When it comes to picking the startups that are guaranteed to reap big rewards, venture capitalists Union Square Ventures are among New York’s finest, with a roster that includes Kickstarter, Tumblr and Twitter. USV now believe cryptocurrency is a potential trillion dollar industry, and have just announced their first crypto-investments, headed by crypto-exchange platform Coinbase.
In business, a “Kingmaker” is a person or company with the ability to discover and uncover talent, then back them financially and open the right doors so that they get to the top and become a “King” of their sector as quickly as possible. Naturally, a successful kingmaker will be very well reimbursed every time they back another winning project, making them as wealthy and powerful as some of their successful clients.
About Union Square Ventures
Union Square Ventures are just such a company. Founded in 2003 by Fred Wilson (pictured), who is rightly regarded as a legend in venture capitalism, and his partner Brad Burnham, this New York-based venture capital firm currently has assets of more than a billion dollars, and an impressive portfolio of successful startups with which USV were early-stage investors, including Clickable, Feedburner, Disqus, Twitter, Foursquare, Kickstarter, Tumblr and SoundCloud, to name just a very few.
USV are rated as one of the top “returning venture capital funds” in the world. In 2007, German-American entrepreneur, venture capitalist and former CEO of Delicious joined USV as a partner, and he has increasingly been seen as the face of the company. In 2017, Rebecca Kaden, a former partner at Seattle VC firm Maveron joined USV as a partner.
Coinbase USV’s First Crypto Investment
Digital currency exchange platform Coinbase are the most high-profile of USV’s initial batch of blockchain based investment projects. Although blockchain and cryptocurrency based startups are part of a sector which is very different from anything USV has targeted before, the company will not be setting aside a separate fund or a specific department for the project. As Managing Partner at Union Square Ventures, Albert Wenger (pictured) said in an interview on CNBC:
“We see a lot of upside to keeping it under the same roof. Investors are rationally pouring a lot of money into this sector because I think people are seeing the winning blockchain here might be worth a trillion, or a couple of trillion dollars. It’s not at all crazy to think that.”
Blockchain Technology “Will Be Huge”
Wenger believes that initially blockchain technology is best suited to be used to improve upon existing applications, rather than have new apps built around it. Wenger believes that many blockchain-based projects will fail, but those that prove successful will become huge.
Wenger is no fan of ICOs (Initial Coin Offerings). There have been over 1,000 ICOs this year alone, some of which are revealed to be scams, while many others fail to land the necessary capital to sustain the project in question. As he says:
“You’ve had a series of ICOs where investors have purchased at steep discounts — the second it starts trading those investors cash out, they make a handsome return, and someone else is left to hold the bag.”
Wenger also admitted to personally being a Bitcoin owner, and that his company has invested in BTC, only to see its value drop by 60% in 2018. Because of this, Wenger believes investing in only one cryptocurrency is bad for the overall market:
“The stuff that actually works will float to the top. It might take a while, but time will tell.”