Selling Twitter Stock Is Prudent, Says Early Investor Fred Wilson

The 2011 TechCrunch Disrupt conference is underway and the New York-based venture capitalist Fred Wilson of Union Square Ventures (USV) is enjoying a fireside chat with TechCrunch co-editor Erick Schonfield.

Wilson’s firm have been early investors on many successful startups, including Foursquare, Zynga, Etsy, FeedBurner, Disqus and, of course, Twitter, and he was pushed by Schonfield on whether USV had sold any of their Twitter stock in the secondary market. Like some other backers.

Wilson’s response: um…  maybe?

“I don’t want to say what we’ve done, but I wouldn’t argue with any of the reports out there,” said Wilson, adding, “We certainly wouldn’t sell stock in a company that the founders haven’t yet sold. We also don’t want to get out ahead of the company’s capital needs. If the company was organizing an opportunity to sell or a sales transaction came around that the company was partial to, we would do that as long as we were aligned with the founders.”

Wilson expanded upon this by saying that you don’t sell 100% of your stock – you sell 5-20%, and that you wouldn’t be prudent if you didn’t do that. Given that Twitter’s secondary stock value has risen considerably in the past year, that certainly appears to be the case. Wilson added that he was “very confident” in Twitter.

Reading between the lines, the implication here is that USV wouldn’t sell secondary stock unless the founders have already done so, so if USV have sold, then so have the founders. Of course, secondary stock isn’t actual stock, so does that mean Evan Williams et al have been shorting Twitter on the secondary market? And maybe buying Facebook in some kind of crazy spread? And putting those profits into actual LinkedIn stock, making millions in the process!?

Of course not.

Well, I hope not, anyway. It’s one thing for an early investor to be cashing in a few of his chips ahead of a proper IPO. Quite another if it’s the co-founders. Even if they could have doubled their money in one day.

(Sources: TechCrunch, Business Insider.)