Investing with Jenny Gao of Bessemer Venture Partners

Investing with Jenny Gao of Bessemer Venture Partners

Dashbot sat down with Jenny Gao, Venture Capital Investor at Bessemer Venture Partners, to discuss investing in the conversational space before her appearance as a panelist at this year’s SuperBot Conference in April.

Tell us about yourself.

I’m originally from Seattle, but went to school at Harvard and have stayed on the East Coast ever since. I’ve always been excited by how technology can make a business or consumer’s life better and all of the nuanced, interconnected ways to grow a business. Venture was a great combination of those two things and I’ve been in the Bessemer NYC office for the last 3 years. I cover a couple different investment areas for our firm, one of which is emerging voice and chat platforms.

Can you give us some background on Bessemer Venture Partners?

Bessemer Venture Partners is an early-stage venture capital firm. Our partners help founders create companies that matter, starting with seed and Series A investments and supporting them every stage of their growth. Over the last fifty years, Bessemer has backed more than 120 IPOs, including Shopify, Yelp, LinkedIn, Skype, Lifelock, Twilio, SendGrid, DocuSign, Wix, and Mindbody.

Why did BVP choose to invest in conversational user interfaces?

We try to think a lot about larger market shifts and macro theses when investing in new areas. We saw a cambrian explosion of chatbots throughout 2016 as the technological advancements around machine learning and NLP accuracy made it very possible to create accessible and decent conversational experiences. It was only in the last couple of years where machine accuracy in NLP surpassed human error rates, which meant we were now in the zone of effective and automated conversations.

We also thought about many of the logistical tasks that just work much better via chat or voice skills instead of traditional search. For instance, coordinating travel feels more natural to go back and forth answering questions on booking details and dates rather than just clicking through webpages. Separately, it became pretty clear that people prefer chat and messaging platforms rather than talking to a live person as it feels much less invasive.

What are investors looking for in a chatbot or voice product?  

Investors are aware of how much activity there is going on in the market but also how early it is for deep enterprise use cases. We’re looking for signs of adoption in really sticky use cases. It’s a good sign when product usage and sales moves out of innovation centers and into line of business units. We’re also excited when more “traditional” enterprises start to adopt these technologies in a serious way since it means the technology is no longer in early adopter phase.

What considerations do you make when looking at a company to invest in?

As an early stage investor, I still spend a lot of time thinking about the caliber of the team and whether they have the right set of experiences to go after a specific opportunity. In a relatively new space like conversational interfaces, it’s also really important for teams to be scrappy and able to tread water as they figure out market timing and opportunity.

The other thing I consider is early signs of repeatability. For instance, once you start to get playbooks for onboarding a set of customers in the same way or once you can acquire a set of users in a repeatable fashion, then you can have higher confidence that things are beginning to work.

What does the process from initial interest to investment look like on your end?

Often it’ll be an ongoing conversation with the founders months in advance of an actual fundraise. That way, when the time comes for an investment round, we’ve had a long standing relationship and several data points over how the company has performed over time. We also do a lot of our own internal research to better understand the broader trends, the competitive landscape, and the financial profile. We try to be much more thesis driven than opportunistic, so often will reach out proactively to founders when they’re still quite early if we’ve spent time understanding a certain industry or sector.

Catch Jenny in San Francisco April 2nd at SuperBot 2019 for the investment panel. Get your tickets today here to learn more about all things conversational AI.

About Bessemer Venture Partners

Bessemer Venture Partners is a venture capital firm based in Menlo Park with offices in San Francisco, Redwood City, New York City, Boston, Israel, and India. Founded in 1911, the firm has invested in over 120 IPOs but is also notable for publishing an “Anti-Portfolio”, a list of companies that went on to be very successful after Bessemer passed on them.

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