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Coinbase Backer Parlays bets “ Fantasy ” for $ 4.6 billion
(Bloomberg) – Before his bet on cryptocurrency exchange Coinbase Global Inc. turned into a multibillion-dollar exit, Union Square Ventures co-founder Fred Wilson compared Bitcoin to science – fiction. He said at a marketing conference in May 2013. This was shortly after investing $ 2.5 million in Coinbase, the largest cryptocurrency exchange in the United States, where people can buy and sell Bitcoin and other digital tokens such as Ethereum and Litecoin. “It’s straight out of a sci-fi novel, but sci-fi novels are the best things you can read if you want to invest,” Wilson said. “It’s an instinctive bet.” Eight years later, Wilson’s Bet became Union Square’s highest-grossing outlet. Earlier this month, Coinbase was listed on the Nasdaq and climbed to $ 328.28 per share, catapulting the company’s valuation on a fully diluted basis to around $ 86 billion. That’s a ten-fold increase from its last public funding round in 2018 and valued Union Square’s stake at $ 4.6 billion by the end of the first day of trading.Wilson will need to listen carefully to his instincts to navigate the volatile cryptocurrency market and Coinbase’s rough beginnings. . But the sheer volume of cryptocurrency trading is good for boosting Coinbase’s revenue, and Bitcoin rallied again after hitting its lowest level since early March. Wilson said that “one of the hardest things in managing a venture capital portfolio is managing your big winners.” On Coinbase’s day of listing, Union Square Ventures sold 4.7 million shares for $ 1.8 billion, according to securities filings.Coinbase is not Wilson’s first foray into an emerging tech trend, but it is certainly the biggest payout. His New York-based venture capital firm has invested in more than 100 companies and has had 10 public exits since its inception in 2003. Nine of them raked in $ 1 billion valuations on the day they debuted in 2003. stock exchange, according to data from PitchBook and the Securities and Exchange Commission, compiled by Bloomberg, Wilson was one of the early social media followers that defined the 2010s and oversaw Union Square’s biggest hits, including the Twitter Inc.’s $ 24 billion valuation of the company’s $ 1.2 billion stake, $ 7 billion IPO of online games company Zynga Inc. in 2011, and purchase of 1 , $ 1 billion from Tumblr by Yahoo! “Fred is driven by intellectual curiosity,” said Zynga founder and president Mark Pincus. “He didn’t get involved for the money.” Wilson declined to be interviewed for this article, saying he doesn’t “think investors should be the center of attention when entrepreneurs and management create all the value.” Union Square’s latest iteration of its investment philosophy focuses on companies with strong communities that “expand access to knowledge, capital and well-being,” according to the company’s website. “Coinbase is at the center of it all,” said Angela Lee, director of innovation at Columbia Business School, where she teaches venture capital and leadership courses. “Most venture capitalists deviate from their investment thesis. Union Square is very disciplined. They are very smart at taking a trend and breaking it down into components. Wilson began investing in 1987 at Euclid Partners, a small venture capital firm in New York City, remembering that “this was not the start of a career,” he writes. in his blog in 2008. Then the Internet arrived. Wilson co-founded Flatiron Partners with Jerry Colonna in 1996 and together they invested $ 150 million in internet startup deals that turned into $ 750 million in three years, according to Wilson’s blog. “We were unruly and undiversified,” Colonna said in an interview. “We were a little too excited.” Colonna is now CEO of executive coaching firm Reboot.io, where his work was described in a Wired article as, “This man makes founders cry.” Flatiron folded in 2001 during the dot-com bust, but Wilson carried those lessons to Union Carré, Colonna says. “Fred is not a Vegas gamer. He doesn’t throw darts at the wall and just follow other people’s investments. Wilson’s belief in connecting ideas, people, and experiences on the Internet through networks was in motion even before social media startups were incorporated into his portfolio. The native New Yorker networking ethic was born out of the era of the post-dot-com bubble that ushered in the first social networking startups or “Web 2.0” businesses like Friendster, Orkut and Tribe.net. His point of view was first put into practice when he launched his popular blog, AVC, in September 2003, shortly before co-founding Union Square with Brad Burnham. family, leisure and music, the blog has grown into technology, business and management and has become a vehicle for finding investment ideas and connecting with entrepreneurs, he said in a March 2006 episode with Businessweek’s Cutting Edge podcast. “The writing process helps me crystallize my thoughts on what’s interesting and what isn’t, what’s potentially strategic, and what’s potentially risky in a particular industry.” One of Wilson’s first thoughts on cryptocurrency dates back to 2011, when he wrote that “an alternative currency with roots in peer-to-peer networks and based on a transparent algorithm for all is an idea whose time has come. Union Square’s founding theory of finding emerging and rapidly growing online communities has since evolved beyond original social media to include other blockchain and cryptocurrency startups like Stacks 2.0, an open network for decentralized apps and contracts on the blockchain, and even CryptoKitties, a virtual Ethereum game that allows players to adopt, breed, and trade virtual cats that started the craze for non-fungible tokens, or NFTs. Coinbase’s groundbreaking listing has been the most buzzing investment in recent years for Wilson, whose enthusiasm has been more measured than Wilson’s. crypto evangelists like investor Mike Novogratz or the Winklevoss brothers who started the Gemini digital asset exchange. In January 2018, Wilson wrote about locking in profits at a time when Bitcoin was taking off. “I know a lot of crypto holders think selling anything is wrong. And it could be. Or maybe not. You just don’t know, ”he says. By the end of this year, Bitcoin had fallen by more than 70%.