Yesterday, we announced the close of BCV’s fourth fund with over $350 million in commitments. While this might not be a head turning number in an industry that has recently been flooded with news around muti-billion dollar fund closes and several hundred million dollar round sizes, for me, it is a considerable milestone. Especially considering where we started nine years ago with a $12 million fund, two partners with no VC experience and only a vision of building a leading venture firm. While this dream seemed so far off back then and almost impossible to conceive, today for the first time it feels achievable, palpable. If feels like all our hard work, hustle and grit put us on the right path towards achieving this moment.
For the first time, in this seemingly nonstop cycle of “raise, deploy, repeat”, I wanted to take a step back to reflect on our journey. I never did so previously because the timing never felt right or there were always near-term priorities to be handled. The truth of it, rightly or wrongly, was that, deep down, I felt that we hadn’t fully achieved something or even earned the right to talk about our journey in the way I wanted to.
Having closed our oversubscribed fourth fund, the time finally feels right to take a small breath, celebrate our achievements — both the performance of our funds and the incredible team we have assembled — learn from our failures, reflect on what to improve, and share our thoughts on what’s next.
Our Journey
Looking back at our journey, while there is so much more for us to do, I feel immensely proud of the firm my partner, Mir Arif, and I have built and the progress we have made. The path we chose is unusual to say the least and our journey has been an incredible adventure full of crazy moments.
When we started, our main objective was to survive, focus on moving forward, invest in great companies, generate returns for our LPs and raise our next fund. We were building a firm while simultaneously learning the business.
We evolved our investment strategy from traditional growth equity in our early days to a true venture growth model. We found our calling backing companies who were shooting for the stars and working with entrepreneurs thriving to build massive businesses and aiming to be change agents. With barely any management fees early on to support ongoing expenses and no salaries (my partner had to fund operations out-of-pocket), we relied solely on interns to support us. As we raised more capital, we started building our team. On the investments side, we hired incredibly talented people right out of school and spent a lot of time mentoring and training them — today we have an amazing team that is as motivated as the partners on growing the fund and the BCV franchise. On the operations side, we were lucky to have met and hired Marc Rappoport, our CFO and a veteran of the VC industry, who single handedly built this function over the past couple of years. Over time, our team worked closely together to develop unique tools and processes to help us gain more efficiency in all aspect of our business. Although we were much smaller than most of our co-investors, we wanted to pull our weight and support our portfolio companies in a unique way. To do this effectively, everyone had to pitch in and work hard, leveraging our skills and strength, to put together a structure around adding true value to our portfolio companies.
We have now invested in over 40 incredible companies and worked with inspiring founders. 40% of our companies have reached unicorn status and many are building category defining businesses and I could not be prouder of that. We have also built a network of over 100 CEOs and founders, 60 of whom invested in our latest fund. To top it all, we won several awards and recognitions including most recently being named to Inc. Magazine’s 2021 list of Top 25 Founder-Friendly VC/PE Firms in the IT sector.
At the core of our achievements to date are a set of guiding principles that were key to helping us get here.
1. We were real, no BS, and straight forward.
I don’t know if it’s our immigrant roots or some other factor, but Mir and I are both straight shooters who value honest and direct communication. Starting at the bottom and growing is a humbling experience on its own that teaches you the true meaning of grit. Turns out there’s a place for that in the VC world! If you asked me to name the single most important factor behind BCV’s growth, my answer would be this commitment to treating everyone the way we like being treated: with humility, honesty, kindness and respect.
What’s more, being “real” helped attract like-minded people. One of the unexpected benefits of my journey at BCV is that it resulted in dozens of new friendships. I distinctly remember looking at the gathering during my 2019 wedding celebration in Lebanon and being amazed at how many of the people closest to me had come from my work at BCV and traveled all the way to celebrate with my wife and me.
2. We always put the company we invest in first.
Needless to say, we started BCV with the goal of building a successful venture firm. We pursued this goal by putting the needs of our portfolio companies first. The success of our companies will ultimately lead to the success of our firm. Every day, we are faced with decisions of how to allocate our time and investment dollars. Those decisions are simplified when your north star is doing what is best for your portfolio company. Yes, that can (and has) had negative impact on our bottom line at times. But this approach has helped companies move forward both in good times and bad. As they work with us, founders discover that we are truly in their corner. That means providing guidance (and sometimes additional funding) when they need it. Sometimes, that means being a supportive ear; someone who will listen and understand, because being a founder is a lonely journey. Putting companies first also means knowing when to stand back. We made the decision early on not to require board seats. As a result, founders often feel free to share their issues with us in an honest and open fashion more than they do with investors who are board members. This type of open communication enables us to be more responsive to their needs and provide the best and honest advice needed in tough situations.
3. We worked our tails off.
Kind of a cliché. Everyone works hard especially in an industry like ours. While that may be true, we came to the VC world as non-VC people. When you don’t have the same level of knowledge, capital or connections as your competition — which was the case when we started — you’re compelled to make up for the difference through hard work and hustle. We started Blue Cloud Ventures with that mindset. It has worked for us, so we keep doing it! Our LPs and company founders are grateful knowing that we are putting in the extra hours on their behalf. Our employees understand that a relentless work ethic is central to our culture. The thing is, when you love your work — and when the work produces meaningful rewards — you want to keep doing it. And so, we do!
We Could Not Have Done It Without You
Writing this article brought up a lot of strong feelings for me — mostly of gratitude. Particularly, gratitude towards all the people who have played a part, large or small, in our journey. When we started Blue Cloud Ventures, I was a 25-year-old with zero experience in the VC world. It is only with the support, faith and friendship of hundreds of investors, founders, partners and colleagues that we’ve been able to reach this moment. That’s why I can’t mark this occasion without sharing some heartfelt thank you’s.
To my incredible wife, who has been next to me since day one and whose belief, love and support never wavered especially as I was quasi absent spending most weekends, late nights, and holidays at work. Thank you for being incredible and giving me purpose.
To the many Limited Partners around the world who trusted us with their capital, thank you for putting your faith in us, for your encouragement, and for your willingness to share your knowledge and contacts so generously with us and our portfolio companies. Joel Lou, our co-founder and Operating Partner, has been in the trenches with us evangelizing the BCV story from day one. He was instrumental in getting some of the leading business families and corporates across the Middle East and Asia-Pacific to partner with us and our portfolio companies.
To the members of the BCV team, thank you for sharing your talent, commitment and time with us. It goes without saying that you have made this moment possible. And it’s your efforts and enthusiasm that will enable us to reach new milestones in the future.
To the portfolio company founders who welcomed our investment, thank you for being the reason we exist! It’s your passion, your ideas and your potential that makes this business so enjoyable for us. Thank you for enabling us to be a part of your remarkable journeys.
Finally, to my co-founder and partner, Mir: it’s hard to find the right words to express my gratitude for all you’ve done over the years. Since there’s not enough room to cover it all, I will focus on thanking you for one thing, namely, taking a chance on me. Offering to partner with me despite my lack of experience remains a defining moment in my life. Your willingness to struggle through the early tough times is an ongoing source of inspiration. Thank you for being a true partner in the very best sense of the word.
What’s Next For BCV
While it’s great to take a moment to reflect on the journey that got us here, our focus remains on the future. And our plans for BCV’s future are clear: we want to stick to our principals and do more of the same, but bigger, better, faster and stronger. That means doubling and tripling down on the things that brought us to where we are.
First and foremost, we want to double down on building the capabilities needed to be an even better partner to our portfolio companies. Add more value and become the preferred partner of choice. Founders and their management teams have come to rely on us for support and guidance across a range of their needs. As these companies grow, and as our portfolio grows, we will keep reinvesting in these capabilities to become best-in-class. It is not an easy task, but the BCV team is determined to make it happen. We are also committed to continue investing in the personal growth of our existing team members as we see them as the future of our firm.
Second, we are focused on helping more market leading companies and co-investors discover who we are and how we can help. One of the drawbacks of starting small and being outsiders to a certain extent means that not a lot of folks in this ecosystem know of BCV and our capabilities. This needs to change. We will be investing considerably on building our brand. One great thing about having built a business on our core values is that we’ve amassed a network of people who share those values and who are eager to evangelize BCV to like-minded colleagues. Those introductions inevitably lead to new opportunities.
Some investors win deals because they simply overpay, especially in today’s environment. Incredible investors win deals because of their capabilities, value-add and brand. We thrive to become incredible investors. To the founders who turned us down — those who refused to take a meeting as well as those with whom we could not get a deal done — thank you for forcing us to be more tenacious in our outreach and more thoughtful in how we approach companies and transactions. You motivated us to become better, aim higher and work harder.
Today we celebrate closing our fourth fund. With the fund already almost half invested, I am incredibly excited about what is to come. Our team is young, hungry and restless and we are eager to keep building BCV into the next leading venture growth firm.
To those who made it to the end of this article, thank you for taking a few minutes to celebrate with us. I look forward to sharing more of our story with you in the months and years ahead.