Investment Committee Memo · Bessemer Venture Partners
Investment thesis
Pinterest is the first company BVP found that demonstrates clear success at the intersection of user-generated content, social, and e-commerce.
We have also explored a number of different companies that play at the intersection of these three trends (“social commerce”). Pinterest is the first site we’ve found that shows demonstrable success in this area.
Why the firm invested
BVP recommends the investment due to Pinterest's talented team and strong traction in a potentially large market, despite a high valuation and early risks.
Pinterest represents an opportunity to invest in a talented early stage team with noteworthy traction against what could be a very large and compelling business. Despite the expensive price and the inherent early stage risks, we are bullish on this opportunity and recommend this investment.
Product
Pinterest is a social e-commerce website allowing users to curate product catalogs and discover products by following tastemakers.
Pinterest is a very early-stage Palo Alto-based company with a social e-Commerce web site that lets users in its community curate catalogs of products and discover products by following tastemakers.
Traction
In February 2011, Pinterest reached 1 million unique visitors and 20 million page views while operating in closed beta.
Despite being accessible only through a closed beta, the site’s traction has accelerated in the last few months and in February registered 1m unique visitors and 20m page views.
Pinterest achieves strong user retention, with 74% of visitors returning to the site.
Thus far, 74% of Pinterest’s visitors return to the site, and of those that return, visitor loyalty has been extremely impressive:
Team
Pinterest co-founders Ben Silbermann and Paul Sciarra met at Yale, graduating in 2003.
Pinterest was founded by Ben Silbermann and Paul Sciarra. The two met while at Yale from which they received undergraduate degrees in 2003.
Business model
Pinterest has not yet developed a business model and is currently not monetizing any of its traffic.
Pinterest has not yet developed a business model and is not currently monetizing any of its traffic.
Competition
Pinterest emerged as a leader over competitors Svpply and TheFancy, achieving over 10x their pageview traffic by early 2011.
Beginning in January 2011, Pinterest started to pull away from these players and emerged as a clear leader with more than 10x the pageview traffic and the reach differential shown here:
Investment context
BVP signed a term sheet to lead a $10M Series A investment in Pinterest at a $40M pre-money valuation with a 13% unallocated option pool.
We have signed a term sheet to lead a $10m Series A investment at a $40m pre-money valuation inclusive of a 13% unallocated option pool.
What founders can learn
- What actually moved the decision: Bessemer Venture Partners wrote that BVP recommends the investment due to Pinterest's talented team and strong traction in a potentially large market, despite a high valuation and early risks.
- The traction evidence that carried weight: Bessemer Venture Partners wrote that In February 2011, Pinterest reached 1 million unique visitors and 20 million page views while operating in closed beta.
- How the team was judged: Bessemer Venture Partners wrote that Pinterest co-founders Ben Silbermann and Paul Sciarra met at Yale, graduating in 2003.
- How the model was assessed: Bessemer Venture Partners wrote that Pinterest has not yet developed a business model and is currently not monetizing any of its traffic.
Source and provenance
Investment Committee Memo published by Bessemer Venture Partners on bvp.com. Read the original
