Member-only story
Lessons from Bessemer Venture Partners Investment Memos
👉👉👉 For more business model breakdowns, please consider subscribing to my weekly newsletter.
A few weeks ago venture capital firm Bessemer Venture Partners (BVP) released investment memos for a handful of successful investments including LinkedIn, Pinterest, and Shopify. While often prolific on Twitter, VCs seldom make this type of document public. The memos provide a behind the scenes view into BVP’s investment and decision making process.
Surfing the Wave
To generate high returns, an investment must be non-consensus and right. Successful venture capital (VC) investments require seeing the future before others do. One of the bets that BVP got right was the consumerization of enterprise software. Their investment thesis was that the enterprise software stack would be recreated in an easier-to-use form for small and medium-sized businesses (SMBs). At the time, few investors thought that investing in software businesses serving SMBs was a good idea.
Historically, business software was developed for enterprises with deep pockets and large IT departments. It was expensive to purchase and complex to install and maintain. The product was sold by sales reps calling on accounts, the right hand side of the sales and distribution chart below:
