Bessemer Raises $5.75 Billion in New Funds, Expands Growth Efforts

Bessemer Venture Partners is set to announce $5.75 billion in fresh funding to support a broader shift towards more growth stage investments, the firm plans to announce Wednesday.

The San Francisco-based venture firm is allocating $4 billion of the funds to growth-stage financings, which include funding young companies raising large rounds at high valuations, according to firm partner Byron Deeter. The remaining $1.75 billion will go towards younger startups raising capital at the inception phase or soon after, Deeter said.

With over $20 billion in assets under management, Bessemer has invested in more than 260 companies in the AI world, building a portfolio that includes AI-powered search engine Perplexity AI Inc., model maker Anthropic PBC and inference provider Fireworks AI.Bessemer is now focusing on growth stage investing in part because artificial intelligence startups need larger capital fundraising to scale up their work, Deeter said.“The AI wave is amplifying it all,” Deeter said. “Companies are staying private longer, and it’s a permanent structural shift.” Bessemer will distributed the total haul across various investment vehicles. It raised a flagship fund, which will invest across seed, early-stage and early growth rounds, at $3.4 billion. That is slightly smaller than its previous flagship, which closed at $3.85 billion. The firm’s growth vehicle, created for even later stage startups, closed at $1.85 billion, or more than double its predecessor. And the remaining $500 million of the total money was raised in separate vehicles directly with Bessemer’s limited partners.The firm’s growth team will invest its allocated $4 billion across all three of these funds, and is targeting roughly two dozen companies. Deeter said the move to expand Bessemer’s growth practice was in response to seeing more opportunity created in the private markets. Earlier this year, for example, the firm invested in Waymo’s $16 billion Series D financing at a $126 billion valuation. The deal signaled a shift in the firm’s strategy, which originally used its growth stage capital largely for pouring more money into existing portfolio companies.

Bessemer is one of several venture firms that have recently expanded their growth investing checkbooks. For example, earlier this year, Sequoia Capital raised $10 billion in both growth and expansion funds; its last expansion fund in 2022 was $3.4 billion. And Menlo Ventures recently closed its largest haul to date, a $3 billion raise, which will include more growth investments.

Bessemer will continue to make early-stage investments. Two years ago, the firm launched Bessemer Beam, a free operational support program for AI scientists who want to start companies. It was part of an effort to attract more technical founders to the firm’s front doors — and it has led to the creation of more than two dozen startups, according to David Cowan, partner at Bessemer.The firm has also expanded the types of investors it recruits to its ranks. “You can’t teach an MBA to be an AI scientist,” Cowan said. Last year, Bessemer hired AI engineer Lance Co Ting Keh as a venture partner, a part-time role at the organization.

Bessemer is also bracing for an expected surge of new activity in the VC world after the highly anticipated public debuts of OpenAI and Anthropic. “A lot of liquidity is about to come to the LP landscape by the middle of next year,” Deeter said. “The world is still DPI starved,” he said, referencing actual cash distributions back to investors in venture funds.

He expects that a surge in returns may lead to limited partners pouring more money into the venture world. For now, the firm plans to stay the course of its investment cadence, deploying the new funds over three to four years, similar to its prior funds.