We are pleased to announce that USV has raised a 2021 Core Fund with commitments of $250 million. This Core Fund will complement our new Climate Fund and existing Opportunity Fund. This will be USV’s seventh early-stage venture fund since the firm was founded in 2003.
As before, we continue to invest with a thesis-driven approach, the USV Thesis 3.0:
Trusted brands that broaden access to knowledge, capital, and well-being by leveraging networks, platforms, and protocols
We believe this thesis is as relevant today as when we articulated it in April 2018.
This past year has seen fundamental (and likely permanent) behavioral changes such as the growth in distance learning, increased usage of telemedicine and asynchronous digital health delivery, and the rise of remote work. These changes accelerated digitalization of tech stacks that in other industries have often been a precursor to falling costs and wider access (e.g., ecommerce). These are the types of opportunities we have been focused on since the beginning of Thesis 3.0.
We are particularly interested in understanding companies that are finding ways to broaden access to learning and healthcare by creating new, trusted solutions. For example, education is largely taught the same way today as it has been historically – a physical arena where people join for classes. Medical care as well – big changes in 2020 notwithstanding. What are the ways to make people – learners and patients – the center of these markets? We aim to find not only the direct application of these solutions, but also those that serve the solutions.
Companies we’ve invested in like Duolingo, Outschool, Quizlet, Codecademy, Sora Schools and Skillshare broaden access to knowledge; Nurx, Brave Health, and Modern Fertility broaden access to wellbeing. These are good guideposts which we will continue to focus on: either direct to learner/patient or an enabling layer to fuel the direct to learner/patient market. We also look to expand the definition of what this means – for example, we are particularly interested in mental health companies that may not look like healthcare businesses at all.
Access to knowledge means education but also tools and platforms that support how knowledge is shared and remembered in organizations or groups, including in this new, more remote world.
Wellbeing to us includes healthcare but also community and fun. New delivery mediums (such as audio) present ways to bring high-density kinds of information to more people for entertainment, healthcare, learning or other purposes. This includes companies like Abridge, Headgum, Wattpad and Meet Cute. Here we also look for new tools and technology-enabled production methodologies.
Similarly, access to capital remains concentrated. Companies like Possible, Stash, Teamshares and Noah broaden services to more people, on better terms through innovations in business models, underlying infrastructure, or new ways of reaching the customer. We also continue to look for ideas that center on collaborative solutions to capital problems – multiplayer fintech, if you will.
As in our last several funds, we expect a significant portion of the investments -around 30%- will be crypto-related investments. This will include holding tokens directly as well as equity in early-stage blockchain-related projects. Crypto networks embody both the evolution of trust in computing and financial systems, as well as vastly expanded access, so we view crypto networks as completely aligned with Thesis 3.0. We believe the opportunity to decentralize systems is still in early stages, seeing adoption tailwinds, and with a lot of interesting new activity.
As always, we remain committed to our way of practicing venture capital and finding those companies that believe we can be great partners. Our funds are small. Our focus is thesis-driven. Our website is a compilation of ideas from ourselves and others, constantly evolving yet always open and public. We publish our investment memos as blog posts. We are active partners to all the companies we invest in at all times. And our decision making is collaborative (we don’t vote).
Thank you to our investors for their continued trust.