How much did Fred Wilson and make from Twitter?

Fred Wilson on his great blog – a must read for all entrepreneurs – gives frank insights into the geek world but is always shy about his carry percent. I have not looked at the figures but I guess that as one of the first VC investors in Twitter, his firm, USV, probably invested some $10million and turned that into $1bn. With a carry percent of the usual 20% he will have given a great return to his investors and walked away with a substantial profit some of which he will have cashed in at the float.

How does he and his partner pick these great winners? He wrote on one of his recent blogs that USV has a hit rate for big winners of 1 in 3. That is amazing. In my little portfolio of 12 companies, I am seeking to find one that returns my cash let alone goes mega.

The biggest problem I have faces is trusting people – assuming that everyone really wants to be a successful entrepreneur and will devote five years of their life to build a company and hopefully a great company. Fred Wilson writes that he always takes up references and talks to many people before investing. I have just relied on people in Cambridge being honest.

One company has just outsourced support to India and two execs are working part-time to keep the website active. The first founder left after going through £14million. We backed his co-founder to learn too late that he had little regard for the money of the investors or the jobs of his team. It took a couple of years to rumble him as I guess we just did not believe that we had been so stupid. Another £6m down the tube.

One of the many lessons is to back a geek(s) who wants to learn how to manage. If the key person is not a geek then he cannot build the business and does not carry the charisma of an Envangelist. It was a sad day when the office closed and I was offered an umbrella for my troubles. I guess the umbrella cost hundreds of thousands. Better put it up in a gale and let the wind take it away.

When we bought the assets from the receiver for £1 we thought that they original team could not have p*****d £14m against the wall – there must be something there. It took another £6m to find out that we should have invested in one of the early USV funds and let Fred Wilson and friends work their magic!

Post a Comment

Your email is never published nor shared. Required fields are marked *