This VC Firm Invested $10M in Pinterest When It Had No Business Model

In 2011, Bessemer Ventures invested between $10 million in Pinterest’s Series A round.

Within 8 years in April 2019, the company went public at $19 a share. Today it has over 430 million global monthly active users as of February 2022. 

Here are some reasons why Bessemer Ventures Partners (BVP) placed that bet.

Pinterest had incredible traction

Pinterest’s founders started off building product catalog iPhone applications called “Totes” for high-end brands. 

When they launched the alpha, they noticed that users gravitated toward a social sharing feature. Upon realizing this feature wasn’t available in other products, the founders decided to focus on what is known as “Pinterest” and put “Totes” on the backburner to take advantage of this insight. As a result, Pinterest’s closed beta generated 1 million unique visitors and 20 million page views.

It broke the mold of existing markets

BVP spent some time investigating the following markets: user-generated content, social, eCommerce, and the combination of the three, called “social commerce.”

Pinterest was the first startup they saw succeed in these areas. The startup had some direct competitors such as Svpply / TheFancy, but Pinterest emerged as a clear winner with 10x pageview traffic compared to Svpply / TheFancy. 

There were many options to monetize

Pinterest had a lot of traction, but no business model at the time of the deal memo.

This didn’t stop the investors from wanting to invest. There were a few options to take, such as implementing an affiliate model for merchants that have products pinned on Pinterest or a CPC model. It now makes money via advertising, specifically, promoted pins. 

In 2021, Pinterest generated $2.57 billion in revenue.

Interested in reading the entire deal memo?

You can find it here:https://www.bvp.com/memos/pinterest