes overlap between teams, staff members regularly attend each other's meetings. And twice a year, the firm holds two to three-day off-sites "with not much agenda," designed specifically to foster collaboration and strip away the usual corporate posturing.
"People who come from other firms is we have less politics," Horowitz noted, emphasizing that political maneuvering is actively discouraged at the firm. When you keep teams small and communication open, there's simply less room for the kind of empire-building that can poison larger organizations.
OpenAI Snaps Up Healthcare Startup in Crowded AI Market
Meanwhile, the AI gold rush continues at full speed. On Monday, OpenAI acquired Torch, a health-care startup, shortly after launching ChatGPT Health—a platform designed to help patients and doctors navigate the overwhelming world of medical information. The deal reportedly valued Torch somewhere between $60 million and $100 million, with the startup's four-person team joining OpenAI.
Torch was built as a unified medical memory system, pulling together data from hospitals, labs, wearable devices, and testing companies into one coherent picture. CEO Ilya Abyzov praised OpenAI's commitment to privacy, safety, and collaboration with physicians—all critical concerns when you're dealing with sensitive health information.
The acquisition is just one data point in a staggering trend. AI startups pulled in $202.3 billion in investment last year, creating more than 50 new billionaires in the process. Chinese startup DeepSeek and Anthropic were among the most prominent names riding this wave.
But not everyone's convinced the valuations make sense. Demis Hassabis, CEO of Alphabet Inc. (GOOGL) subsidiary Google DeepMind, warned that many early-stage AI startups are dramatically overvalued. He described the current market enthusiasm as an "overreaction to the underreaction"—essentially, investors who initially dismissed AI's potential are now overcorrecting by throwing money at anything with "AI" in the pitch deck.
Hassabis did acknowledge that AI's long-term potential remains robust. The question is whether today's valuations reflect that future reality or just fear of missing out on the next big thing. Given how quickly fortunes have been made in this space, it's easy to understand why investors might be getting a bit ahead of themselves.
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