DC Needs a Fred. Any Takers?

FredWilson cropped.pngProfiled in Sunday’s New York Times, Union Square Ventures‘ Fred Wilson is a legend of contemporary venture capital — a title previously reserved for West Coast luminaries like Moritz and Doerr, and maybe a couple others. At Web 2.0 Expo in New York last week, Wilson was greeted with cheers usually reserved for celebrities. . . or rock musicians.

We don’t need a celebrity here in DC. But it would be great to have a venture capitalist with a fraction of Wilson’s passion, commitment, and drive. It’s not so much that he’s an investing legend. . . what’s amazing is his sheer devotion to his companies, his followers, and everything Web 2.0.

By his own admission, Wilson’s had his share of bad calls. But most of that goes back to The Bubble, when he was at Flatiron Partners. I was at a startup (liveprint.com) pitching Flatiron in 1998. I met Wilson briefly back then, as well as the firm’s the most vocal partner, Jerry Colonna; the partner who ended up leading our investment was Bob Greene.

Flatiron’s highest-profile investment was probably deliver-to-your-door service Kozmo.com. I remember getting a Kozmo.com hat. Kozmo raised $100M, before its legendary implosion. I left liveprint.com after the first Flatiron (~$3M) round, before an additional ~$40M bought all those Aeron chairs, and the chairs were acquired (along with the rest of the company) by Kinko’s in a transaction so complicated that no one knew what they had until a check arrived in the mail.

According the NYT profile, Flatiron wrote off a third of its investments.

But Wilson returned, humbler and smarter. To me, he’s the quintessential early-stage VC. Why? Because he’s so focused on his space, and passionate about his companies. True, he’s been accused of shilling for them . . . but from an entrepreneur’s standpoint, the benefits of having such a high-leverage, high-profile investor on your team is literally worth millions (not to mention what you’ll save on not needing a PR firm.)

Just watch Wilson work. He uses nearly every one of his portfolio company’s products — twitter (6,571 follow him @fredwilson), disqus, tumblr. Add these to his blog (A VC), and he’s one of the most prolific posters on the planet.

DC needs a Fred.

Or maybe a Josh. Josh Kopelman, though less vocal than Wilson, has put his money where his mouth is, on behalf of the venture fund he founded just outside Philadelphia, First Round Capital. In fact, First Round has made no fewer than 57 early-stage investments, nearly triple USV’s portfolio.

Or maybe a Bijan. Or a Brad.

And this isn’t just about attitude. There are clear metrics here. Several mid-Atlantic firms talk about their ‘seed’ programs. But the litmus test is: name the ones routinely doing investments in the $250k – $1M range. For most firms, the funds are just too large for the math to work — invest a $250M fund $500k at a time, and you end up with 500 startups in your portfolio. That’s a helluva lot of board meetings.

Which is why First Round usually doesn’t take a board seat. (Most VC firms have a six-seats-per partner limit.) This is about volume (or more accurately, statistics). Quicken the cycle of investment, trim the due diligence, invest more with the gut . . . and let the odds work in your favor over a larger statistical sample. Though time will tell, based on initial exits, it seems these guys are doing pretty well.

So while it’s good to see them on the East Coast (Silicon Valley has sufficient players that none is noteworthy) — and Baltimore, DC, and Northern Virginia are certainly within their flying radius — it’s just not the same as having our own local VC hero. I mean, how sad is it that a local meetup was organized for DC Fans of Fred? (Full disclosure: I was there, and met some great, like-minded entrepreneurs.)

And perhaps more than anything else, these guys get Web 2.0. Unlike most VC firms, USV is not only not afraid to invest in pre-revenue companies, they will invest before a revenue model is even figured out (twitter, tumblr, disqus). So who out there will claim this mantle? Anyone? Anyone?

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Aaron Brazell

Aaron Brazell is a Baltimore, MD-based WordPress developer, a co-founder at WP Engine, WordPress core contributor and author. He wrote the book WordPress Bible and has been publishing on the web since 2000. You can follow him on Twitter, on his personal blog and view his photography at The Aperture Filter.

6 thoughts on “DC Needs a Fred. Any Takers?”

  1. Firms like FirstRound pay attention to DC and the region, but the quality of start-ups are not up to the level of other areas. VCs like Valhalla Partners does investment in local start-ups and they really understand the type of expertise and knowledge that the DC area has. I have tried to help VCs find talent to fill out teams that are local in the DC area and surrounding areas, but they often find the talent in RTP, NYC or Boston. The technical depth is not a strength here. There is a lot of copying in the DC area, but very little innovation. There are a few exceptions to this, but they are funded or are moving closer to talent. Part of the DC area problem is cost, lack of talent draw (AOL is no longer a talent draw and Fed Govt is not a solid draw for the top people outside of the intelligence community). The past 15 years I have watched top DC area talent move out to Bay Area or elsewhere to get closer to larger talent pools that understand start-ups. All but 2 of the start-ups I advise are outside the DC area.

  2. You bet. Launchbox was a good start on proving our credibility & elevating our profile. Our best shot may be a NY or SiValley firm to open an office and seize the opportunity . . . unless there's a local dark horse ready to surprise us all.

  3. yeah, should have said sad commentary. . . as I posted, I was hoping you wouldn't take it the wrong way. I'm sure you know I thought it was a great meetup (or you wouldn't have twittered, thx!) So when's the next one?

  4. Ouch! Some would beg to differ, but you make good points, and a heat map of DC vs NY vs CA would probably bear them out. Considering that a lot of Web 2.0 creativity comes right out of school (and yeah, we don't have the Stanfords, etc.), it's still a bit of chicken-and-egg: no money, no companies, no companies no money. Launchbox Digital was a watershed . . . maybe will help get to critical mass. Anyway . . . glad you're based here!

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