Real VCs Aren’t Afraid to Cry: The Anti-Portfolio
It’s said that real self-confidence means being willing to own up to your faults and foibles. If that’s true, Bessemer Venture Partners, with offices in Wellesley Hills and five other locations worldwide, gets our vote as the most secure VC outfit around.
Google, Apple, eBay, FedEx, Intel, PayPal, Cisco, Lotus, Compaq. Would you admit it if you passed on opportunities to invest in all of these mega-stars in their early stages? Well, maybe under oath. But would you feature that fact on your website and make fun of yourself? Bessemer does. All these names were taken from the firm’s Anti-Portfolio, which is given equal play with lists of Bessemer’s current investments and Top 50 Exits. As the folks at Bessemer, which was founded in 1911, explain (emphasis theirs): “This long and storied history has afforded our firm an unparalleled number of opportunities to completely screw up…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.
Several of the Bessemer items poke fun at managing partner David Cowan, who has a stellar rep and a blog, by the way, and must be very secure indeed. Some highlights:
eBay—“‘Stamps? Coins? Comic books? You’ve GOT to be kidding,’ thought Cowan. ‘No-brainer pass.'”
Intel—“BVP’s Pete Bancroft never quite settled on terms with Bob Noyce, who instead took venture financing from a guy named Arthur Rock.”
FedEx—“Incredibly, BVP passed on Federal Express seven times.”
Google—“Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to ‘these two really smart Stanford students writing a search engine’. Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, ‘How can I get out of this house without going anywhere near your garage?'”
We’d like to thank our friend and fellow scribe Scott Kirsner for pointing out the Bessemer Anti-Portfolio. Scott mentioned it at Convergence: The Life Sciences Leaders Forum, as he began a great Q&A with Bessemer senior partner and former Massachusetts gubernatorial candidate Chris Gabrieli.
Inspired by the Bessemer list, we queried a few local VC and angel groups we know about the companies in their anti-portfolios. The early results:
CommonAngels managing director James Geshwiler (who also likes to blog) nominates EnerNoc (ENOC). The company, which seeks to automatically balance electric supply and demand to make the grid more efficient, went public in May at $26 a share, a nice premium over its early target of $21-$23. Writes Geshwiler in an e-mail: “When they presented, we liked the idea of virtualizing a powerplant. A ‘client-server network for electric power,’ is what I called it. But selling ‘dumb’ electrons (ie., power)…we like selling ‘smart’ electrons (ie., software)…well, see who was ‘smart’ and who was ‘dumb’ after all…oh well…”
A late-breaking entry from Jonathan Seelig (Akamai co-founder) over at Globespan Capital Partners, where he is managing director: “Great one to add to the list—Tacoda—really liked Dave Morgan and the behavioral advertising space—but dug in on price—sold today [to AOL, on Tuesday, July 24] for $275M.”
Noubar Afeyan, managing partner and CEO, Flagship Ventures: “Since we have been around only since 1999-2000, we haven’t had a chance to see the companies we passed or missed flourish to become great successes. I am sure that day will come soon enough.”
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