The New York Times published a worthwhile read last week ("A New Kind of Venture Capitalist Makes Small Bets on Young Firms"). This background report delves into the investment model from Fred Wilson’s Union Square Ventures, which invested very early into Flickr, Etsy and Twitter.
Notably, the article revolves for the most part around Etsy:
"Mr. Wilson and Mr. Burnham decided to make very small initial investments, often less than $1 million in a first round of financing, in exchange for 5 to 12 percent of the company, instead of the usual 20 percent. Then, if the company did well, the firm would invest more in future rounds. (...)
In the case of Etsy, Union Square has taken an active interest in the company through four rounds of financing. Mr. Wenger, an engineer who made a personal investment in Etsy before joining Union Square, essentially served as Etsy’s chief technology officer until the company hired one, running all tech-related meetings.
Mr. Wilson coined Etsy’s slogan, “Buy Handmade.” At one board meeting, when Mr. Kalin presented a long list of fancy new features he wanted to add to the site, Mr. Wilson stood up and crossed each one off the list. Instead, he advised Etsy to focus on creating a bare-bones site that worked well."
In the meantime, Rob Kalin isn’t the boss anymore and two more Etsy founders decided to leave the company. At the same time, Etsy’s revenues are breaking record after record.
Related posts:
- Social Commerce: Etsy Founders Bid Fond Farewell
- Etsy Boss Rob Kalin Also to Take Back Seat
- ShopExchange: VC Fred Wilson on European Tour
Originally posted in German by Jochen Krisch, translated by Jason Soo.
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