Union Square Ventures announces The Opportunity Fund | Hacker News Reader

Union Square Ventures announces The Opportunity Fund

usv.com

27 pointsdabent7 comments

I'm respecting Fred Wilson more and more with each article I read from him. But I think this article really has some deep thoughts that are expressed in clear ways.

1. Not "web apps" but "Internet services". It's a bigger world than just websites or backend services. iOS, Android, Desktop native, Web App, cloud, etc. Developers need to think broader in not just what website or app do I want to make but what kind of Internet service do I want to provide.

2. The irresistible economics of large networks. In other words, large networks make sense economically. They will find a way to be profitable. And they will transform the world, relationships, business, culture, worldview. Large networks might just be the most transformative force in today's world.

3. User experience rules. It's not about how techy or complex your project is, but rather what's the experience of the user. How does it add value to them? And do they LOVE it? This is what differentiates various Internet services and allows them to gain traction until they can fully utilize network effects to make their site better than anything else out there.

4. Launching new large networks is more challenging. People are already on FB, Twitter, Tumblr, etc... and to create new large networks can be difficult because people already have their loyalities, and the current large networks are just getting better and better. Those that can start large new networks are doing it in a way that's a different approach than what's out there.

I'm not sure it's necessarily harder now to launch a new network. Obviously it's going to be harder to launch something similar to what's already out there, but I suspect that truly novel services are actually easier to spread the word about because the velocity of information is so much higher. Do something really cool, and you'll be splashed across the Twtterverse in a matter of hours.

the opportunity fund blog post was written by "committee"

i kicked it off with a first draft, then my partner Brad rewrote a lot of it, and then Albert, John, Gary & Christina also made some contributions

the parts you cite were largely contributed by Brad. he is the "deep thinker" at USV and the post reflects that

I wonder if this kind of "extra fund" will become commonplace for successful micro-vc / super-angels. If you put out 100 $500k investments, and one turns out to be twitter, you are going to want the capital to keep a pro-rata share and follow on.

Raising money for that should be easy, especially if you restrict the fund to existing investments and only charge fees on invested capital.

"Defensibility is more about network effects than patents." Interesting point.

Its interesting because FW has been cautious about a bubble developing within the startup investing. Maybe he was referring to non-network-effect companies.

Venture capital firms are definitely taking note of the seed stage opportunities. From what little I know about the VC business, I believe the problem isn't that the money doesn't scale to make lots of small investments. The problem is that people's time doesn't scale. Fred Wilson can't keep up with all his emails, and adding more people to the firm isn't going to solve the problem. On the other hand, although having a public "VC" firm like a public stock market would solve this problem in a great way ("invest in the startups you're interested in"), the SEC enforces laws to prevent willy-nilly selling shares to the public (blue sky laws an all that). Makes sense.

So that's why we have sites like KickStarter and I think you will see a lot more of that kind of thing going on to fund entrepreneurs in the next 5-10 years. Which is a good thing, IMHO.

I have a few ideas along these lines, but no money to execute them at the moment. They are fairly simple but have a lot of moving parts, involving lawyers, settings things up, etc. If anyone is curious as to my ideas about improving seed funding for everyone, contact me at my email address. http://magarshak.com/contact . Especially if you work at a VC firm and want to spin something off like this :)

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