This discipline has helped USV maximize returns. Its latest early-stage vehicle is $275 million, a modest sum for a franchise of its stature. Despite its success, USV has kept its funds small. One under-the-radar smash was recruiting platform Indeed. USV is well-known for investments in Twitter, Zynga, Coinbase, Tumblr, and Etsy. The firm’s 2012 vintage has done even better. USV’s first fund was an extraordinary hit, returning ~14x of invested capital. The University of Texas played a pivotal role in catalyzing institutional interest. Despite their pedigree, Wilson and Brad Burnham took the better part of eighteen months to raise USV’s first fund. Much of its portfolio collapsed during the dot-com crash.Ī difficult raise. The firm invested in buzzy startups like Geocities and The Industry Standard. Before starting USV, Fred Wilson co-founded Flatiron Partners with Jerry Colonna. Read on to learn about:įlatiron Partners. Today’s piece will explore the firm’s history, evolution, and playbook. But more importantly, it has been very, very good. Like every successful investor, USV has been lucky. It is the venture capital equivalent of pointing toward center field before the pitch comes in, calling one’s shot. Much of this success stems from the firm’s gift for thinking deeply about the future and devising a thesis that distills an investment opportunity. It has also logged some of the top-performing vintages of all time. USV has consistently performed in the top quartile across its vehicles. Since it opened its doors in 2003, few other funds have maintained such elevated performance for so long. Union Square Ventures may be the most reliable slugger in startup investing. Over a long enough time horizon, finesse and good fortune diverge. Either an investor keeps hitting, or their luck runs out. If it takes just one hit to do so well, how do you know which investor is lucky and which is good? How do you distinguish the gleeful chancer from the skilled technician? This dynamic can make it difficult to distinguish between practitioners. Never mind the litany of failures in venture capital, it is your successes for which you’re remembered. Anyone lucky enough to have splashed some capital on the names mentioned above may have looked, for a time, like a guru. In small bursts, spraying and praying can work well. So many, in fact, that this “hope as a strategy” has a name: spray and pray. Since picking a generational business from a sea of pitches is no simple thing, it’s tempting to leave selection in the lap of the gods. Participating in early rounds for Google, Facebook, Stripe, or Coinbase erases a season of shanks, whiffs, and bunts. In the grand-slam business of startup investing, a big hit can make up for a slew of strikeouts.
Lefty Gomez once said he’d “rather be lucky than good.” Many venture capitalists might make the same trade-off as the eccentric Yankees pitcher.
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