

Union Square Ventures announces The Opportunity Fund - dabent
http://www.usv.com/2011/01/the-opportunity-fund.php

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dave1619
I'm respecting Fred Wilson more and more with each article I read from him.
But I think this article really has some deep thoughts that are expressed in
clear ways.

1\. Not "web apps" but "Internet services". It's a bigger world than just
websites or backend services. iOS, Android, Desktop native, Web App, cloud,
etc. Developers need to think broader in not just what website or app do I
want to make but what kind of Internet service do I want to provide.

2\. The irresistible economics of large networks. In other words, large
networks make sense economically. They will find a way to be profitable. And
they will transform the world, relationships, business, culture, worldview.
Large networks might just be the most transformative force in today's world.

3\. User experience rules. It's not about how techy or complex your project
is, but rather what's the experience of the user. How does it add value to
them? And do they LOVE it? This is what differentiates various Internet
services and allows them to gain traction until they can fully utilize network
effects to make their site better than anything else out there.

4\. Launching new large networks is more challenging. People are already on
FB, Twitter, Tumblr, etc... and to create new large networks can be difficult
because people already have their loyalities, and the current large networks
are just getting better and better. Those that can start large new networks
are doing it in a way that's a different approach than what's out there.

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ScottBurson
I'm not sure it's necessarily harder now to launch a new network. Obviously
it's going to be harder to launch something similar to what's already out
there, but I suspect that truly novel services are actually easier to spread
the word about because the velocity of information is so much higher. Do
something really cool, and you'll be splashed across the Twtterverse in a
matter of hours.

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far33d
I wonder if this kind of "extra fund" will become commonplace for successful
micro-vc / super-angels. If you put out 100 $500k investments, and one turns
out to be twitter, you are going to want the capital to keep a pro-rata share
and follow on.

Raising money for that should be easy, especially if you restrict the fund to
existing investments and only charge fees on invested capital.

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tyng
"Defensibility is more about network effects than patents." Interesting point.

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raheemm
Its interesting because FW has been cautious about a bubble developing within
the startup investing. Maybe he was referring to non-network-effect companies.

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EGreg
Venture capital firms are definitely taking note of the seed stage
opportunities. From what little I know about the VC business, I believe the
problem isn't that the money doesn't scale to make lots of small investments.
The problem is that people's time doesn't scale. Fred Wilson can't keep up
with all his emails, and adding more people to the firm isn't going to solve
the problem. On the other hand, although having a public "VC" firm like a
public stock market would solve this problem in a great way ("invest in the
startups you're interested in"), the SEC enforces laws to prevent willy-nilly
selling shares to the public (blue sky laws an all that). Makes sense.

So that's why we have sites like KickStarter and I think you will see a lot
more of that kind of thing going on to fund entrepreneurs in the next 5-10
years. Which is a good thing, IMHO.

I have a few ideas along these lines, but no money to execute them at the
moment. They are fairly simple but have a lot of moving parts, involving
lawyers, settings things up, etc. If anyone is curious as to my ideas about
improving seed funding for everyone, contact me at my email address.
<http://magarshak.com/contact> . Especially if you work at a VC firm and want
to spin something off like this :)

