These guys are very, very sharp.
First up, from PitchBook, March 18:
Q&A: Bessemer Venture Partners' big bet on Web3
Venture capital interest in blockchain and cryptocurrency startups has shot up in the past year, with 2021's total of $32 billion marking an annual increase of more than 370%, according to PitchBook data.
Blockchain is gaining more attention as it will underpin Web3, a vision for a decentralized iteration of the World Wide Web, which has become an increasingly important area of focus for many investors.
Bessemer Venture Partners, which has earmarked $250 million for Web3 startups, is no exception. But it is also seeking to innovate further by becoming one of the first VC firms to create a decentralized autonomous organization in an effort to provide portfolio companies with a community outside of the firm that can service their needs.
A DAO is a members-only community organized around a set of rules enforced on a blockchain. BVP's is designed as a place for people in the crypto space to connect and share ideas about products, business development and tokenomics—essentially the study of supply and demand characteristics of cryptocurrency.PitchBook spoke to BVP partner Ethan Kurzweil to discuss the firm's crypto strategy and the allure of Web3. This interview has been lightly edited for length and clarity.
PitchBook: Why is Bessemer setting up a DAO, and what is its purpose?
Kurzweil: We wanted to try to experiment providing portfolio services in a new way that's more aligned to the way crypto projects are formed. They tend to be more community-oriented and collaborative, with groups of people forming and sharing ideas from the very start. Rather than taking the traditional VC model and trying to force that into crypto, we wanted to reinvent how we do things to be more crypto-native from the start.
To get the full breadth of Web3, we as investors need to be open to some tweaks to our model. There's definitely problems that VCs haven't experienced or can't advise on in crypto, but the community can and is willing to provide that support and help in an open-source ethos kind of way.
PitchBook: We are seeing more DAOs being set up with an investment purpose. Is this a new alternative for crypto startups?....
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Over the years we've visited Bessemer's Anti-Portfolio a half-dozen times, here's the latest interation:
The Anti-Portfolio.Honoring the companies we missed.
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.Throughout 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.
Airbnb
Jeremy Levine met Brian Chesky in January 2010, the first $100K revenue month. Brian’s $40M valuation ask was “crazy," but Jeremy was impressed and made a plan to reconnect in May. Unbeknownst to Jeremy, $100K in January became 200 in February and 300 in March. In April, Airbnb raised money at 1.5X the “crazy” price. In December 2020, Airbnb went public at a $47 billion valuation.Ebay
"Stamps? Coins? Comic books? You've GOT to be kidding," thought David Cowan. "No-brainer pass."FedEx
Incredibly, Bessemer passed on Federal Express seven times....
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