Builders & Buyers: Charles Birnbaum of Bessemer Venture Partners on Roadmaps, Resilience, and Building the Future

Builders & Buyers is dedicated to showcasing leading figures in the fintech industry and their contributions. Through candid and in-depth conversations, Stifel Bank’s Managing Directors, Josh Dorsey and Jake Moseley, aim to connect audiences with the thought leaders driving the future of finance. The series will explore personal journeys, company building, investing strategies, and topical macroeconomic conditions.

Notes from Josh Dorsey, conversation moderator:

Hey, y’all. I’m excited to bring you another Builders and Buyers post, and this time, my guest is Charles Birnbaum at Bessemer Venture Partners (BVP). What I found fascinating about Charles is his commitment to his crafts – in all that he does, he’s methodically driven. That’s not just with venture; it’s his approach to all things: running, family, board member, etc. 

Charles brings a dynamic blend of experience, logic, and candidness. He’s a student of history, and his ability to balance the hard-earned lessons from past challenges stands out with an openness to new opportunities. Throughout our conversation, Charles’s reflections on the evolution of venture capital, his emphasis on intellectual honesty, and his commitment to a thesis-driven approach were engaging. His perspective on the importance of roadmaps and conviction in investing offers valuable insight into navigating this complex industry successfully. I hope you enjoy this conversation as much as I did!

Josh: I want to start with a fun one. How do you spend the first hour of your day, and how does that set you up for success?

Charles: I start by checking my email, which is probably the worst thing to do, but after being in venture for over a decade with a lot of portfolio companies, there’s always something going on. So, I put out any immediate fires. Then, I lace up my running shoes and head to Prospect Park. If you’re ever there in the morning, you’ll spot me running the loop—whether it’s 20 degrees or 100 degrees outside, that’s how I start my day. It’s not a super long run, but it’s become almost an addiction over the years. If I skip it, I feel off, and the rest of the day just doesn’t feel right. So, five or six times a week, that’s how I kick things off.

When you say short run, how long are we talking?

About five or six miles.

What about the rest of your day? How do you balance portfolio management, admin work, and deal-making?

Venture is interesting because it evolves as you do. I came from Wall Street with a background in investment banking and capital markets, then moved into a startup called Foursquare during and after business school. But when I joined venture, even with a decade of experience, it felt like drinking from a fire hose. Being on the other side of the table, where people pitch their visions and dreams to you, is a totally different experience. In those early years, it was all about taking meetings, attending conferences, and getting a lot of reps. There’s no shortcut for that. We encourage our younger investors to see as much as possible, explore different sectors, and develop their own style.

In my first few years, I spent a lot of time supporting the partner I worked for, Rob Stavis, attending board meetings with him. Most of my days were filled with meeting entrepreneurs and honing my judgment. Now, 11 years into my venture career, I sit on 13 boards and work closely with 18 companies. So, most of my time is spent supporting those companies and helping them as much as I can. Much of my day is dedicated to one-on-one catch-ups with CEOs, attending board meetings, and assisting with key executive recruiting. I also keep in touch with industry contacts at large enterprises and banks, especially in fintech, insurance, and financial services.

I still meet 10 to 15 new companies a week, although it used to be more. A typical day now might involve a board meeting, meeting a couple of new companies, interviewing a candidate for a CMO role, and inevitably dealing with whatever crisis pops up. Mondays are a bit different, as the firm comes together for investment committee and partner meetings, but outside of that, that’s what a usual day looks like.

How do you typically prepare for board meetings? Is it challenging to get up to speed, or does it vary depending on the company?

It evolves, just like the career. Sometimes, I invest at the seed stage, where it’s just a few entrepreneurs and a pitch deck. Other times, it’s at Series B or Series C, when the company has traction, and you’re giving them the fuel to grow. Different stages bring different board meetings. For a company building its first product, board meetings might be a one-hour monthly catch-up where you’re mostly listening. But for a company with thousands of employees and hundreds of millions in revenue, board meetings are more intense, with independent directors, committees, and more involved work that goes beyond the day-to-day. Board meetings should change as the company grows.

At Bessemer, partners usually serve as either the lead director or one of the lead directors for their portfolio companies, where the team looks to us for guidance. While we rarely take majority positions from our core fund, we’re often the largest minority shareholder.

Do you track the number of companies you meet?

When I started, I was probably meeting 700 to 800 companies a year. Now it’s closer to 300 to 400. Across fintech and financial services, we’re meeting even more as a firm, and there are many super smart people here working besides me. These days, I’m usually not the first person to engage with companies, but I still meet a fair number. We’re very thesis-driven, so if a company doesn’t align with the areas we’re focused on, we won’t waste the founder’s time. We prioritize a thesis-driven approach for early-stage investments and lean more on financial analysis for later-stage ones. So, yes, I’m still meeting a lot of companies—that’s just the nature of the job. 

How do you stay up to date on trends? I envision a combination of meeting with founders and corporations, reading white/research papers and public filings, and history. 

We call them roadmaps. When I first joined, I thought everyone claimed to be thesis-driven, but it’s genuinely a core part of the firm’s culture. These roadmaps are living, breathing documents that a small team works on. They might start as just a notion or a Google Doc with a few ideas and startups in a space and then grow into deeper research—talking to experts, reading reports, and triangulating that with what early-stage entrepreneurs are building.

For example, when I built our insurance technology roadmap, I spent time with executives at large insurance carriers, brokers, and reinsurers. I wanted to understand the real problems they were facing and see how early-stage entrepreneurs were addressing those challenges. Sometimes, these roadmaps evolve into something we publish, like our vertical SaaS, developer platform, or cybersecurity roadmaps. Other times, they remain more specific.

One roadmap I’ve worked on is Fintech for the Aging. We decided to publish it because we didn’t see many entrepreneurs building interesting things in that space. We wanted to signal them that we were interested and to come talk to us, no matter how early they were. That roadmap led to a couple of investments. We noticed that much of the disruption in consumer fintech seemed to cater to younger demographics, even though the boomer generation still holds the majority of wealth. With the transfer of wealth happening and structural challenges not being solved by governments, we saw a big opportunity there.

Sometimes, roadmaps take years to come to fruition. I probably started working on that Fintech for the Aging roadmap four or five years ago, and it’s just now beginning to gain traction in a meaningful way. Rising healthcare costs, the current interest rate environment, and people relying on home equity as their primary asset are making these issues more pressing.

Other roadmaps, like vertically applied AI, are being built more dynamically, tying them to our history in vertical SaaS. It’s a collaborative effort, with partners teaming up to benchmark what’s great right now.

Then, there are roadmaps that are constantly evolving, such as B2B payments. It’s a massive part of the economy that hasn’t been fully disrupted by digitization or technology, so it’s an ongoing focus for us. Some of the seemingly “boring” areas actually hold a lot of potential.

You’ve been in the Fintech VC game for over ten years. What has been the biggest change you’ve witnessed, and how did it force you to evolve as an investor?

We all have our anti-portfolio – those deals we didn’t win or chose not to pursue. It’s part of the process of developing conviction. You can’t just have conviction from the start. You need to make mistakes to build it. In my first few years as an investor, there were deals where I had conviction but didn’t push hard enough, didn’t move quickly enough, or didn’t adjust the price to win the deal. Those experiences shape you. Some of my better companies today are the result of those scars. For example, we were one of the first investors to present Plaid with a term sheet at their Series A, but we didn’t win the deal. That experience taught me a lot and influenced how I handled future investments, like leading the Series A in Alloy and preempting a Series B at Brightwheel when the business was still quite early-stage.

And what about BVP as a firm? How has it evolved?

At BVP, our approach isn’t top-down. We don’t have an institutional philosophy on investing or a set style. Instead, it’s about intellectual honesty—doing the work, going deep, trusting your process, and developing conviction. We give individual investors the space to do their thing without making group decisions. We hire partners externally from time to time, but we primarily grow from within. I started as an associate, then became a VP, and eventually a general partner. The philosophy here is to let people learn by doing before they get their own checkbook and make commitments on behalf of our LPs.

Of course, how we approach a biotech deal, a deep tech defense deal, or a fintech deal will differ because those spaces are different. Deal dynamics change based on the sector, whether we want to lead a syndicate or take it all ourselves. What doesn’t change is our commitment to having a team that goes deep into the space, develops a prepared mind, and makes a call. Ultimately, we trust the deal team to make the final decision.

Rising rates have shaken the venture system post-2022, with fintech companies experiencing the most significant shock wave. What have you observed, and what did you learn about investing and company building?

It’s a tough time for entrepreneurs who have been at it for a while, especially those whose products are now mature and ready for prime time. In enterprise software, it takes time to become feature-complete and truly disrupt incumbents. Many companies raised capital during 2019-2021 and used that time to continue building while adjusting their operating expenses. Now, some of them are strong enough that they won’t need to tap into the capital markets again until they’re ready. The challenge for these entrepreneurs is shifting their teams’ focus from raising capital to generating cash flow. It’s a leadership moment, particularly for first-time founders, who need to get their teams excited about self-sustainability rather than chasing big valuations.

In venture capital, there are always companies that probably shouldn’t be financed and should either fold into something more substantial or call it a day. For a long time, there was so much capital in the system that companies were able to stay alive longer, even when they shouldn’t have. That’s starting to change, but it’s been a slow process. This downturn feels different because it’s been more methodical. With so much capital out there, many of the strongest companies have managed to weather the storm by finding ways to survive.

Is it more challenging for companies to secure liquidity events or get acquired in the current market?

The M&A environment has been quiet for two main reasons. First, the best assets raised capital at high prices and have strong balance sheets, so they aren’t desperate. You don’t see many attractive assets in distress right now. Second, antitrust regulations, both under the current administration and the previous one, have made acquisitions more challenging. Buyers are skittish and hesitant to pursue significant deals due to the legal distractions and headaches involved.

We’re in a tough spot because we need liquidity to recycle capital back into the ecosystem, but the M&A environment is cooling due to these factors. The IPO market will need to step up because M&A just isn’t delivering right now, largely due to these dynamics. Although it’s quiet, it’s more about timing. Good assets aren’t under pressure, thanks to their strong balance sheets.

Given that many fintech business models rely on interest rates, have you noticed any significant changes in the sector recently?

Yes, absolutely. If you’re an entrepreneur with the vision and the stomach to start a balance-sheet business right now or something direct-to-consumer in fintech or insurtech, you’ll face much less competition than you did seven years ago. There’s a contrarian opportunity for early-stage investment in talented entrepreneurs with big ideas, but you still need a strong hook, just like before. Betterment disrupted wealth management with their fee model, and Robinhood did it with free trading, despite how they make money on the back end. You need that kind of compelling angle to build something new. That hasn’t changed.

We’re still open to those kinds of opportunities, and now might actually be a better time since you’re less likely to have several fast followers right behind you. However, if you’re in the lending space and need balance-sheet partners, it’s tougher to raise capital, and I’m seeing that in the market.

The lessons from interest rates rising so quickly won’t be forgotten by anyone in fintech during that time. For example, anyone involved in real estate transactions, especially those tied to the refi market, saw their business vanish almost overnight. It was brutal for those with transactional models in that space.

On the other hand, with rates rising, we saw a resurgence in interest from retail investors in fixed-income products like T-bills and high-yield savings accounts. That was a boon for the industry. Challenger banks doing business banking became profitable overnight due to the net interest margin they were able to pass through to their customers. So, while real estate and proptech suffered, some direct-to-consumer plays that had quick CAC payback but low lifetime customer value in the U.S. also took a hit.

I’m already seeing new pitches in the space. If rates come down, we’ll likely see another wave of activity in the mortgage and real estate sectors. The investment landscape will change again, and you’ll see a dramatic shift in certain revenue lines.

One of the biggest challenges as a fintech investor is trying to understand whether something is driven by macroeconomic factors or not. You almost have to break it down to a sum-of-the-parts analysis. You want to remove those macro factors and see if you’re still excited to invest in the business over the long term. We invest over longer time horizons, for 10 years or more in some cases, so you have to consider how a business model will react to different cycles. But that’s easier said than done. It takes a lot of discipline.

What emerging fintech trends or technologies do you find most exciting right now? What’s BVP focused on?

Fighting fraud has been a successful roadmap for us over the years. One of our more mature portfolio companies, Alloy, has become a leader in identity and transaction monitoring, and it’s essentially become an orchestration layer in that space. We get a lot of great insights from their team, and they integrate powerful vendors underneath them.

I think emerging vendors in fraud detection are well-positioned, especially in a world where fraudsters are leveraging generative AI and real-time payments are becoming more common. Some people see fraud detection as a niche area that’s overcrowded, but I believe it’s changing dramatically. It’s more akin to cybersecurity than a niche sector, and I see it as a massive space with opportunities for multiple winners, each focusing on different types of fraud.

Another area we’re spending more time on now is stablecoins. We haven’t been as deeply involved in crypto over the years, but we’re seeing a lot of interesting developments there. Stablecoins have the potential to significantly lower costs in cross-border payments and eliminate the need for traditional correspondent banking systems and legacy platforms that add cost and delay.

We’re spending time developing our point of view here because there’s a lot of growth potential in remittance and B2B payments, where FX plays a big role, and stablecoins could bring meaningful change. This is a true fintech development, unlike the more insular crypto and Web3 activities. 

Lastly, the fintech for the aging roadmap continues to be a focus. The generational transfer of wealth that’s starting to take place creates many opportunities in wealth and asset management. 

You contributed to a post about logistics and the intersection of logistics and AI. Is that still something you’re focusing on?

That was part of a specific roadmap around logistics and the startups in that space. But the broader theme is something I’ve always thought about. One of the last true arbitrage opportunities in fintech is around suppliers to large corporations waiting to get paid. It’s an unfair reality of the economy, and it’s a data problem that software and digitization should be able to solve.

Small suppliers shouldn’t have to wait to get paid by larger corporations with strong balance sheets and no cash flow issues, yet they’re stuck with net 45 or 60 payment terms. That’s a problem I’ve always been focused on, but it’s been a challenging market for entrepreneurs to break into. We’re spending time on it, and I’m always open to solutions. The issue of employees waiting to get paid by their employers is another problem I believe software will eventually solve.

You co-authored another post, The Five Waves of Fintech, and I’ve heard you’re a history nerd. What has surprised you the most about what has and hasn’t changed in the financial system?

Supply chain finance is one area I thought would have been solved by now, but it hasn’t. Another is the process of buying a life insurance policy. It’s still manual and frustratingly slow. I don’t know if you’ve ever had to purchase a life insurance policy, but the process, especially at a time in your life when you really need it, is painful. You still have to get fluids drawn and wait, even when you’re just trying to check that box when starting a family. It’s hard to believe that hasn’t changed yet.

You can get an accelerated policy for a small amount, but that often comes with extra costs. Certain aspects, like how risk products are underwritten and how long businesses have to wait to get paid, continue to have a significant impact on what they can pay their employees. These are two problems I would have thought would be solved by now, but they haven’t been.

What about people’s relationship with money?

That’s a key part of our thesis in the wealth management space. We invested in a platform for registered investment advisors because we believe people will always want someone to talk to about their finances. Our thesis is that the new generation of advisors and clients doesn’t need a fancy office to walk into—delivering advice over platforms like Zoom works just as well, if not better.

For most people, it’s not just about generating alpha or understanding sharp ratios. It’s also about having someone to discuss what’s important to them and how to match that with the right financial products. Even with AI enabling more automation, the role of the advisor isn’t going away. It’s similar to what we’re seeing in therapy and legal services, where technology empowers professionals to handle more clients and offer services at a lower cost.

You’ve seen a lot of companies. Are there any specific characteristics in founders or how they operate that you find more predictive of success?

They’ve got to be a little crazy because they’re choosing a 24/7 life. Building a team and managing the constant grind is incredibly tough. I deeply respect all the founders I work with, but I don’t envy them – it’s tough. 

You want them to believe in what they’re doing so deeply, and it has to come from a place of either pain or deep conviction because it’s going to be incredibly hard, especially in the early stages. I want to understand what motivates them and why they’re doing it.

For me, the best indicator of success is the team they’ve built. If they can convince really talented people to take a big leap, accept huge pay cuts, and believe in the equity of something that doesn’t have much traction yet, that’s a strong first test. Because as a founder, you’re always selling, whether it’s to customers, investors, or new recruits. Even when you’re at hundreds of millions in revenue, you’re still recruiting better people. It never stops.

The ability to genuinely convince people, without coming across as too salesy, is key. And this can look different across industries. For example, my company Farther, which is building a wealth management platform, has to recruit RIAs to their platform. Meanwhile, Brightwheel, which sells preschool and daycare software, had a lot of customer love and product-led growth early on. Founder-market fit needs to align with the type of business. Unfortunately, there’s no universal formula—and sometimes, you get it wrong.

What skill or experience do you lean on the most as an investor? Or, to put it in another way, what do you invest in to bring out the best in yourself?

That’s a good question. Honestly, it’s the reps and the time. The best tool is making mistakes and learning from them, then trying not to repeat them. I spent six years in finance and three years working at a startup that went through significant growth in product and business development. Those experiences shaped me in many ways, but they don’t necessarily make me a better investor. What makes you a good investor is just doing it—being in the game, making mistakes, and keeping an open mind.

The hardest part now is learning from past mistakes without overcompensating, like being too afraid to revisit areas where things didn’t go well. You have to keep an open mind and ask, “Why now?” in venture, especially when considering an opportunity that might be ripe for another shot, even if it didn’t work out before.

People often talk about pattern recognition as something a good investor has. What’s your take on that?

Pattern recognition is important, but it can also be a flaw. I cover a broad range of areas in financial services: B2B payments, mortgage software, insurance, vertically applied AI, and more. It’s a lot of different things, so you can’t apply the same pattern recognition across the board. You need to adjust. When a team is applying breakthroughs in generative AI to a sector they know well, for example, you can use some of your classic software investing patterns, but you still need to ask, “What’s different now? What don’t I understand?” You have to do the work. There’s no shortcut for that.

If you could wave a magic wand, what fintech product or solution would you love to see built that doesn’t yet exist?

Probably a supply chain finance product. If you could skip the go-to-market challenges of getting large corporates to adopt the product and push it down to their suppliers – if you could get all the suppliers to share the necessary data to underwrite transactions and just pay everyone instantly, instead of having this unnatural creditor dynamic –that would be the solution I’d love to see.

Beyond the interview:

Here are links to where you can get to know Charles better.

Website

LinkedIn