Bee Partners closes fourth fund to add more capital for pre-seed founders in deep tech

For pre-seed founders innovating in the deep tech space, Bee Partners wants to be partners with you. It closed on $50 million in commitments for its fourth fund, which Michael Berolzheimer, managing partner, said was oversubscribed.

The San Francisco-based venture capital firm invests in companies focused on artificial intelligence, machine learning, robotics and frontier technologies. Within that deep tech space, Berolzheimer sees more innovation coming out of laboratories than ever before. So much so that Bee Partners experienced an increase in deal flow of 40% year over year, despite a slow down of funding into the area, he said. Deep tech was still the second-most invested segment in the second quarter of 2023, after energy, according to Dealroom.co.

“The challenge, obviously, is that a lot of deep tech companies are getting funded, just not necessarily getting the funding that we think it deserves, given the disruption and the innovation that’s coming out of that space,” he said. “That’s a broad statement because deep tech is so big. There’s still plenty of activity happening, it’s just a little bit more discreet.”

The firm’s LPs include a Boston-based university endowment and U.S.-based family offices. It is among a handful of firms investing at the pre-seed level that closed on new funds recently, joining the likes of Onvi Capital and Garuda Ventures.

However, Berolzheimer told TechCrunch that Bee Partners is not like others, explaining that his firm is among just a handful willing to write relatively large checks at such an early stage.

“We like to say, ‘no capital, no customers, no code, no problem’,” he said. “We’ll invest in a team with a great idea, even in a company not incorporated yet. We are literally writing that first check only days after incorporation and we’re comfortable doing so. For a founding team to be able to pick up $500,000 or $1 million at a time is very unique.”

A second unique aspect is Bee Partners’ partnership model, hence the name. While other firms typically provide one person for each portfolio company, founders get to work with Bee’s entire team of partners, Berolzheimer said.

Bee Partners IV has already deployed 20% of its capital into nine companies, including three generative AI companies. One, Nova, raised $2.4 million for tools to protect brand integrity. This year, it was also an investor in fermentation technology company Pow.bio’s Series A and co-led a seed round in Wellplaece, a product-purchasing platform for dental offices.

This fourth fund is the firm’s largest to date and gives the firm just over $130 million in total commitments. Its third fund, closed in 2019, was $43 million. Bee Partners typically invests in 25 companies per fund over the course of about four years. Its average check size is $800,000, but has invested as low as $350,000 and as high as $1.5 million. Portfolio companies have an over 60% matriculation rate to Series A, according to the firm.

“We decided to stay concentrated at that 25 mark,” Berolzheimer said. “It affords us the time and energy to actually allocate to each of our companies, which is the whole purpose for why we started Bee Partners in the first place — to support founders at inception. We help them get to product market fit and then get into Series A.”