Union Square Closes on $116M for Third Early Stage Fund, Has Commitments for Rest

Fred Wilson. Photo by Joi Ito, Wiki Commons
Fred Wilson. Photo by Joi Ito, Wiki Commons

Union Square Ventures has closed on more than half of a new, $200 million early stage fund, raising $116.5 million of fresh capital, according to a filing with the Securities and Exchange Commission.

Rumors of the close began to spread last week, with two sources close to the company confirming the commitments. The SEC filing says another $83.5 million of the firm’s third early stage fund remains to be spoken for, though one source said it too has been sold. Sources say Union Square drew its capital from existing LPs with few if any new investors invited.

The apparent ease of the fundraising isn’t surprising given the success of Union Square’s first two early stage funds. Those funds invested in a number of notable Internet companies, including Twitter, Zynga (in registration for an IPO), Tumblr, Meetup and Foursquare.

Union Square Ventures 2004, a $125 million early stage vehicle, has an internal rate of return of 82.15%, according to a May 31 report from the University of Texas Investment Management Co., an LP in the fund. UTIMCO invested $22.2 million in the 2004 fund and Union Square has returned $39.8 million in cash. The cash and remaining value of the fund is $160.6 million, UTIMCO says.

Union Square Ventures 2008, which topped out at $156 million, sports an IRR of 19.98%, but that fund has not yet returned any capital, according to UTIMCO.

The news of the new fund comes just days after Union Square announced that Andy Weissman, a co-founder of Betaworks, joined the firm. The firm’s other partners are Brad Burnham, John Buttrick, Albert Wenger and Fred Wilson.

In addition to its early stage funds, Union Square last year raised $200 million for Union Square Ventures Opportunity Fund, which is focused on later stage investing. That fund has not returned any cash so far, according to UTIMCO.

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