Fred Wilson – A VC in Europe (but just for this month)

Last week I had a coffee with Fred Wilson of Union Square Ventures. Fred is perhaps best known as the blogger “A VC – Musings of a VC in NYC” but he is also an investor in Twitter among other startups. He was on a European “Tech Tour”, but this is not something he normally does. I asked him why a New York VC was suddenly doing a tour of European startups (which he’s blogged here, here, here, here).

The first reason, he said, was that his blog had given him exposure to many European startups, so he decided to combine a family holiday with a trip over here.

Secondly, as his firm’s portfolio of startups becomes more mature they have an increasing number of companies that need to “be global”. It’s possible to get English-speaking countires right just being based in the US – you can hit the UK, Canada Australia, etc almost without having to get on a plane in many cases. But trying to generate footprint in foreign languages is harder. You need boots on the ground. He cited the recent example of how StudiVZ is beating out Facebook by being the big local player in Germany, faster than Facebook was able to internationalise (and that story will run and run now court action is under way).

“So we either need to get to know local entrepreneurs to either partner with them or work with them or maybe even buy them,” says Wilson. As a VC, it’s easier for him to be a “go-between” between US and European startuops than it is for possibly competitive startups in Union Square’s portfolio from the US, he says.

The third reason is that “when we built Union Square we tried to focus on web apps and services in New York then invest in Silicon Valley.” The latter is of course a 6 hour plane ride away. But – as it turns out – a 6 hour plane ride in the other direction puts you into Europe. “We can do that from New York, but Silicon Valley VCs can’t do that,” he says. In other words, a VC in New York is more likely to be interested in European startups than one much further away in Silicon Valley. Plus there is the time factor: European companies can have a New York base because the time difference with Europe is not so onerous. So will Union Square make investments into Europe? Fred said they woud look at doing “one investment a year in Europe” to begin with just to “get the deal flow going.” It helps that Albert Wenger, partner at Union Square, is German, so he has plenty of roots in Europe.

Wilson admits that pan-EU VCs like Balderton, Mangrove, Index and others are “way more connected” here so it’s not like Union Square is about to trouble them. However, there is an interesting aspect to Union Square’s incursion into Europe. They will fund startups from a point as low as $250,000, which is unusual, and possibly suits Europe’s hunger for seed financing right now.

After we chatted, Fred rushed off to another meeting and was later clearly networking with Seedcamp Seedcamp over dinner if this blog post is anything to go by:

Topics of conversation included: hosted processing and storage vs. true cloud computing, the question of whether European entrepreneurs receive a “black mark” from failure, where to base development, whether to expand monetization efforts geographically at the same pace as user adoption, the advantages of targeted local startups that seem to fend off even the biggest global juggernauts, the early-stage European funding gap, and the knock-on effect of having not only the founders of successful startups seed new ventures, but their early employees as well.

I would have recorded a video interview but all my tech failed me on the day, so here’s an interview recorded in Berlin by Lukasz Gadowski of Spreadshirt fame:


Fred will be talking on 8th August at Old Broadcasting House in Leeds. See here.