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Pre-IPO Apple, Facebook, Tesla, Google lead a VC firm's biggest missed investment opportunities - 'Kid, haven't you heard of Friendster? Move on. It's over!'

Jan 10, 2023, 20:54 IST
Business Insider
Google headquarters is seen in Mountain View, California, United States on September 26, 2022.Tayfun Coskun/Anadolu Agency via Getty Images
  • A venture capital firm has a list of missed investment opportunities before companies went public.
  • Bessemer Venture Partners passed up chances on Apple, Facebook, Tesla, and Google.
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Would you be upset if you missed an opportunity to invest in Apple at a $60 million valuation before the company's initial public offering?

For Bessemer Venture Partners, that price was simply "outrageously expensive" as it passed on a chance on a pre-IPO secondary stock. Apple has since become the first company to touch a $3 trillion valuation and is currently worth $2 trillion.

As first reported by the Wall Street Journal, the venture capital firm reveals such big misses in its "the Anti-Portfolio," which details some of the reasoning behind passing on early startups that turned into Wall Street heavyweights.

To be sure, Bessemer is one of the biggest VC firms, and its investments include successful companies like Linkedin, Yelp, Twitch and Shopify. The firm has taken part in 135 IPOs and has over 200 companies in in its portfolio.

But Apple isn't the only household name that Bessemer says it missed the boat on, with other early passes including Airbnb, Google, Paypal and Tesla.

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Bessemer also had a chance to grab hold of a stake in Facebook in 2006. Jeremy Levine, a partner at the firm, reportedly spent the better part of a weekend "dodging" Eduardo Saverin, a Facebook cofounder who was still a Harvard undergrad at the time.

Levine ultimately passed on the company, but not before seemingly putting Saverin in his place. "Kid, haven't you heard of Friendster? Move on. It's over!"

Meanwhile, Byron Deeter, a partner at Bessemer, thumbed his nose at Tesla's negative margins in 2006 after meeting the electric vehicle company's team and test driving a Roadster.

"It's a win-win. I get a great car and some other VC pays for it!" he said. Bessemer says Deeter eventually ended up paying full retail price for a Tesla Model X.

As for Google, Bessemer co-founder David Cowan's college friend tried to get him in 1999 and 2000 to meet the Stanford students creating what is now the ubiquitous search engine in her garage.

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"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?'"

Other misses include eBay, which Cowan called a "no-brainer pass." And on PayPal, the VC firm passed on a Series A funding round, citing a "rookie team, regulatory nightmare."

"Our reasons for passing on these investments varied," Bessemer says about its anti-portfolio. "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."

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