Another VC firm has closed on some significant funding for investments -- underscoring both the long-term confidence investors continue to have for backing startups in the tech sector, and the amount of money swimming around in venture at the moment.
Bessemer Venture Partners announced Thursday the close of two new funds totaling $3.3 billion, money that it will be using to back early-stage startups as well as growth rounds for more mature companies.
The Redwood City-based firm closed BVP XI with $2.475 billion and BVP Century II with $825 million in total commitments.
With BVP XI, Bessemer plans to focus on early-stage companies spanning enterprise, consumer, healthcare and frontier technologies. Its Century II fund, meanwhile, will be aimed at backing growth-stage companies that Bessemer said it believes “will define the next century,” and will include both follow-on rounds for existing portfolio companies and investments in new ones.
Despite being founded more than 100 years ago, Bessemer didn’t actually enter the venture business until 1965. It’s known for its investments in LinkedIn, Blue Apron and many others, with a current portfolio that includes PagerDuty, Shippo, Electric and DocuSign. Exits include Twitch and Shopify, among many others.
And like many VCs in the last year, it has continued to keep active in both backing existing companies in its portfolio as well as new ones, with a focus being startups that have found that not just the pandemic, but the changing tides of consumer and enterprise demands, have brought them surges of new business. Recent investments include Folx (which focuses on health services for the LGBTQIA+ community); GetAccept (sales for SMBs); StackPulse (for developers to manage outages); a big round for DriveNets (cloud-based network router technology); Mambu (one of the leaders in the world of SaaS that powers fintech services at the back end); just earlier this week Electric (cloud-based IT services for SMBs); a big round for Sila Nano (cutting edge battery materials technology) and StuffThatWorks.
Interestingly, last year BVP highlighted Stripe as the top company in its annual cloud report. It doesn't invest currently in it, but could that be a signal of something in the works? (Stripe reportedly is currently raising $100 million.)
With more money than ever before available for backing startups, the challenge now for VCs is to see how and if they can find (and invest in) whatever will define the next generation of tech, in competition with an ever-wider field of investors with deep pockets. Some of those firms are bringing more than just money to the table -- they're bringing ideals and ideas -- and some of them are being spawned as talent leaks from the bigger firms.
Bessemer is not a stranger to those trends and so is carving out a place for itself and what it can bring -- not just money, but its eye for success, its reputation and the networking that this brings, and its time and commitment.
"As venture capitalists, we pay too much attention to pattern recognition and matching when in reality, the biggest opportunities exist where those patterns break,” the firm wrote in a blog post today.
“Our job is to make perceptive bets on the future, especially those that others will dismiss and ridicule. We are fundamental optimists and strong believers in the power of innovation; our life’s work is putting our reputation, time, and money to help entrepreneurs realize a different future. They’re the ones pioneering something entirely new and obscure -- a technology, a business model, a category."
In addition to announcing the new funds, Bessemer also revealed today that it’s brought on five new partners, including Jeff Blackburn, who joins after a 22-year career at Amazon, alongside the promotion of existing investors Mary D'Onofrio, Mike Droesch, Tess Hatch and Andrew Hedin.
Most recently at Amazon, Blackburn served as senior vice president of worldwide business development, where he oversaw dozens of Amazon’s minority investments and more than 100 acquisitions across all business lines -- including retail, Kindle, Echo, Alexa, FireTV, advertising, music, streaming audio & video and Amazon Web Services.
“Having been part of Amazon for more than two decades, I’m excited to begin a new chapter helping customer-focused founders build breakthrough companies,” said Blackburn in a written statement. "I’ve known the Bessemer team for many years and have long admired their strategic vision and success backing early-stage ventures."
With the latest changes, Bessemer now has 21 partners and more than 45 investors, advisors and platform “team members” located in Silicon Valley, San Francisco, Seattle, New York, Boston, London, Tel Aviv, Bangalore and Beijing.
“At Bessemer, there’s no corner office or consensus; every partner has the choice, independently, to pen a check. This kind of accountability and autonomy means a founder is teaming up with a partner and board director who thoroughly understands your business and can respond quickly and decisively,” the firm’s blog post states.
Bessemer's task is all the more difficult because there is more competition than ever before to get into the best deals.
TCV closed on a record $4 billion fund to invest in e-commerce, fintech, edtech, travel and more in late January.
Last November, Andreessen Horowitz (a16z) closed a pair of funds totaling $4.5 billion. The firm raised $1.3 billion for an early-stage fund focused on consumer, enterprise and fintech, and closed a $3.2 billion growth-stage fund for later-stage investments.
And, last April, Insight, the firm that has backed the likes of Twitter and Shopify and invests across a range of consumer and enterprise startups, announced it had closed a fund of $9.5 billion, money it said it would be using to support startups and “scale-ups” (larger and older startups that are still private) in the coming months.
BVP XI marks Bessemer’s largest fund in its 110-year history. Its last fund was closed in October 2018, when the firm brought in $1.85 billion for its tenth flagship VC fund. This latest fund is Bessemer's fifth consecutive to exceed $1 billion, based on PitchBook data.
Although BVP is one of the older firms in the valley, there has been a new wave of investors, some like SoftBank with very deep pockets, and others will less money but a lot of credibility, so it will be interesting to see how these next two funds play out for the firm.