Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Rebecca Kaden was recorded in February 2019.
Rebecca Kaden, General Partner at Union Square Ventures, discusses her firm’s capital efficient investment thesis and debates the pros and cons of blitz scaling.
Sramana Mitra: Union Square has been around for a while and has been very influential in the entrepreneurship ecosystem. Tell us a bit about where you are today. What is the vision? What is the investment thesis at this point of the game?
Rebecca Kaden: Union Square was started a little less than 20 years ago. It’s been around for a little while but in the history of venture, it’s not all that long. From the beginning, it has really been a thesis-driven venture capital firm. We’re a small-team fund. There are six general partners. It’s a very flat structure.
As a partnership, we subscribe to a thesis which is a set of ideas and beliefs that we all can get behind. We go out and meet entrepreneurs that we think are thinking about similar things. The firm really started with a thesis behind network effects and the idea that mass equity value is going to come from large networks of engaged users. It evolved to not only include horizontal networks, but vertical networks focused on financial services, healthcare, education, as well as the infrastructure underlying the network which led to investments like MongoDB and Twilio.
Also the decentralized cloud which is our Blockchain thesis and the idea that this centralization needed a counter force. What we noticed is across these platforms, what interests us most are companies that we think are broadening access, which are leveraging protocols and platforms to drive up value and make products and services that were previously only accessible to a small group. That’s where we’re really focused today. I think about that a lot across financial services, consumer health, and wellness education.
Sramana Mitra: Is this a more recent thesis? If so, what is the time frame when you started investing with these thesis?
Rebecca Kaden: The way we look at our thesis is they’re evolutions. They build on each other. Horizontal leads to vertical. Vertical leads to this broadening access. By the time we publish a new thesis, it’s really as much of a reflection of where our focus has been in the recent past. We published the thesis about a year ago. It reflects the investing trend before that.
Sramana Mitra: The reason I asked you this question is whether I will ask you the next question or not. Could you give us some examples of investments that you’ve made along the lines of the thesis 3.0?
Rebecca Kaden: One, for example, is Bash. It’s a mass market financial services platform. It splits the model of financial services which has long been built around an AWS structure that favors the top of the pyramid. Anyone should have access to core financial products that make their lives healthier in financial terms. That doesn’t work with the model that banking has traditionally been built on. They built a mobile platform that’s extremely simple to use.
Education is a big piece of it. There’s a digital coach that walks people through it making what might be difficult to understand aspects of financial services much easier to get onboard with. They started with an investing product. They moved to savings. Now to core banking. That’s one example.