Union Square Ventures raises $900 million with four general partners

Union Square Ventures has raised $900 million in new money and will deploy it with a smaller circle of decision-makers than it has had in years. The New York firm's latest early-stage fund is $500 million, up from the $275 million it raised in 2024, and its general partnership now consists of four investors: Fred Wilson, Rebecca Kaden, Nick Grossman and Michael Mignano, according to Bloomberg.

The firm tied the rebuild directly to what AI does to the cost of building a company. "A single person can use AI to turn an idea into a working product in a matter of days, and assemble a full-blown team of agents to support that product for a fraction of the cost of hiring a traditional team," the partners wrote. "These changes have profound implications for how we want to build USV."

Cheaper products have not meant cheaper companies. The partners argued that easier building has raised demand for the best startups, producing "bigger rounds and higher prices." Compute is now a major line item for AI companies, and many subsidize inference so customers can try products without paying up front, according to Sourcery's account of the interview. When USV started, Wilson expected to write $3 million Series A checks; checks from the new funds are expected to run $10 million to $30 million, with the firm aiming to lead or co-lead.

The rest of the money sits in a $400 million opportunity fund, used for later-stage deals and follow-on investments in existing portfolio companies. Its predecessor was $350 million. Sourcery, a venture newsletter that interviewed three of the partners, described the raise as the largest fund cycle in the firm's 23-year history and supplied the longer view: USV's 2016 core and opportunity funds each closed at $175 million, and the 2019 cycle closed at $200 million and $250 million.

The people side of the change is less a cut than a reshuffle. In a post on its website, USV said four longtime investors, Andy Weissman, Albert Wenger, John Buttrick and cofounder Brad Burnham, "will continue supporting USV and its portfolio companies." The firm described a core investment team of seven: Wilson, Kaden, Grossman and Nikhil Raman, plus three recent additions with operating backgrounds. Mignano, the new general partner, cofounded Anchor and was later a partner at Lightspeed. Jared Hecht, a venture partner, cofounded GroupMe and Fundera. Scott Belsky, a product advisory partner, cofounded Behance and was chief product officer at Adobe. Hecht and Belsky joined over the past 18 months, according to Sourcery.

The workload per partner is set to rise. USV said it will make "roughly the same number of investments as in previous funds," and Mignano expects 30 to 40 companies from this cycle, including more seed deals than the firm has historically done. That deal count, at larger check sizes, falls to four general partners rather than a wider group.

Some of that seed activity will look more like company building than investing. Sourcery reported that USV is adding three seed strategies it has rarely used: pure founder bets; incubation, in which the firm builds a product inside the partnership; and what Wilson calls proprietary seeds, in which USV develops an idea, recruits a founder and writes the first two checks before outside investors arrive. Wilson said those could make up "as much as a third to a half of all the seed investments we make." Hecht, Belsky and Mignano lead much of this work. The first incubation, Supertake, is a private-beta product that turns an investing thesis into a portfolio; Mignano described it as a USV-incubated startup with cash in the bank and equity available for founding hires.

Investors were willing to go further. USV discussed the larger raise with limited partners well ahead of time on its quarterly calls, and added new LPs alongside existing ones. "I was a little surprised how many of them said, 'Are you sure you shouldn't raise more?'" Kaden said, according to Sourcery. The partners kept the fund below what LPs would have supported, arguing that a smaller fund is easier to return and keeps incentives tied to portfolio performance.

The money will chase a thesis USV calls "obliterate, don't automate": backing application-layer companies that use AI to reshape markets rather than speed them up. In Sourcery's summary of Wilson's view, that means using an AI lawyer, accountant or doctor instead of hiring one. The firm said the larger funds also let it invest in categories that need more capital to win, naming robotics, manufacturing and energy, and that its dedicated energy strategy, run through a separate fund since 2021, now merges into the core fund.