投资界巨兽USV谈投资理念

Original title: Investing at the Edge of Large Markets Under Transformative Pressure

Original author: Nick Grossman

Since Brad and Fred deployed the first USV fund in 2004, USV has celebrated its 20th anniversary. At that time, the dot-com bubble had just burst, the smartphone had not yet been invented, the concept of social media had not yet existed, and the first Bitcoin transaction was not made until five years later - Union Square Ventures

Since 2004, we have raised and invested in a total of 14 funds (8 early-stage “Core” Funds, 2 early-stage Climate Funds, and 4 Opportunity Funds) and have made more than 230 investments across multiple categories and technologies , including: social media, marketplaces, developer tools, learning, health, fintech, web3 and decentralized systems, as well as energy and climate fields, etc.

Throughout our development history, we have completed our investment theme layout around each technological or social transformative moment that can give birth to a new paradigm:

• The opportunity in 2003-2004 is in building out the application layer of the Internet, and those infrastructure investments that were core during the Internet bubble could play a significant advantage here.

• By the mid-21st century, it was clearly recognized that it was possible and promising to build new networks (social networks, marketplaces, etc.) as a more directed type of Internet application with huge potential.

• Then, as the underlying ubiquitous network began to solidify in the early 2010s, we started looking at narrower vertical networks (e.g., learning and health), new infrastructure layers (developer tools, fintech), and decentralized computing systems ( Blockchain and crypto markets).

• As Internet applications became increasingly central to the global economy in the late 2010s, we began to seek to leverage themExpand our access to critical resources(e.g. knowledge, capital and welfare) and look for opportunities to enhance our understanding of these critical systemstrust。

• As we approach 2020, and as it becomes increasingly clear how quickly the climate crisis is intensifying, we are beginning to look to entrepreneurial opportunities that are seeking to not only mitigate its impacts, but more importantly, accelerate the energy transition and adapt to the changing climate. world.

• Today, we are seeing exponential growth in large language models (LLMs) and artificial intelligence, which are making related software increasingly ubiquitous and useful, while the need for new forms of digital trust is becoming increasingly clear .

Looking back on our 20-year investment history spanning different periods and sectors, we have recently begun to ask ourselves: What are the consistent factors in our investment approach?

This is how we describe it:

USV invests in the fringes of large, transformative markets that are driven by technological and social pressures.

Across time, industries, and technologies, we have been and continue to look for a set of common attributes that we believe will guide innovative products and experiences:

edge

The “edges” of a market are often the best places to introduce new ideas and approaches. Startups on the fringe often seem strange at first but have the potential to challenge incumbents in surprising new ways.

For example, early social media didn’t look like it was competing with traditional media; early cryptocurrencies didn’t look like they were competing with the financial system; and many consumer learning products didn’t look like they were competing with traditional media. The education system competes head-on.

New technologies make the previously impossible possible. In hindsight, these new behaviors may seem like nothing more than that, but they were not so at the time of their emergence and required experimental exploration. Rapid experimentation is the fastest way to make progress, but changing an industry is difficult because institutions and those already in the arena tend to be dismissive or even resistant.

“Edge” approaches, such as consumer-first, prosumer, developer-first, and open source models, have the potential to circumvent market gatekeepers and allow for greater freedom of experimentation. Therefore we love them.

pressure

Technological and social pressures may disrupt existing market structures, creating windows of opportunity for new companies and networks to meet market needs in new ways.

Technological stress may include new technologies and platforms, such as new operating systems, cryptoassets, and artificial intelligence stacks. The highest intensity of technological pressure has given rise to new business models, and these models are often structural changes that existing companies cannot catch up with.

Social pressures may include global forces such as the climate crisis, loss of trust in civic institutions, or changes in social norms and attitudes. These pressures can quickly produce changes in behavior that would otherwise be unimaginable, or at least thought unlikely.

The convergence of these pressures may cause an otherwise static market structure to become dynamic. Start-up companies have the opportunity to adjust their position according to these pressures, so that they can still compete with traditional enterprises in a disadvantaged position. , don’t go against the hill on your back”). We are constantly looking for these pressures and looking for draft opportunities behind these pressures for startups.

Looking to the future

Looking forward to the next 20 years of USV investment: As global changes accelerate and as new technologies emerge and mature, we will continue to write and publish relevant papers to illustrate our new findings, but we hope that these new findings will always be consistent with this overall The framework remains consistent, i.e., looking for opportunities at the edges of large markets, driven by pressures for change.

We’re excited to partner with founders who share our philosophy and look forward to continuing to explore at the edge with you.