Private equity firms have been playing in the venture space for years. Now, veteran early-stage investor Bessemer Venture Partners is flipping the script with BVP Forge fund, which recently closed on $780 million.
BVP Forge is led by partners Rob Arditi and Navid Oreizy. Arditi joined the firm in 2021 after serving as general partner and co-head of growth equity at Norwest Venture Partners. He was joined in February by Oreizy, who was previously with Serent Capital, where he helped lead investments in software, payments and tech-enabled services companies.
BVP Forge aims to commit $30 million to $125 million per transaction across majority and significant minority stakes in software and tech-enabled services companies based in North America, Europe, Australia and New Zealand.
While venture firms like Insight Partners, private equity firms such as Blackstone Growth and hedge funds including Tiger Global have poured billions into growth deals over the past few years, Arditi was quick to point out that BVP Forge is “not doing traditional growth investing. We’re investing in what we call self-sustaining companies.”
‘Growth and profitability’
In an interview with Venture Capital Journal, he elaborated on the types of companies BVP Forge will target. “They don’t need capital, but these businesses don’t have that breakout growth potential, so it doesn’t make sense to put those in a venture fund,” he said. “They don’t have that risk reward profile that you would typically look for, but they’re still phenomenal businesses. A traditional growth investor would tell a company, ‘Hey, we’re going to put a bunch of capital on your balance sheet so you can be more aggressive and grow faster.’ BVP Forge is a private equity strategy, so it’s focused on a balance of growth and profitability.”
BVP Forge brings Bessemer’s history of success with companies like LinkedIn, Shopify and Procore to the private equity landscape in a way that no other venture firm is currently doing, said Arditi. The new fund will employ Bessemer’s ForgeEdge operational program to identify opportunities for growth in tandem with offering management teams access to Bessemer’s network of founders.
“We’ve now offered something to CEOs and management teams that does not exist on the market today,” Arditi said. “There is no other venture capital firm with a standalone private equity fund. So as a CEO, you get all the benefits of a dedicated buyout fund, the dedicated value creation resources, total alignment, focused pattern recognition, depth, but layer on that all the benefits that Bessemer brings you. It’s very unique.”
Bessemer has not made any investments from its new fund yet, but the firm is in “active discussions” about a number of potential investments, according to Arditi.
Bessemer had no trouble finding investors interested in its new strategy. Select LPs in the BVP Forge include MetLife Investment Management, Rice University and StepStone Group.
“We had tremendous interest and demand so we didn’t take all the capital we could,” said Arditi. “We were in the fortunate position to select people who we felt could be great long-term partners for us.”
It should be noted that the new strategy does not mean Bessemer is moving away from early-stage investing. In fact, at the same time it announced BVP Forge, Bessemer said it raised $3.85 billion for its 12th flagship fund.
“BVP XII will focus on early-stage investments in companies around the globe spanning enterprise, deep tech, fintech, consumer, and healthcare, allowing our partners to continue investing early in promising technology companies and continue backing the companies and their founders at every stage of their growth,” Bessemer said in a statement.