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Will Betaworks and Union Square Ventures be The New Silicon Alley Power Couple?

pcu Will Betaworks and Union Square Ventures be The New Silicon Alley Power Couple?

Listen up Weissman, real VCs wear blazers, you "dig"?

Last night Betabeat broke the news that betaworks (no relation) co-founder Andy Weissman was leaving to join Union Square Ventures.

Peter Kafka over at All Things D followed with a story about why Mr. Weissman split. His analysis:

[John Borthwick] and Weissman had previously planned on raising a “sidecar fund” that would essentially split Betaworks into two businesses: An operating company run by Borthwick and an early-stage VC shop run by Weissman.

But that plan was discarded this summer, at least in part because of opposition from Betaworks’ investors, who include RRE Ventures, Intel, AOL and the New York Times. Investors argued that they had put money into a company where investing was only a component of the plan, not a full-time occupation; by raising a new investment fund, they argued, Betaworks would essentially be competing against some of its backers.

Sources within betaworks deny Mr. Kafka’s account. It seems likely that betaworks could have overcome any objections from current investors by offering them a prime spot as LPs in the new fund.

The one thing that is clear is that Mr. Weissman was interested in expanding his work in venture capital beyond the seed investing he was doing at betaworks. Betabeat spoke with his co-founder, John Borthwick, last night.

“We have always had a unique structure that mixed investment with operating, both backing companies and helping to build them. As we have grown the operating side became more of a priority, but the investing has always kept us sharp and engaged with what’s going on in the larger community,” said Mr. Borthwick. “Andy has been the lead on the investment side, and what better place for him to expand that work than Union Square Ventures. But of course, we fully intend to continue doing seed stage investing through betaworks.”

One likely outcome of Mr. Weissman’s move is that betaworks and USV will develop an even closer relationship than before. They already share investments in New York notables like Tumblr and Kickstarter. Both co-founders of betaworks are also graduates of Wesleyan University, as is Union Square Ventures co-founder Brad Burnham.

What might emerge is a pairing that joins forces frequently on seed stage investments. Those companies could sometimes be incubated at betaworks, which hopes to expand its work as an operating company that helps startups to refine and grow their business. And when it comes time for the follow on rounds, Union Square Ventures can supply the capital all the way through the later stages with their Opportunity Fund.

That is a hypothetical situation that has yet to be determined. But it is certainly an exciting vision for the future of the New York tech scene.

Disclosure: Ben Popper is also a graduate of Wesleyan University, where he majored in modern dance.

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