Announcing Bee Partners III: $43M to invest and a new partner

It is with profound gratitude and a sense of great purpose that Garrett, Tim, Kira and I officially announce today the closing of our $43M fund, Bee Partners III. 

You may have already learned this news from our own personal conversations these last few months or today from VC Journal and Crunchbase News. And as many of you know, we have been investing Bee Partners III since early 2018, with 10 positions already and one more pending. These companies represent a remarkable future, one in which we as humans co-evolve with machines, and the world is most definitely a better place. Much more to come about them in future posts. 

We also are announcing another important development: We’ve promoted Tim Smith to Partner!  We are delighted to have him assume the title of a role he has largely filled for the last two and a half years by both building the proprietary systems that help support our Founders and supporting them from the depth of his own experience as a longtime Silicon Valley Founder, advisor and angel investor. 

Now, empowered with an optimal fund size for pre-Seed investing and our incredible team, here’s what we stand for at Bee Partners: 

We will never leave pre-Seed.

We have no plans or desire to stray downstream and we absolutely remain committed to inception-stage investing. Founders ride a violent rollercoaster of entrepreneurship and we're committed to helping them straighten the path when it is most difficult. Being this early, vital support to a Founder and their nascent idea is critical to our success. That’s proven out in events like TubeMogul’s 2014 IPO, the $275M sale of BuildingConnected last year, and the valuation of another nine companies at more than $100M. Our investment model works, and we aim to keep continuously improving and learning through the work we do with our Founders. 

Machines will win, and how they win is up to our brilliant Founders.

We are in a window of profound change. The steps innovators and backers take, the designs we create, the outcomes we envision and build toward in the next few decades will be as important as those machines and processes that laid the foundation for the factory systems in the late 1800s and the Internet frameworks in the 1990s. But, to be clear, we as investors will not be the ones to deliver the solutions here. It will be Founders who are deeply immersed in the respective technical domains who will show us the best, most innovative ways forward. It falls to us as investors to identify the optimal traits of Founders and then trust the Founders to build the machines that will win. 

We welcome the crazy, the outlandish, the passionate.

Yep. Remarkable change comes from those who passionately apply their energy and precious time to deeply-felt problems. Share your dreams with us and if we invest, we commit to being your partner for life. Full stop. You’ll get an answer from us, we’ll tell it like it is. And yes, we’re wrong sometimes, but that goes back to our willingness to learn.   

On behalf of the team here at Bee Partners, thank you all for your support through these many years and the successes you’ve brought us all. We welcome your insights, feedback, dealflow and introductions. We look forward to partnering with you, investing alongside you, collaborating with you on your own journey, and welcoming you into our community. Most of all, we look forward to sharing a bright and hopeful future, one we’re honored to take part in creating. 

Sizing Something That Doesn't Exist: Forays into the Robotics Market

The “robots are coming” narrative has two parallel conversations. One is a dialogue over whether or not this is a good thing. Team Bee collaborated (argued, postulated, wrote, erased, and wrote again) over several months last year to develop our core thesis, Machines Will Win on that topic. Spoiler alert: Yes, they will win, and we’re excited to be among those leading the way to positive human-machine engagement as evidenced by the companies in our portfolio.

The other conversation is around financial rewards and it goes something like this: Robots are coming and they bring with them dramatically reduced labor costs, blindingly fast efficiencies, and embarrassingly large profits for their makers, users, and investors.

If only any of it were that simple.

Yes, a global robotics industry is rapidly emerging. Writing about it has been like trying to describe the ground under my running feet. And the industry, as well as the investment it requires, faces all the challenges of any emerging business field. It also has some unique and unprecedented challenges, and has us posing questions we’ve not asked before.

In “Demystifying the Robotics Market,” I set out to define the developing space, looking at the simplicity (not) and cost (high) of implementing robots, market conditions among the two dominant robotics producers and users (the U.S. and China), and possible solutions to the problems of business models and expense. Please have a look. I eagerly await your thoughts and opinions, so start a conversation with me at kira@beepartners.vc, and use that email address as well if you’re interested in a job in robotics. Our robotics investments in Skycatch, Carbon Robotics, and Iris Automation have given us fascinating and unique insights and we know them to be exciting and rewarding places to work.  

CalFounders Elites Meet Elite Meet

Does Silicon Valley need more AI PhD’s? Or could some seriously operationally-savvy generalists, say … people trained to deal with existential uncertainty and practiced in keeping cool in the midst of often unrelenting chaos, fill a meaningful role in tech startup?

That was the question on our minds as we developed this year’s first Frontier Innovators Quarterly for CalFounders. On April 3rd, we partnered with BearX and SkyDeck to bring together CalFounders and Bee Founders with Elite Meet, a national group of military veterans transitioning to the workforce. The goal: Learn how hiring military veterans can benefit early-stage startups.

And while being grateful to anyone in military service, I should make clear that these aren’t rank-and-file military. Elite Meet members have served in special forces like the Navy SEALS, Army Rangers, Marines MARSOC, and in the Air Force as fighter pilots and members of AFSOC. Hence the “elite,” a well-deserved acknowledgement of their rank and achievements.

Tim likes to say Elite Meet members casually walk through walls. That might not have been exactly what Bee Founder Rosanna Myers of Carbon Robotics was looking for when she first interviewed Elite Meet member and Navy SEAL Zach Marshall, but she was able to see his no-nonsense potential at their first interview.

Zach and Rosanna participated in a panel I led along with Bee Founder Rachel Olney of Geosite and Joel Tolbirt of the Elite Meet management team.

In the panel and later in smaller sessions in the CalFounders’ tradition, Zach recalled how he pitched himself in their interview, particularly how he proved his readiness to engage with the business aspects of Carbon by completing some writing tasks on request, and how he was completely upfront about not being knowledgeable about robotics. His honesty appealed to Rosanna more than any preconceived industry notions he might have had.

The panel and discussion sessions also addressed what jobs might be appropriate for generalists like Elite Meet members. Early-stage companies are hungry for employees who can figure “it” out even if they don’t know what “it” is, and they crave horizontal generalists with independent, can-do attitudes. This often manifests, as it did with Zach at Carbon, in a chief of staff or business operations role, managing long-tail tasks with very little oversight.

Our upcoming Frontier Innovators Quarterly events will certainly vary in topics while keeping the hallmark CalFounder small-group sessions. Next up, we’re sponsoring StEP, co-founded by Bee spring intern and Cal MPH / Haas MBA candidate Santiago Freyria Dueńas. Stay tuned for dates and details. We hope to see you there.

Heroic Sideqik

Back in 2012, I was a sole GP investing from a windowless office in a shared workspace south of Market. With the backing of several remarkable and patient LPs, I had raised $7M of capital and invested in only 25 companies. I was learning a lot in a very hands-on manner.

The portfolio had its moments of high drama, as portfolios usually do. During this time, Sideqik (Bee I) was on the violent swing of the entrepreneurial roller coaster, with a big personnel change at the top. Co-Founders Jeremy Haile and Tree McGlown and I jumped on a call ... It could have been our last. We were brutally honest about the challenges ahead and the near-certain death as a result of an utter lack of capital and a product that just wasn’t working. On that call, I promised to work with them weekly to help right the ship.  Sometimes daily, on those calls and in those meetings, we would discuss the upcoming opportunities, what was being learned every week, what was being accomplished, and what to do next. After every session, Jeremy and Tree would return to the grind and execute with what limited resources they had.

Through those meetings two things happened. One was that a spark began to be lit in these Founders that gave me measured confidence (hope, perhaps?) that these two were the right people to raise this phoenix from its ashes. The second was the conviction that Bee Partners would dedicate and devote time to any founding team that was truly struggling yet definitely had the functionality, the resource magnetism, the empathy, and the passion to execute for brilliance. And, we had LPs who had co-invested as well—we weren’t about to cut bait as would so many other “rational” VCs. We saw that this was not a situation where they weren’t cut out to be Founders, not at all. They just had their backs against the wall and had to make remarkably difficult choices in that phase of their entrepreneurial journey.

Just like a society should be judged by how it supports its most vulnerable members, so should investors be judged by how we support our portfolio companies in their darkest hours.  

This was by no means a quick turnaround and I have long been inspired by how Jeremy and Tree navigated the very squiggly line of entrepreneurship. Every single time they generated some revenue, they would plow it back into the company, and Sideqik became a steady drumbeat of more customers, more employees, more resources. There were always trade-offs—should they hire for marketing or engineering—and real struggles to determine the best uses of capital. But they were making progress, picking up customers like Coca-Cola, Universal Music, and Procter & Gamble.

And then, in 2017/2018, growth rocketed—they had found product-market fit! Their phenomenal patience finally started to pay off and, as of this week, the company is now capitalized with a $5M Series A, led by Jackson Square Ventures.

So, congratulations to Jeremy, Tree, and the entire team at Sideqik, and to JSV for adding these resilient operators into your portfolio—Next step, $100M in revenue!