How Union Square Ventures Knew Venture Capital Had Peaked

Union Square Ventures managing partner Albert Wenger, 55, has been meaning to write a blog post about Tesla’s self-driving technology, he tells me about half hour into our interview at the firm’s New York headquarters last week. Sitting between two framed NFTs, he’s already covered the fall of FTX (“a setback”), the signs that venture capital had reached a top (VC firms starting “incubation funds”) and why USV passed on some once-hot startups like Hopin. Tesla engineers, he mused, might want to think about the road as a “kind of a social interactive system.”

USV, co-founded by Fred Wilson nearly two decades ago, has become a cornerstone of New York’s VC scene thanks in part to its prescient bets on Coinbase and Twitter. Wenger counts early stakes in now-public enterprise startups Twilio and MongoDB among his wins. But these days his investments—and opinions—expand far beyond enterprise software. He’s focused his investing on climate (more on the firm's new $200 million climate fund here) and crypto startups, and in his spare time he blogs about philosophical and technical problems. In December, he published a book, “The World After Capital."

Asked for his view on a tech story of the moment—Elon Musk’s takeover of Twitter, an early USV investment—Wenger, who is from Germany, spits out “verschlimmbesserung,” a German word meaning an attempt to improve something that only makes it worse. He also explains why he hates the term unicorn and why he doesn’t often speak to reporters: “You’ll never get any dish from me,” he said, between veiled criticisms of the media establishment. As for USV’s own mistakes, he’s a bit cagier: “In retrospect, were we investing a little too fast in ’21 as well? Probably. But never totally wacky, wackadoodle valuations.”