Venture-capital firms tout ‘anti-portfolios’ to show a degree of humility; one critic calls it ‘performative BS’

By Eric Sylvers


For venture capitalists, there are the home runs that make them millions—and the ones that could have made millions, but were passed on. The investments that got away include Meta Platforms Inc.’s Facebook before the thumbs-up became ubiquitous, AlphabetInc.’s Google before it became a verb and Robinhood Markets Inc. before meme stocks became a thing.

John Frankel, a partner at New York-based FF Venture Capital, declined a chance to invest in Robinhood at a $10 million valuation. The online brokerage was worth $32 billion when it started trading on Nasdaq a few years later in 2021. 

Win some, lose some

“These guys were technically incredibly strong, but they knew nothing about marketing and their financial model was ridiculous,” said Mr. Frankel, who previously held a dozen positions during a 21-year career at Goldman Sachs Group Inc. “But they made it. We were wrong. What can I tell you?”

Even though Robinhood shares are now valued at only about one-fourth the price set for the initial share sale, the run-up represented potentially rich investment gains, especially if shares were sold near their highs.

Unable to forget their biggest mistakes, some venture investors—who by definition are mostly investing in companies before they become successful—are embracing them, talking about them, even writing them down. Bessemer Venture Partners, a large San Francisco-based investment firm, popularized the trend with a page on its website dedicated to the “anti-portfolio.”

A Bessemer partner declined to make an early investment in Facebook. PHOTO: L.G. PATTERSON/ASSOCIATED PRESS

The company’s “long and storied history has afforded our firm an unparalleled number of opportunities to completely screw up,” declares the Bessemer page.

Bessemer’s long list of misses includes Google in 1999, Tesla Inc. in 2006, Apple Inc. at a $60 million valuation and Airbnb Inc. at $40 million. And then there was Facebook, shunned by Bessemer partner Jeremy Levine.

“Jeremy Levine spent a weekend at a corporate retreat in the summer of 2004 dodging persistent Harvard undergrad [and Facebook co-founder] Eduardo Saverin’s rabid pitch,” Bessemer’s anti-portfolio says. “Finally, cornered in a lunch line, Jeremy delivered some sage advice, ‘Kid, haven’t you heard of Friendster? Move on. It’s over!’ ”

That unflinching honesty has become lore in the venture-capital world.

“I’m not sure how great it is to be known for what you didn’t do,” said Mr. Levine, whose hits include early investments in LinkedIn, Shopify and Yelp. “Now we have a page on the website on the investments that turned out really well, and that is almost as popular as the anti-portfolio, so we feel much better about ourselves.”

In 2021, booming economies and post-Covid lockdown enthusiasm led to a record number of U.S.-based companies reaching a pre-IPO valuation of at least $1 billion, according to analytics firm CB Insights. As the valuations surged, so did the fear of missing out.

“The fear of missing out drives everybody, this is a very competitive industry,” said Alastair Mitchell, a partner and co-head of EQT Ventures. Despite that fear, he passed up the chance to invest in Revolut Ltd. because he said Revolut’s already high valuation had spooked him. The company is now Europe’s most highly valued unlisted financial technology firm. “When you miss out it feels like a gut punch,” he said.

Alastair Mitchell of EQT VenturesPHOTO: EQT VENTURES

Mr. Mitchell did get an early investment in Pleo, which manages employee expenses for companies and got a valuation in late 2021 of almost $5 billion.

By touting their warts, firms in a field not known for its modesty can show a degree of humility and that they are learning from their mistakes, potentially making them appear more trustworthy to investors. 

There are skeptics. Hunter Walk, a partner at venture firm Homebrew who himself has publicly admitted some of his misses, called anti-portfolios “performative BS.”

“The next best thing if you missed investing in a startup that became very successful is to signal that you saw the deal even if you chose not to invest,” Mr. Walk wrote in a blog post.

“Failure résumés” also had a moment in academia several years ago. Melanie Stefan, a professor of physiology at Medical School Berlin, helped popularize them.

“As a junior scientist you sometimes feel like you’re the first ever to fail,” said Dr. Stefan, who laid out her idea in an article for Nature. “I thought if people did a failure CV it would remind them of what they achieved and might inspire another scientist to keep going.”

Inspired by Dr. Stefan, Johannes Haushofer, a professor of economics at Stockholm University, published his CV of flops, which includes numerous scholarships rebuffed, papers rejected and funding denied. It ricocheted around the internet, prompting him to write: “This darn CV of Failures has received way more attention than my entire body of academic work.”

Greg Kidd, a co-founder of early-stage venture firm Hard Yaka, got in on the first round of Robinhood through another fund. But he is still smarting over passing up on the seed round for Revolut, which got a $33 billion valuation in its most recent funding round in 2021.

“I don’t know why I was so concerned about the company making money from Day 1,” said Mr. Kidd. “It was a hit and I blew it. I tried to cover up my mistake by buying in at a later round at a much higher valuation.”

Other venture-capital firms publishing their anti-portfolios include Vancouver, Canada-based Version One Ventures, which passed on Honey Science Corp. at a $12 million valuation in 2015. PayPal HoldingsInc. bought the online shopping and rewards platform for $4 billion less than five years later. (“$12 million felt kind of high,” Version One’s anti-portfolio says.)

French venture firm ISAI and Milan-based Italian Angels for Growth have helped introduce the anti-portfolio to Europe.

In 2017, Rouven Dresselhaus, a managing partner at Berlin-based Cavalry Ventures, had a chance to invest in Coinbase Global Inc., a crypto exchange that hit a valuation of $85 billion at the end of its first day of trading in 2021. 

The Coinbase logo at the Nasdaq site in New York in 2021. PHOTO: SHANNON STAPLETON/REUTERS

Mr. Dresselhaus was investing at the last minute after another investor fell through. A day before the deadline to wire the money, Hurricane Irma hit the Caribbean, including the British Virgin Islands, home to Coinbase’s investment vehicle. The storm knocked out much of the region’s infrastructure and hijacked Mr. Dresselhaus’s attempt to meet the deadline.

“All of us knew Coinbase, we used it ourselves, we were bullish on crypto at that time,” said Mr. Dresselhaus. “We saw a huge golden pot waiting for us at the end of a not-too-distant rainbow.”

Never mind that Coinbase’s market capitalization has fallen by about 90%. Mr. Dresselhaus thinks he would have cashed out up at least 100 times on his investment because he would have sold the shares as soon as the post-IPO lockup ended.

Ruth Foxe Blader, a partner at London-based venture-capital firm Anthemis Group, missed an early chance to invest in AcreTrader Inc., a platform for buying farmland, because her associate following the company was on vacation when the company launched and then quickly closed a funding round.

Ruth Foxe Blader of Anthemis GroupPHOTO: ANTHEMIS

About a year later, Anthemis led AcreTrader’s next funding round, but only after Ms. Blader didn’t take her eyes off her inbox for weeks for fear of missing out again. By then, the company’s valuation had risen considerably. 

“We managed to shepherd in the deal we’d missed a year earlier. It was highly satisfying, all except the price,” she said.