BVP’s Anti-Portfolio

My friend Milan recently sent me Bessemer’s “anti-portfolio” – a sobering account of the opportunities they missed. That’s right, a VC actually documented and published a list of the companies they passed on. Many of which came back more than once for investment, and BVP passed. The list is short, but it’s filled with some of the biggest heavy hitters in the world today. Without further ado…

Anti-Portfolio

Bessemer Venture Partners is perhaps the nation’s oldest venture capital firm, carrying on an unbroken practice of venture capital investing that stretches back to 1911. This long and storied history has afforded our firm an unparalleled number of opportunities to completely screw up.

Over the course of our history, we did invest in a wig company, a french-fry company, and the Lahaina, Ka’anapali & Pacific Railroad. However, we chose to decline these investments, each of which we had the opportunity to invest in, and each of which later blossomed into a tremendously successful company.

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.

Whatever the reason, we would like to honor these companies — our “anti-portfolio” — whose phenomenal success inspires us in our ongoing endeavors to build growing businesses. Or, to put it another way: if we had invested in any of these companies, we might not still be working.

Apollo Computer

Apollo Computer

(acquired by Hewlett Packard) BVP’s Felda Hardymon was offered a small position in the company’s last private round, and waved it away: too small a position, he thought, at too high a price. In less than a year it was worth 17x.

Apple Computer

BVP had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. BVP’s Neill Brownstein called it “outrageously expensive.”

eBay

“Stamps? Coins? Comic books? You’ve GOT to be kidding,” thought Cowan. “No-brainer pass.”

Federal Express

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?”

Intel

BVP’s Pete Bancroft never quite settled on terms with Bob Noyce, who instead took venture financing from a guy named Arthur Rock.

Along with every venture capitalist on Sand Hill Road, Neill Brownstein turned down Intuit founder Scott Cook. Scott managed to scrape together only $225K from friends, including HBS classmate and Sierra Ventures founder Peter Wendell, who personally invested $25K to get Scott off his back.

Ben Rosen, one of the founders of Sevin Rosen, offered Felda Hardymon the chance to invest in both Lotus and Compaq Computer on the same day. Says Hardymon: “Lotus wasn’t proven yet, and I was worried about the situation there. As for Compaq, I told him there was no real future in transportable computers since IBM could do it.”

David Cowan passed on the Series A round. Rookie team, regulatory nightmare, and, 4 years later, a $1.5 billion acquisition by eBay.

StrataCom

(acquired by Cisco) Felda Hardymon: “[Sierra’s] Pete Wendell asked if I’d like to look at Stratacom, which was doing a ‘fast packet switch.’ I gave him a blank stare.”

Source: http://www.bvp.com/portfolio/antiportfolio

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