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NYC's Top VC Fred Wilson Is Rich . . . and Grumpy

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Wilson is right. People know him. Thanks to his blog, and to all of his other proselytizing on behalf of Silicon Alley, he’s been elevated to a somewhat mythical status. The city’s would-be Mark Zuckerbergs talk of "Fred" in soft, worshipful tones. But USV is still, as Wilson put it, "a sleepy little firm," and if he actually cares about maximizing Silicon Alley’s potential and turning New York into a true, lasting tech hub, he still has his work cut out for him.

"Everyone reads his Twitter feed," Newser CEO Elisabeth DeMarse, who has known Wilson since the 1990s, told Adweek by email. "Is he as influential as Bob Kagle from Benchmark? Or John Doerr at Kleiner Perkins? Or Tim Draper from Draper Fisher? Or anyone in California? No, but that is no slam on Fred; it’s simply because . . . New York has [only] just begun to outpace Boston in venture investing."

The rise of Union Square has been a second coming for Wilson. From 1996 to 2001, he and Jerry Colonna ran Flatiron Partners, investing in a number of high-profile Web startups, including Kozmo.com (a once popular online delivery service) before the dot-com bubble burst, the startups started to fold, and Flatiron stopped making new investments.

Wilson, now 49, began his career in venture capital in the mid-’80s. After graduating from MIT and earning an MBA from Wharton, he became an associate at Euclid Partners, a New York-based firm that focuses on life science and info-tech investments. In 1987, he married Joanne Solomon—who was selling advertising for the Silicon Alley Reporter while Wilson was at Flatiron, and who now blogs about her life under the moniker Gotham Gal: "Someone called me the ‘woman around town’ which I thought was quite appropriate," she once wrote.

Wilson started his own blog in late 2003, at the same time that he and Brad Burnham, with whom he co-founded Union Square Ventures, were first looking for funding. Their investment strategy was based on an idea that was unique at the time: the belief that the Internet’s "next wave" would be in Web services, the "application layer." (Back then, apps were still a novel concept.) The two started their first fund in 2004.

The strategy paid off big, at first. The year after USV launched, one of the first companies it funded, Del.icio.us, was sold to Yahoo for a reported $30 million. USV made seven times its investment on the deal. In 2007, two more early recipients of USV funding, FeedBurner and Tacoda, were sold. FeedBurner went to Google, reportedly for $100 million, and AOL doled out a reported $275 million to acquire Tacoda.

That same year, USV was involved in the deal that really made its name when it led a $5 million funding round for Twitter. (At the time, Twitter reportedly had a valuation of $20 million. USV participated in two later rounds of funding but has stayed out of later rounds as the valuation of the company has climbed to what’s been reported as anywhere between $5 billion and $10 billion.) In 2008, it added Zynga to the portfolio. Those two companies alone should be enough to keep USV’s partners fat and happy for years.

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