Bessemer Looks Forward With New $1.6B Fund

Bessemer Venture Partners (BVP) announced its latest investment fund today with $1.6B in investments. It has dubbed it BVP IX. It follows a highly successful BVP VIII.

Byron Deeter, a partner at BVP says this is just part of the normal fundraising cycle for the company. They are reaching the end of the previous cycle when they launched BVP VIII, and as the funds from that round have been exhausted, they simply want to set themselves up for a smooth transition to the next round.

“We work roughly on a four year cycle. We were coming to the end of BVP VIII and we like to plan ahead and will start investing in this fund (BVP IX) in the summer time frame, so we don’t slow down our investing pace,” Deeter told TechCrunch.

He said, it would be making this move regardless of the investment landscape. It doesn’t raise funds with an eye to how attractive to the markets are. It is investing regardless of the external economic forces because that’s what it does, he explained.

BVP won’t name their investors, but he says it’s the usual institutional suspects.

The firm concentrates on seed rounds and series A and B. Among their hits at that level are Twilio, Pinterest, Yelp, Skype and Shopify. BVP will still come in later when it feels it might have missed something early on and believes there’s still value, as when it invested later in growth rounds for LinkedIn and Box.

BVP is coming off a banner year with 35 new investments and 21 exits of previous ones including the IPOs of 2U, Cerulean Pharma, and Proteon Therapeutics. Others went the mergers and acquisitions route including Amazon snagging Twitch for more than $1B along with Google’s purchase of DropCam and satellite imaging startup Skybox.

Looking ahead to the next four years, BVP partner Jeremy Levine says the company hopes to expand its investment outside the US. The firm currently has a ratio of approximately two-thirds US investment to one-third outside the US, and it wants to increase worldwide investment where it has had some success.

It currently has offices in Israel, and the India (in addition to US offices in Menlo Park, Cambridge and  New York ) and the company has had some big hits outside the US including French ad-tech company Criteo, which Deeter calls “the biggest exit ever over there.” BVP has also invested in 15-20 companies in London and partners travel there frequently.

“We’ve had an office in Silicon Valley for 30-something years, and our investments our [somewhat] Silicon Valley-centric, but we’ve always had a world view,” Levine explained.

Just last week, we wrote about Team8, an Israeli security company, which BVP invested in. Team8 is run by a pair of former Unit 8200 officers, who have a unique approach to cybersecurity. David Cowan, a BVP partner with over 20 years experience investing in security companies took the lead on that.

As for investments over the next 4 year cycle, BVP is looking at a number of areas including many you would expect such as the aforementioned cybersecurity along with mobile, consumer internet and cloud and SaaS.

As you would expect, it is looking for companies that take an unusual approach or solve a problem that hasn’t been digitized yet. Levine sees a lot of potential in the small business software market where up until recently, it has been expensive for them to install and maintain software. The cloud has changed that and he sees a lot of potential at that end of the market. 

Deeter says the mobile phone is really driving big changes. “One thing we are seeing is the proliferation of devices. Once you have that computer in your pocket and there are peripherals and software and security implications, we are studying this area very carefully –and how it all relates to the Internet of Things.

Ultimately as Deeter says, BVP is in the business of investing and making money and that’s what it hopes to do with this latest fund. “We are investors. Creating financial return is the bottom line we need to uphold,” he said.