New York City-based venture firm Union Square Ventures is reinventing itself to better compete in the artificial intelligence race by nearly doubling the size of its core fund and whittling down its general partnership to just four investors.

The firm has raised $900 million in new money, including $500 million for its latest early-stage fund, the partnership plans to announce Thursday. It’s a big jump for USV, which last raised $275 million in early-stage funds in 2024. The firm also raised $400 million for its opportunity fund, used for later-stage deals and follow-on investments in its existing portfolio companies; its previous comparable fund was $350 million.

USV’s move to “right-size” its funds is just the latest example of how investors are shifting their strategies in the AI market, where surging VC enthusiasm and capital-intensive technologyhave driven up even fledgling startup valuations to dizzying heights. This summer, Benchmark, which used to exclusively invest in early-stage companies, raised its first-ever growth fund. As an asset class, venture capital has never been bigger — other large funds, like Sequoia Capital and Lightspeed Venture Partners, have been pulling in increasingly larger hauls and putting pressure on smaller firms to keep up.

USV cofounder and general partner Fred Wilson said in an interview that the firm had been wanting to boost its funds well before it started raising the latest batch — especially as deals in the AI market kept growing.

“If we’ve got to be able to write a $30 million check to lead a $50 million Series A, we have to figure out how to do that. And if our fund size is too small to be able to do that, then we need to have a bigger fund size,” Wilson said.

USV has focused on early-stage investments since its 2003 founding, establishing its reputation in the New York venture scene with early bets including Coinbase Global Inc., Twitter and Duolingo Inc. It’s keeping that focus with its latest funds and in some cases aims to invest even earlier than it has in the past. To secure meaningful stakes in hot AI companies before their prices surge, USV wants to lead more rounds, go after more startups at the seed stage and incubate new ones inside the firm.

Its most recent swing, announced last week, is its incubation of Supertake Inc., which uses AI agents to make stock trades on behalf of consumers. General partner Michael Mignano built the core product inside USV and is now seeking outside talent to lead the startup.

Supertake is one of several products USV is building itself. In late 2025, the firm paused its analyst program and instead opted to build AI agents to automate many of its internal tasks. Now, USV has AI agents that help conduct diligence on its potential investments, source new deals and handle low-level legal and administrative tasks. The firm has since resumed hiring human analysts that work alongside the agents.

As USV expands its remit, however, it’s shrinking its core investment team. Four of the firm’s partners have stepped down into what will effectively be part-time roles: USV cofounder Brad Burnham and John Buttrick, who’ve been winding down their investment activities for the past several years, as well as Albert Wenger and Andy Weissman, who are newly taking a step back from investing with the latest funds. While they’ll still be able to make new investments and will retain any board positions, they’re expected to significantly cut back on their investing activity.

USV will now operate as a four-person general partnership, which includes cofounder Wilson, Nick Grossman, Rebecca Kaden and recent addition Mignano, who joined the firm in April.

Wilson said a successful generational transfer in venture capital requires giving younger investors the helm.

“You have to give the younger generation the ability to drive the car — drive the strategy, drive the key investment decision-making, and you have to give them the majority of the carry economics,” Wilson said. “If you’re not willing to do that, it’s not going to work.”USV is maintaining its approach of thesis-driven investing, but it’s updated the types of companies it’s willing to back, too, as Silicon Valley pours billions of dollars into physical industries like robotics. While Wilson admits he previously shied away from such capital-intensive bets, USV has made several so-called deep tech investments in recent years, backing companies like $3 billion robotics startup Generalist AI and $1.8 billion nuclear energy company Radiant Nuclear.

The key, Grossman says, is finding founders that can rally the market behind them. “One of the things we’ve learned from investing in more capital-intensive sectors is looking to identify founders that are great at fundraising,” he said.

USV has always kept its team in New York, despite the continued dominance of San Francisco’s venture market. While Kaden said USV is unlikely to open up an office in the Bay Area, the partnership is “thinking about what it means to show up there in the way we want to,” she said. “I think San Francisco is more important than ever.”Several firms this year that raised larger funds did so after writing checks into Anthropic PBC and OpenAI.

USV has not made an investment in either large language model provider. Beezer Clarkson, managing director at LGT Capital Partners and a longtime backer of USV, said that working with early-stage funds offers limited partners a diversification of deals.

Lindel Eakman, an early limited partner in USV’s first fund, echoed that he’s happy to see the firm raise a larger fund that will be invested across a longer time period and several classes of startups founded over the next few years.

“All of us, LPs and GPs, would prefer to have some vintage diversification,” said Eakman. “Fund sizing is a game.”