San Francisco-based Bee Partners announced today that it has raised more than $30 million for its second fund, Bee Partners II, beating its initial target of $25 million. As a venture capital firm that primarily invests “pre-seed” money, Bee Partners has scouted and mentored multiple successful tech startups since its founding in 2009. Two of the early investments in its first fund include TubeMogul and Indiegogo.
According to Bee Partners, the firm aims to “go back to VC roots” of early-stage investment at a time when many VCs have shifted focus to businesses with established models. Bee Partners is the first investor in more than 60% of its portfolio companies, and one-fourth of its current portfolio companies had no product or revenue stream at the time of Bee’s initial investment. As the firm has put it, Bee Partner believes the pre-seed stage is where investors can add the most value and best help founders “slog through the various tribulations of entrepreneurship.” “We are proud of our commitment to the pre-seed phase,” says Bee Partners’ founding partner Michael Berolzheimer, “a most challenging time for founders, and one that we embrace.”
Michael Berolzheimer, CEO and founder of Bee Partners | Credit: Bee Partners
Bee Partners II is four times larger than Bee Partners I. Bee typically invests in about eight new startups each year, each around $400,000. Bee II has already funded 17 startups spanning a variety of categories, from real estate and fintech (Neighborly and Embroker, for instance) to artificial intelligence (StatMuse, which received seed investment from Bee and subsequently secured $10MM in Series A funding). Several of Bee’s portfolio companies have reached profitability without raising further funding; of those that have gone to to seek follow-on funding, a majority have received investments from such high-profile VC firms as Avalon, Canaan, Foundation, Khosla, Kleiner and Trinity — “speaking volumes ,” according to Berolzheimer, “about Bee’s quality of deal flow.”
According to Bee, nearly half of Bee II’s startups have strong UC Berkeley ties, in part the result of Bee founder Berolzheimer’s relationship with UC Berkeley and CalFounders, the Bay Area-based startup community that Berolzheimer helps manage. In an interview with TechCrunch, Berolzheimer said CalFounders was created to raise awareness about UC-educated entrepreneurs and startups among VC’s, who have traditionally had tighter connections to schools like Stanford and Harvard. As Berolzheimer put it, a significant portion of Bee Partners’ second fund comes from UC Berkeley alumni and Cal trustees, who “share our passion for venture creation.”
“We are true partners to our entrepreneurs,” Berolzheimer says, pointing to the fact that the firm calls itself Bee Partners rather than Bee Capital. “We are striving constantly to improve the quality of work we do on behalf of our founders. While we are extremely capable of providing them with financial support and introducing them to additional investors and key reference customers, we are now building out our capabilities around best practices for hiring, sales and marketing. This year we are specifically working to build partnerships with groups that can provide these services to our portfolio.”