VC Cliche of the Week

I am going to take advantage of Brad Feld’s post on the world play for this week’s cliche.

I am not sure it is technically a cliche but it’s a phrase you hear all the time in the venture business.

People will say, "we need an RSS play"

Or "VideoSense is our video advertising play"

Entrepreneurs will blurt out during a pitch, "think of us a play on the intersection of wifi and mutiplayer gaming".

This terminology is a sympton of a disease that the venture business suffers from.  That is the disease of always needing to be invested in the latest and greatest big thing.

There are some investors who subscribe to the theory that you need exposure to all the big investment themes.  These investors tend to be very transaction oriented and build and manage (I am using that word generously in this case) large portfolios.

We don’t subscribe to that theory at Union Square Ventures.

We subscribe to the theory that you need a well thought out and sound investment thesis and you need to find a small set of interesting companies that should benefit if your thesis turns out to be directionally correct.  We believe that small is better and that active management of a small portfolio is the best way to generate exceptional returns.

We most likely won’t have a China play in our portfolio even though China is possibly the most interesting investment theme right now.

We most likely won’t have an energy play in our portflio even though energy is a very investable area right now.

Frankly we don’t want any plays in our portfolio.

We’ll take a few really smart entrepreneurs who we can help build great management teams and great businesses. 

That’s our only play.