Fred Wilson Tells The Secret To Landing His Investment

When you’re talking about top tier venture capital firms, you can’t really leave out Union Square Ventures. The New York firm has invested in some pretty big names: Twitter, Foursquare, Etsy, Kickstarter…

Actually, that list could continue for the rest of this article, and I still wouldn’t name all the strong companies USV has invested in. Yet, despite a long list of impressive investments, the firm only hands out money to roughly 8-10 companies a year.

So, how does a startup get the attention of a top tier VC firm like Union Square?

Thanks to blogging, speaking investors like USV’s Managing Partner Fred Wilson, that’s actually not hard to discover anymore. But, last week, Wilson gave a talk at Le Web that outlined their investment strategy.

Ok, so he was supposed to talk about his predictions for the future.

“As if I had a crystal ball or something,” he told the audience.

Instead, Wilson outlined the 3 major trends he is watching and the 4 areas within to those trends that he’s particularly interested in. Right there, on the stage of LeWeb, Wilson made it very clear what his investment goals are. And, since he’s investing real money in these areas, it’s safe to assume they are where he expects to see massive growth in the next 10 years.

Wanna know what they are?

Networks
Undbundling
Smartphones

Networks:

Wilson is very bullish on networks, and he started with the analogy of old newspapers. Editors decided what to cover, assigned reporters, and reporters got the stories. Now, thanks to networks like Twitter, people decide what’s news and what isn’t.

Besides media and content, though, he points out other industries that are now being disrupted by networks: hotels by Airbnb, Hollywood by Kickstarter, and education by Codecademy and the like.

Unbundling:

“People are starting to deliver much more focused services–best of breed services–and you can buy them a al carte.”

Wilson pointed again to newspapers, which used to house all the global, national, and local news one person could want in a day. Now, of course, we go to many different sites that focus on being the best in their given vertical.

He then talks about several industries that are experiencing unbundling: banking, education, and entertainment.

Smartphones:

Well, obviously. Mobile is exploding (well, maybe not yet). But, it’s going to. Wilson calls us all a “node on the network,” and in a hand-raising poll of the audience, most attendees would choose to have only their smartphone, if they had to choose between that and a computer.

The connection of the “nodes on the network” impact industries like transportation (Hailo), banking (Dwolla), and even dating (Tinder).

There, on the stage of Le Web, Wilson laid out all the “secrets” to getting in with Union Square Ventures. If you have a startup that’s innovating in one of these big trends, it looks like you have some phone calls to make.

Fred Wilson: The C In 5C Means Clueless Not Cheap

The godfather of New York venture capitalists Fred Wilson took to his blog Wednesdaywith his reactions to the New York City Mayoral race and, the all important news to the world, Apple’s release of two iPhones. When the story started crossing my alert box, I hadn’t had time to read the blog post and thought perhaps Wilson had gotten it wrong. I was thinking he didn’t see the need for the iPhone 5C.

Wilson took a look at what really happened on the stage at Apple’s headquarters in Cupertino, California on Tuesday morning. The first indicator that things were awry with this iPhone announcement is that they were holding the press event in the town hall room at Apple vs the Moscone or the Yerba Buena Center For The Arts. The significance in the venue is how many people it holds. Holding the event on campus meant a tighter, more curated press corps.

So what did happen on Tuesday?

Apple’s Phil Schiller, Jony Ive, and CEO Tim Cook announced not one but two new iPhone models. The iPhone 5s is the annual upgrade to the original iPhone (now in it’s 6th iteration). The iPhone 5c is supposed to be a cheaper version of the iPhone, designed to start competing with Android.

Most tech pundits have said time and time again over the last three days that one would be silly to “upgrade” your current iPhone to the iPhone 5c. The colors are cool but you can get a case for the new iPhone 5s in any color imaginable. Heck a 3d printer can print you one.

The 5C isn’t supposed to be an upgrade. It’s supposed to be an entry level iPhone, which is Wilson’s exact point over on his blog. When Apple held their press event, they showed the subsidized two year contract prices. The iPhone 5c would start at $99 while the 5s would start at $199. Yes you get a whole lot more for $100 dollars, but that’s not the point.

The point Wilson brings to our attention is that the iPhone 5C is supposed to be the low cost point of entry in the iPhone ecosystem. Abroad most wireless users buy a phone outright and just pay for SIM cards from the carrier they want. They own the phone and don’t have to get into a ridiculously long contract to obtain it. In the US those contracts are two years and in Canada they are three years.

So if you look at what’s really happening as Wilson reports: “the 5C is a big disappointment. It will sell for $100 less than the 5S in the unsubsized market, which means $549 for 16gb and $649 for 32gb. The C in 5C does not mean “cheap” as I had hoped. It means clueless, as in clueless about how the vast majority of new smartphone users are paying for their phones.”

So it looks like Wilson is right. The 5C may not be that entry point Apple’s been looking for to disrupt the low cost Android phones that are gobbling up market share.

The Startup Fred Wilson And Union Square Ventures Would Back Right Now

The startup and venture capital world breathed a sigh of relief earlier this month when New York based venture capitalist, blogger extraordinaire and managing partner at Union Square Ventures, announced he was investing in Coinbase a startup that helps facilitate Bitcoin transactions. Sure Bitcoin is a hot commodity these days, just ask Ashton Kutcher, but there was more to it than that.

For many, Wilson’s investment in Coinbase was one of those big “signaling issues”. As most know, Wilson has been in a two year slump with investments while he tried to figure out what the next big thing was.

His firm, Union Square Ventures, did just fine with investments and made some great bets during Wilson’s cool period.

So what’s next more Bitcoin startups? Wilson has always been one to go ahead of the curve, so undoubtedly whatever he invests in next will go to that record. Wilson just saw an exit with Tumblr, for which he was an early investor. Some of their other great investments include Boxee, Turntable.fm, Twitter, Twilio and countless others.

Regardless of what’s actually in the pipeline, we can tell you for certain, if you read Wilson’s personal blog, avc.com, if you’ve got a team of college graduates who’ve developed the next thing that’s going to stop Google, and big hint here’s it’s not Bing, Wilson would go all in.

In a tribute to his daughter Jess who just graduated from College earlier this week, Wilson acknowledges the fact that he and USV often bet on college drop outs but he writes;

“Dropping out of college is all the rage today in startup land (even dropping out of high school). And when it comes to our business, we really do not care if someone went to or graduated from college. We have funded many college dropouts and will continue to.

But there is also something to finishing something you started. ”

So just to be clear, Wilson will still bet on dropouts but I’m willing to bet a college graduate team may have a special place in his heart these days.

As for what’s stopping Google, Wilson also wrote a short, sweet and to the point post called “Running the table”. In the post he talks about how Microsoft “ran the table” with desktop computing, Apple did it with mobile computing and Facebook did it with social networking. That was until Apple and the internet stopped Microsoft and Twitter stopped Facebook.

As for Google, Google is trying to run the table with the “entire fucking internet” and Wilson wants to know “Who Will Stop Google”.

So if you’ve got a college graduate team ready to stop Google, you better get that deck in front of Wilson.

Read Wilson’s blog avc.com daily. Got that startup ready, make sure your business plan submission includes a clear description of your operations and current progress and take it on over to Union Square Ventures, 915 Broadway, 19th Floor, New York, NY 10010, make it interesting, Wilson’s a busy go.

Here are Wilson’s Venture Capital Do’s & Dont’s

Fred Wilson, PrivCo’s Report On Tumblr Deal Is Total Garbage

Fred Wilson, who some consider the godfather of New York venture capital, made some money in the Tumblr deal. However he is quick to point out that a PrivCo report that suggested his firm, Union Square Ventures, netted a 5,000% return is “total garbage” Business Insider reported late Tuesday.

PrivCo is a private firm that reports on startups and they claim that they had access to details of exactly how much everyone made in the landmark $1.1 billion dollar deal between Yahoo and Tumblr.

Wilson took to Hacker News where he said “Total garbage. There is not one fact in this privco thing that is close to right. The numbers are good but nowhere close to that good. This is the same firm that predicted Foursquare would be out of business this year which will also prove to be nonsense.”

Time Magazine is reporting the Privco data, that Tumblr founder David Karp is taking home $253 million dollars in the deal. They’re also reporting that on a combined investment of $5.25 million dollars over 2007 and 2008, and in conjunction with Boston based Spark Capital Union Square Ventures saw a return of 50x which was worth $253 million to USV and $231 million to Spark.

Privco also suggests that Sequoia yielded $176 million and a combined, Greylock Partners, Insight Venture Partners, CrunchFund and Draper Fisher Jurveston made $88 million.

Wilson has not revealed what the actual numbers are, and probably won’t which could make this information just a shot in the dark.

Another early Tumblr backer, Bijan Sabet said on Twitter that the PrivCo report was “complete garbage and incorrect”.

Now check out Fred Wilson’s Venture Capital Do’s & Dont’s

Fred Wilson’s Venture Capital Do’s And Don’ts

Fred Wilson’s: Venture Capital Do’s and Don’t (via http://www.besttechie.com)

Fred Wilson is currently being interviewed on stage at TechCrunch Disrupt NY by Michael Arrington and a topic of discussion that came up was the “Best and Worst Things to do in VC Pitches.” If you’re not familiar with Fred Wilson, he is a managing partner and venture capitalist at Union Square…

Non Tech Co-Founders Check Out TechSpeak For Entrepreneurs

TechSpeak For Entrepreneurs,Nelly Yusupova, Fred Wilson, startup tips,startup news

Nelly Yusupova founder of TechSpeak For Entrepreneurs (photo: tech.co)

Although he hasn’t led a deal this year, the venture capitalist of all New York venture capitalists, Fred Wilson, is still sharing great advice on his “avc” blog. If you’re not a regular reader of avc.com you need to be.

Last week he wrote about his friend Nelly Yusupova, the CTO at Webgrrls International and the founder and creator of TechSpeak For Entrepreneurs.

As you might imagine, TechSpeak For Entrepreneurs, is a two day bootcamp that teaches us non-technical founders the ins and outs of the software design and build process, and how it works.

Wilson says “…that entrepreneurs who are not deeply technical spend too much money, time, and effort trying to get their ideas turned into software products. Many hire the wrong people, get a product that doesn’t meet what they wanted, and worse of all, many get ripped off in the process. ” Wilson is not a “design” or “developer” snob and realizes that all great startups don’t need a technical founder, but they need to be technically savvy.

TechSpeak for Entrepreneurs also helps non-technical founders learn the lingo and the language on the design and development side. To some, speaking tech is like a foreign language, taking the time out of your busy schedule to attend a TechSpeak for Entrepreneurs could give you the leg up.

There are three TechSpeak For Entrepreneurs’ bootcamps coming up in Phoenix, Silicon Valley and New York.

Phoenix, AZ Apr 05-06

Silicon Valley, CA Apr 13-14

New York City, NY May 04-05

“If you are a non technical entrepreneur, I strongly advise you to get technical. And TechSpeak for Entrepreneurs is a good way to start on that journey.” Wilson suggests.

Wilson is a VC and Principal at Union Square Ventures in New York. Click here to check out avc.com his personal blog.

Learn more, check out these Startup Tips at nibletz.com

Startups Everywhere Else See 65% Of US VC Money In Q3 2012

The latest Dow Jones VC Edge report for Q3 2012 was just released. Overall, venture capital investment across the globe has declined 20% quarter over quarter. Deal flow on a global decreased as well by 11% with 1341 deals in Q2 2012 and only 1189 deals in Q3 2012.

Fred Wilson, the Principal at Union Square Ventures, weighed in on the Dow Jones report in a blog post on Sunday. Most notable to Wilson was that VC funding of consumer web and mobile companies was down 42% for the first 9 months of 2012, when compared to the same 9 month period in 2011. He’s careful to note that the decrease has come in follow on funding and not seed funding.

Wilson highlights three trends in consumer based web and mobile companies that are worthy to note. The most important being that mobile first startups need to spend more to simultaneously bring products out across iOS, Android and the web. It also seems that some startups are having a hard time building scale after their mobile products are built.

The Dow Jones VC report said that IT still received the most venture funding with $3 billion dollars spent in the quarter which is still a decrease of 10%.

In overall venture funding the US was the strongest region even with a 17% drop in investment. Israel saw an increase of 43% with $263M invested in Q3.

Source: Dow Jones’ Venture Source

As for the United States, Silicon Valley still commanded 35% of the venture pie, while startups “everywhere else” drew 65% of the venture capital. Dow Jones highlighted the Los Angeles metro (3%), Seattle metro (2%), Chicago metro (4%), Boston metro (10%), New York metro (9%), and Potomac with (3%). All the other US cities that weren’t broken down accounted for 32% of funding.

Wilson’s interpretation of the critical piece of data surrounding follow on funding was spot on. The Wall Street Journal noted that companies that had a seed round in 2007 and 2008 were more successful in raising follow on funding than those who received a seed round in the following years. There was also more money up for grabs just 5 years ago. The median seed round in 2007 and 2008 was $4 million, while today that’s shrunk to $2 million.

Linkage:

Get a free tour of Dow Jones’ Venture Source here

See this Wall Street Journal piece

Here’s more startup news from “everywhere else”

and here’s the biggest startup conference on the planet

Arrington Is Back: Fireside Chat With Fred Wilson

Mike Arrington was back, looking right at home on the stage at TechCrunch Disrupt NYC. As most of you know he was here last year for Disrupt NYC but after that things between he and AOL got a little shaky.

Last year Arrington appeared onstage with a TechCrunch Green t-shirt that read “unpaid blogger”. This year there was no special shirt, just Arrington in his best form. After being introduced by John Biggs as a guy who used to be Biggs’ boss he sat down to chat with Union Square Ventures’ Fred Wilson.

Arrington pointed out that every time he talked face to face with Wilson they were always in New York. Arrington went on to ask Wilson if he was extremely wealthy and if Wilson had rode into Disrupt on a helicopter. Wilson was quick to point out he walked a couple blocks and then grabbed a cab. He also pointed out that New York Mayor Michael Bloomberg often takes the train.

As far as Wilson and his investments are concerned, Arrington immediately started in on him about Duck Duck Go a new search engine. In regards to Duck Duck Go, Arrington looked at Wilson and simply said “Why, I don’t understand”.

Wilson responded by saying that Duck Duck Go has 40-50% of the traffic of AOL search which is still a top 5 search engine in the world. Wilson is also enthusiastic about Duck Duck go because it was created by just one person. Concerns about privacy will also drive the popularity of Duck Duck Go because it’s a 100% private search engine.

When Arrington asked Wilson if Google should be worried about Duck Duck Go, Wilson said no pointing out that Duck Duck Go is fundamentally different. Where Google uses algorithms and key words, Duck Duck Go “leverages 100s of services that are domain experts, hit their API’s and assemble on the fly”.

Arrington admitted that he was not enthusiastic about Kickstarter at first but has since become one of biggest fans of the crowd sourced funding site. Union Square was the only venture capital firm to invest in Kickstarter. When Arrington asked Wilson why they invested, Wilson described Kickstarter as a “futures market for product”.

Arrington and Wilson rounded out their conversation talking about Wilson’s investments in Twitter and Zynga. Arrington of course said Wilson needs to get to San Francisco more.

Check out more of our Disrupt coverage here: