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Pre-seed VC firm announced today it closed a new $43 million fund.

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The raise marks the San Francisco-based venture firm鈥檚 third fund since it was founded in 2009. Bee Partners closed on its first fund, worth $8 million, in 2011. And it closed its second fund, which raised $30 million, in 2014.

Its latest capital has interesting stakeholders. Eleven of Bee’s portfolio company founders are now limited partners, according to the firm, along with a “large Boston-based endowment,” and , among others.

In announcing the new fund, Bee also disclosed it has promoted advisor 聽 to partner.

Future Plans

I hopped on the phone with Bee鈥檚 founder, this morning and he shared some more details on Bee Partners鈥� history and future plans.

鈥淲e like to use the phrase inception investing,鈥� he said, 鈥渟ince we like to participate in and lead rounds at the inception stage of capital.鈥�

Bee鈥檚 average deal size is $750,000 but the firm has put in amounts as small as $150,000, and how much the firm puts in a company is 鈥渃ase dependent,鈥� he said.

鈥淪ometimes founders only need a few hundred thousand dollars to drive a specific model to unlock the next round of resources, including capital.鈥�

Money In, Money Out

Bee Partners has had a couple of impressive exits since its inception starting with , an enterprise software company that went public in 2014 and was for $540 million in 2016. Another portfolio company, , was for $275 million in December 2018. The sale of that construction tech startup provided Bee Partners with a 鈥�14x return鈥� on its initial investment, according to Berolzheimer. The firm currently also has 鈥渁 few pending exits,鈥� he added.

Bee Partners鈥� second fund is close to fully deployed, with some additional capital left for follow-on investing, according to the firm.

So far, Bee has backed nine companies with its third fund, with two shortly to join the portfolio. The companies already funded by Bee III include , which aims to allow businesses to build business apps from a matched library of components and a network of on-call experts; , which uses plant-based sensors in an effort to make farming more efficient; and , a cloud-based platform for aggregating geospatial data.

InnerPlant and Geosite are both led by women founders and CEOs, Berolzheimer notes. In fact, he says, 30 percent of Bee鈥檚 portfolio since its inception is made up of female-founded and/or female-led companies.

Another statistic Berolzheimer is proud of is that 65 percent of his firm鈥檚 portfolio companies have reached a Series A. (This is a figure that is often called a 鈥榞raduation rate.鈥�)

鈥淐ompanies that are on the route of venture type of growth are hungry for capital,鈥� he told me. 鈥淚t鈥檚 not easy to move from pre-seed to Series A. They need a product market fit, some traction and a great idea fundable by top tier investors. For our companies to get to that phase is a very important milestone as they turn into foundational businesses.鈥�

Bee operates with a 鈥渕achines will win鈥� thesis,聽 Berolzheimer said, with the view that 鈥渕achines will win, and win big.鈥�

Over the years, the definition of pre-seed may have changed. But the need for it has not. Despite Series A, B and C rounds being bigger than ever, there are always going to be startups that need that early-stage funding to get to that point where they can raise bigger rounds. Bee, therefore, should stay busy as a, well, you get the idea.

Illustration:

Photo Courtesy of Bee Partners