Friday, October 26, 2018

Bessemer Venture Partners Raises $1.85 Billion Fund (plus Bessemer's anti-portfolio)

From the Wall Street Journal:

One of Silicon Valley’s oldest venture firms has reached a new milestone.
Bessemer Venture Partners has gathered $1.85 billion for its 10th fund, its largest to date.
Bessemer, which garnered early stakes in LinkedIn Corp., Box Inc. and Shopify Inc., is taking advantage of the excess of capital in Silicon Valley and doubling down on its enterprise and consumer technology investing. In 2015, it raised $1.6 billion for its previous fund.

The new fund is one of the latest megafunds raised as competing venture firms like Sequoia Capital and Lightspeed Venture Partners have also stocked up on billions of dollars to help startups stay private longer.

Yet Bessemer itself has seen a number of portfolio companies go public in the past couple of years. DocuSign Inc. held its debut earlier this year, and Twilio Inc. and SendGrid Inc. had IPOs in 2016 and 2017, respectively. Earlier this month, Twilio said it has agreed to acquire SendGrid.
In addition to the cloud-computing category, Bessemer still believes in consumer investing, despite backing cooking-kit business Blue Apron Holdings Inc., whose stock has been pummeled almost from the start.

The firm is also looking to invest in technology-enabled real estate businesses, said Jeremy Levine, a Bessemer partner who invested in Pinterest Inc. and Yelp Inc. He said that Bessemer is willing to write checks ranging from $100,000 to $100 million, depending on the stage and needs of the startup....MORE

Bessemer Venture Partners Anti-Portfolio

For the last eight or so years we've visited one of the best finance pages on the internet.
From Bessemer Venture Partners:
The Anti-Portfolio
Bessemer Venture Partners is perhaps the nation's oldest venture capital firm, tracing our roots back to the Carnegie Steel empire. This long and storied history has afforded our firm an unparalleled number of opportunities to completely screw up.
Over the course of our history, we did invest in a wig company, a french-fry company, and the Lahaina, Ka'anapali & Pacific Railroad. However, we chose to decline these investments, each of which we had the opportunity to invest in, and each of which later blossomed into a tremendously successful company.

Our reasons for passing on these investments varied. In some cases, we were making a conscious act of generosity to another, younger venture firm, down on their luck, who we felt could really use a billion dollars in gains. In other cases, our partners had already run out of spaces on the year's Schedule D and feared that another entry would require them to attach a separate sheet.
Whatever the reason, we would like to honor these companies -- our "anti-portfolio" -- whose phenomenal success inspires us in our ongoing endeavors to build growing businesses. Or, to put it another way: if we had invested in any of these companies, we might not still be working.
(acquired by Hewlett Packard) BVP's Felda Hardymon was offered a position in Apollo Computer and passed.  Within a year it was trading publically for 17x the price that he was offered.  Apollo was subsequently acquired by HP for an even greater value.  
Apple Computer BVP had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. BVP's Neill Brownstein called it "outrageously expensive."
In 1994, Gil Schwed pitched his idea to BVP's David Cowan, who said that Gil would never get distribution in the US. The next year, Check Point got a huge Sun OEM deal and sold $25M of firewall software.

(acquired by Unilever) Shortly after the first viral video* Ethan Kurzweil passed on investing in the company. He figured Gillette was bound to launch a competing subscription that would extinguish Dollar Shave’s momentum.  He was half right:  Gilette did launch a subscription, although it mostly served to drive awareness of Dollar Shave Club.  A few years later Unilever bought Dollar Shave club for $1 billion.
eBay "Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass."
Jeremy Levine spent a weekend at a corporate retreat in the summer of 2004 dodging persistent Harvard undergrad Eduardo Saverin's rabid pitch. Finally, cornered in a lunch line, Jeremy delivered some sage advice "Kid, haven't you heard of Friendster? Move on. It's over!"
Federal Express Incredibly, BVP passed on Federal Express seven times....

*Here's the Dollar Shave Club ad: