When Union Square Ventures’ Fred Wilson took the stage today at TechCrunch’s Disrupt NY conference, he elaborated on a recent blog post about “the valuation trap” and argued that “too much money is the root of all evil.”
Wilson’s post was actually a response to an article in TechCrunch about the challenges Square and Box seem to be facing. Basically, Wilson argued that startups should be careful about pushing valuations too high when they raise funding, because “You will need to find someone to top that price down the road and that person may not be there.”
He said today that there have been investments where the startup chose to take his firm’s money at a lower valuation than they could have gotten from another investor. TechCrunch founder Michael Arrington asked if Union Square’s partners are giving each other high fives around the office when that happens, but Wilson said the companies “made the right decision,” adding that those deals are also less dilutive for entrepreneurs’ equity.
This led to a back-and-forth between Wilson and Arrington, with Wilson arguing that money is “never the recipe for success,” and Arrington countering that “rich people often say that.” Wilson: “Too much money is the root of all evil.” Arrington: “Too little money is also not great.”
As perhaps the best-known investor in New York, Wilson also talked about the city’s tech scene. He said there’s “a real sea change” with the appearance and growth of more enterprise companies like MongoDB.
Asked, hypothetically, whether he’d choose to invest only in New York companies or in every other part of the world (including Silicon Valley), Wilson said he’d have to go with everywhere else because “there’s so much interesting happening.” Arrington (jokingly, I think) suggested that must mean he’s down on the New York scene, but Wilson replied, “No no no … If you want me to sit here and pimp our portfolio all day long, I can.”
Wilson began the session by arguing that Apple won’t be one of the top three companies by 2020, as we covered in a separate post.