Union Square Ventures has secured $135 million of a new $200 million fund titled Union Square Ventures Opportunity Fund LP, according to an SEC filing.
Listed as a new partner in the filing is John Buttrick.
Principal investor Fred Wilson of Union Square is one of the most visible Silicon Valley venture capitalists you can find, as he operates a blog updated nearly every day called A VC: musings of a VC in NYC and is a regular contributor to VatorNews, commenting on financial news and trends. His most recent post, entitled Invest in the mess, follows up on his own piece highlighting the crowded startup environment and suggests that the best firms will know how to invest intelligently anyway:
Not everyone knows how to invest in the mess. But experienced VCs should know how to invest in the mess because they have all had to help their companies get through this stage. They understand the issues, they understand what it takes to cure them, and they should have the courage to know that investments made at this stage will be handsomely rewarded when the companies emerge into a successful adulthood.
We have plenty of portfolio companies in the ugly adolescent stage. And most of them are not finding it easy to raise money. We are doing many of these rounds as inside rounds, meaning the existing investors are funding the company without a new lead investor. I see this as a big opportunity for our firm and I am excited about it and entusiastic about making these investments. I know that not all of them will be great investments. But I know that many of them will be. And we are getting to make these investments at attractive valuations that don't have the least bit of irrational exuberance written on them.
Union Square has invested in several notable tech startups, including Twitter, Zynga, Tumblr. Most recently, the firm has contributed to rounds raised by open-source database developer 10gen, browser add-on Zemanta and cloud telephony platform Twilio. The former three could be considered the “ugly adolescents” that Wilson is referring to, but Twitter didn’t seem to have very much trouble raising a $200 million round recently from Kleiner Perkins Caufield & Byers. Tumblr also just recently raised a fourth round of funding and Zynga raised a massive round over the summer.
It’s hard to tell which are the startups having trouble raising funds because executives typically remain tight-lipped during the fundraising process. To get an idea of the kinds of startups Union Square funds, check out their full portfolio. Also, I've embedded a video below of John Doerr (Kleiner Perkins) and Wilson discussing the current state of entrepreneurship and finaces at Web 2.0 Summit in November.
(By the way, if you’re a VC firm or startup trying to keep new financing quiet, Wilson has some advice for you: “do as I say, not as I do.”)