An autonomous approach, pattern matching and investing in outliers, a profile of Bessemer Venture Partners

bessemer process It is born out of innovation within the steel industry dating back more than a century, and for the last 50 years we have been helping entrepreneurs lay solid foundations to build lasting businesses. We have over 130 IPOs, including LinkedIn, Shopify, Pinterest, and DocuSign, and 200 current portfolio companies. We have long believed that innovation knows no borders and have taken a global approach to our investments, with teams now in Silicon Valley, San Francisco, New York, Boston, London, Tel Aviv, Beijing and Bangalore.

We made our first investment in Europe in 2004 and since then have seen 13 current partners back businesses in the region, with almost 50 investments made across Europe. In the fall of 2021, I moved out of our New York office to officially open our first office in London and be closer to European founders and tech hubs.

What industries are you working in?

Our strategy in Europe is to support leading early-stage cloud companies that are focused on selling to global customers. I dedicate my time mainly to SaaS, fintech, data management, software for SMEs and cybersecurity, where the European technological ecosystem is showing great potential. We see many exciting innovations in these areas, from the development of new cross-border payment systems to software to help businesses manage data privacy and security in the cloud.

What do you look for in a founder?

We look for three main attributes among founders. First, intellectually honest and curious founders; second, founders open to learning and champions of divergent thinking with their teams; and third, founders who are naturally collaborative. We believe it’s important for entrepreneurs to share and embrace new perspectives to help grow and nurture their teams and ideas. Additionally, we’ve found that success is often tied to high personal motivation, resilience, and a growth mindset—this combined skill set can help a founder deal with the ups and downs of their rarely linear entrepreneurial journey.

Can you tell us about your current portfolio?

We have almost 50 European portfolio companies and I have personally invested in more than 10 in Europe and Israel. Companies include Manta, GetAccept, Pipedrive, Temaviewer, NewVoiceMedia, Wandera, Vertice, Upvest, Dashlane, BigID, Hunters,ai, Optibus. Common themes are that we invest early, often as the first check in seed, frequently go back to founders for the first time, focus on B2B companies that aspire to sell globally, and draw on Europe’s strength in engineering and product talent. .

How has COVID-19 changed the way you operate?

We have operated as remote/globally distributed teams long before the COVID pandemic made it necessary. And while COVID certainly pushed us to a new level of decentralization and hybrid working, in the end, the pandemic further removed geographic limitations, allowing us to connect with more founders and companies where they are being built.

From a broader perspective, remote work and virtual connectivity present opportunities from all corners of the world that may not have been so obvious when everything was done in the office. Throughout this period, we have seen entrepreneurs seize the opportunity to transition entire industries online and create new ones, reaping the benefits of the cloud to a greater extent than ever before, which we recently wrote about in our State of the Cloud Report 2022.

What does the future look like? New trends/technologies, changes in the global/local economic landscape?

Despite the recent drop in the value of the public cloud market, we still believe cloud software will play a critical role in transforming global productivity, whether it’s freelancers excelling on platforms like Canva and Fiverr, companies that automate operations with platforms like Zapio or vertical solutions that change B2B online commerce and optimize logistics with software.

Across the tech startup ecosystem, we’ll see less fixation on achieving unicorn status. The saturation of ‘easy’ money within the startup ecosystem has led to multi-billion dollar valuations, and some founders have focused too much on increasing valuation rather than the fundamentals of a good business, fostering a mindset of ” unicorn or bankruptcy”.

This sentiment is changing and we believe ARR is the right metric, rooted in business fundamentals, for the market to realign and specifically hit the $100 million ARR milestone. . We have coined the term ‘centaurs’ as a way of recognizing $100M ARR companies. A company that has reached this milestone has a strong product-to-market fit, a scalable sales and marketing organization, and a critical mass of customer traction—ingredients for long-term success.

What sets Bessemer Venture Partners apart?

Unlike many of our peer companies, we invest primarily from a central global fund and that structure gives us flexibility in both the industries and geographies of our investments. We also take an autonomous approach to our association: we work together as an association to support companies, but decisions about which investments to make are up to the individual partners. In venture capital, pattern matching is critical, but we are also looking for outliers – our autonomous model allows us to take chances on those outliers. Our investments are based on roadmaps, or deep dives into industries, and allow us to make investment decisions based on our knowledge of the market/landscape, countless conversations with entrepreneurs in the trenches, and our belief in the founders. Finally, something that I think exemplifies the value we place on intellectual honesty: we don’t just celebrate our successes, we strive to point out and learn from the opportunities we’ve missed with our anti-wallet.

What advice would you give founders?

One of the CEOs I worked with used to say that no one is perfect, but there are almost perfect teams. This really resonates with me. The best performing companies in our portfolio are those where the founders have prioritized team building. And this is not just about the executive team, it extends to your board, investors and advisors.

Alex Ferrara is a partner at Bessemer Venture Partners.

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