Jun 1, 2015 · 5 minutes

More than any company, public or private, Twitter seems to draw one overreaction after another from a small collection of commentators, investors, agitators.... even insiders.

The most recent was early investor Chris Sacca, the founder of Lowercase Capital, who wrote a breathtaking post called "I Bleed Aqua." Buried in a million disclaimers about how much he loved Twitter and couldn't live without it was this: "During all of these years, I haven’t been as candid as I could be in public discussions about Twitter." And hinting that more was to come, saying "So stay tuned for a few more of my thoughts about Twitter."

Immediately tech blogs and business sites galore jumped at the news that Sacca "might start becoming more critical" of Twitter. And quite right: We're hard pressed to think of another example where one company was so hugely responsible for enriching someone, only to have that person turn around and throw the management under the bus in a public forum.

The baffling post wasn't lost on Union Square Ventures' Fred Wilson who took a subtle, yet direct shot at the Lowercase investor on Saturday.

On his AVC blog, Wilson included video of Twitter's CEO Dick Costolo from Re/Code's Code conference, and included a little dig towards Sacca. Here is how he closes:

Full disclosure, I own a lot of Twitter and am a big fan of the company and of Dick. I do not plan to be more critical of Twitter in the coming months.
Sacca responded on Twitter with two tweets directed at Wilson: It's hard to know where to start with Sacca's original bizarre post and overblown response to another investor coming to the company's defense. But the spat reminded me of a larger grumbling I've been hearing amid East Coast investors for some time.

Recently, I've had quite a few conversations with East Coast venture capitalists who feel West Coast investors are getting too much credit for the East Coast's early risk taking. The common wisdom is that West Coast VCs are the big risk takers, but in a handful of significant companies, East Coast firms like Spark, Union Square Ventures, or First Round Capital lead early rounds while bulge bracket Sand Hill Road firms paid up to pile in later-- once the idea was proven. Those Sand Hill firms meanwhile are getting most of the credit.

It's a messy argument to make, given the state of seed investing "party rounds," where more than a dozen investors may pile in on a seed deal-- some from the East Coast, some from the West Coast, some from Middle America. You have to look at who lead those early rounds, not simply whose name shows up on Crunchbase.

Consider a few examples:

  • Despite Evan Williams deep relationships in the Valley, Twitter's first institutional lead investors were Union Square Ventures and Spark Capital. Some Valley firms-- like Floodgate and CRV-- show up early in the cap table because they rolled over their previous investments in Odeo into Twitter. But other Valley firms who get outsized credit for Twitter didn't show up until much later. Benchmark Capital didn't invest until Series C, and Kleiner Perkins Caufield & Byers didn't invest until the company's $200 million Series F.
  • Zynga had early funding from both Union Square Ventures and the Boulder-based Foundry Group. Still, the firm most associated with its (arguably fleeting) success is Kleiner Perkins, which only  joined in its Series B (later taking part in its $490 million Series C too).
  • Founder Collective, Lowercase Capital, and First Round were the three earliest institutions to back Uber, with First Round leading the deal and getting a board seat early on. (So at least Sacca scores some West Coast credit for being early there.) Yet, Benchmark, Menlo Ventures, Google Ventures, and SherpaVentures are most often thought of as Uber's most significant investors. They all came later.
  • Matrix Partners and Spark were early investors in Oculus VR. Andreessen Horowitz joined the larger Series B round of funding, but Chris Dixon was the most vocal and visible in explaining why that $2 billion acquisition made sense. You can imagine a similar thing happening in the future to BuzzFeed-- which Dixon also recently bet big on. Andreessen Horowitz may wind up getting a lot of credit, but the early speculative rounds were almost totally done by East Coast investors, unafraid of the messy world of content.
Now, one could argue there's good reason some of these later Sand Hill Road investors get so much credit. Bill Gurley of Benchmark, for instance, is on Uber's board and trots out to Bloomberg TV to defend Uber at every opportunity. Perhaps he does add more value, even if the risk he took wasn't so great. Likewise, it's hard to imagine that Andreessen Horowitz's close ties to Facebook didn't help Oculus in some capacity.

But at least one East Coast VC I spoke with griped that the value-add of the late round deal is mostly financial. The company is already working; cash just helps it scale faster. Where's the glory in that?

This anonymous VC isn't alone. There are many venture capitalists at top-tier firms that have expressed similar sentiments during conversations. Some East Coast VCs believe that they make far more risky investments than their West Coast counterparts, which goes against the long held belief that VCs in Boston and New York are more conservative compared to Silicon Valley venture capitalists.

Like I said, it's muddy. There are just as many counter examples like Facebook, Airbnb, and Dropbox where the primary early funding has come from the West Coast. And a lot of the firms mentioned have offices in both locations. Is First Round even still considered an "East Coast VC" anymore now that it's spent years beefing up its San Francisco office? It was after all Rob Hayes -- who opened First Round's SF office-- who lead that Uber deal. Still, such nuances don't make investors I've spoken with -- who permanently feel in the shadow of Sand Hill Road-- feel less aggrieved.

Maybe the Wilson/Sacca spat has nothing to do with this. After all, in this case both were early to Twitter even if Wilson lead the first round, and Sacca made most of his Twitter money buying and selling secondary shares much later.

But optics-wise the East Coast VC in question scored a point on this one: One investor said he backs a company no matter what, while the other one took to his blog to throw the man who made him rich under the bus. It's another lesson about the kind of word of mouth that actually matters: Who cares who the press most commonly cites as a deca-unicorn's backer as long as entrepreneurs know who has their backs when times get tough?