Category: flybridge

Now Is The Time to Play Offense

This post is by Jeff Bussgang from SEEING BOTH SIDES

For the past six months, there has been a lot of handwringing about the market downturn. Most everyone has been advising entrepreneurs to marshal their capital, cut costs, and extend their runway. In essence, play defense.

Many investors have been creating a whiplash effect with their portfolio companies. As one of my CEOs put to me, wryly — “In my January board meeting, I wasn’t hiring and scaling fast enough and told to ‘go, go’, go’. In my April board meeting, I was burning too fast and was told to ‘stop, stop, stop’.”

Her experience rhymes with many stories I’ve heard.

But recently, as the dust has settled a bit, I am seeing the best entrepreneurs realize that now is the time to play offense. The “play offense” playbook is well known to many, but hard to execute during a downturn. With the start of the football season around the corner (go Patriots!) and as I have been talking to my most talented entrepreneurs, I have been thinking more and more about what playing offense looks like in 2022–2023. Here’s the six-part playbook I’m hearing:

1) Talent acquisition. A few years ago, it was impossible to acquire talent. The best engineers, sales reps, and growth managers could name their price and had a dozen offers in front of them. Today, layoffs — (Read more...)

Flybridge 2022

This post is by Jeff Bussgang from SEEING BOTH SIDES

We are pleased to announce that Flybridge has raised a pair of new, oversubscribed funds with aggregate commitments of $150 million to continue our mission of backing ambitious founders at the pre-seed and seed stage. With this latest fundraise, Flybridge crosses $1 billion in assets under management, reflecting the outstanding success of our founders and portfolio companies during our 20-year history.

The new capital includes a $110 million Seed Fund (our sixth), which will invest in very early-stage startups leveraging the power of community as a source of competitive advantage, as well as an Opportunities Fund (our first), which will invest exclusively in our fast-growing portfolio companies as part of an outside-led growth financing. The Seed Fund has already closed eight new investments in AI/robotics, cybersecurity, low code/no code, creator economy, web3/crypto/NFTs, and SaaS. Our first Opportunities Fund investment was our recently announced investment in the Series B at Chief, a company we first invested in when we co-led the $3 million seed round in 2018.

The new funds complement our four Network Funds: (1) XFactor Ventures (focused on female founders), (2) The Community Fund (focused on under-estimated founders), (3) The Graduate Syndicate (focused on founders who recently graduated from Harvard), and (4) a new Network Fund called LTV Operators, comprised of C-level executives at unicorn startups.

A few years ago, we reinvented the firm and took an innovative approach to how we invest. Starting with The Graduate Syndicate in 2016, we created each of these Network Funds to (Read more...)

The Rocket Ship Startup List – 2022 Edition

This post is by Jeff Bussgang from SEEING BOTH SIDES

As many of you know, each spring I provide a comprehensive list of exciting, fast-growing, rapidly hiring startups that are promising places to start or continue a career in Startupland.

This year has been another boom year for tech startups, to say the least. As a result, it’s been the hardest list ever in my eight years of doing this. Graduating students and mid-career professionals have an abundance of opportunities to launch their careers. Leveraging insider knowledge and input from VC and entrepreneur friends regarding who has real momentum, I mix subjective and objective criteria in assembling the list. The objective criteria include:

  • Growth / momentum: typically growing users and/or revenue > 100% year over year
  • Fundraising: typically has raised > $40 million in the most recent round, which closed in the last 18 months (note: independent, private companies only! 10% of last year’s list went public and 3% were acquired)
  • Scale: typically > 100 employees
  • Hiring: typically growing headcount > 50%/year, including a number of entry-level positions that would be a fit for recent college or business school graduates
  • Young: founded in 2011 or later

With the help of numerous VC friends in startup hubs throughout Europe, India, Israel, and LatAm, I try to cover international startups each year. Pitchbook is less reliable outside the US and so I am particularly grateful to the dozens of folks who shared their local market insight. I left out China this year. That was a tough decision (Read more...)

Echoes of (My) History in Ukraine

This post is by Jeff Bussgang from SEEING BOTH SIDES

Ukranian border crossing at Siret, Romania

It has been a hard week to focus on startupland.

My usual daily obsession with new innovations, new entrepreneurs, and new fundings has been replaced with daily reports of bombs, convoys, and sanctions as Ukraine struggles for its survival. The blog post I had been working on regarding illiquidity in venture capital and the recent tech market correction now seems woefully tone-deaf.

My inbox and news feeds are full of heroic acts by Ukrainian friends, colleagues, and former students. One of my VC friends posted last night that he and his wife had flown from Boston to the Romanian border and handed out $7,000 in cash to 100 Ukrainian women.

This week’s NY Times The Daily podcast — “In Ukraine, the Men Who Must Stay and Fight” — described the buses being stopped at the Ukrainian border as all men ages 18–60 are ordered to remain in the country to take up arms to fight. As one Ukrainian young man put it, “Last week, I was contemplating what new game to buy for my PlayStation and today I am contemplating taking up arms to kill Russian soldiers and defend my country.”

A Ukrainian former HBS student who is a managing director of a private equity firm in Kyiv with over a billion under management, happily married with two young children, wrote: “All we have now fits in a few suitcases…this is not an abstract [classroom] discussion — it’s Munich all over again. We’re (Read more...)

What We Have Learned from Backing 100 Companies Founded By Women

This post is by Jeff Bussgang from SEEING BOTH SIDES

AllSpice Co-Founder Valentina Ratner in front of Baker Library at HBS

This week, Valentina Ratner (formerly Toll Villagra), co-founder and CEO of AllSpice, announced the company’s $3.2M seed financing. AllSpice is essentially building “Github for hardware” — a collaboration hub inspired by software principles, powered by Git, and designed to accelerate hardware development. Apart from being a talented team with a unique solution targeting a significant market opportunity, AllSpice is consistent with our belief that community-driven companies that harness the power of a passionate ecosystem of members to drive adoption and growth will outperform. And they are executing on a go-to-market strategy that we love — emphasizing developer-driven adoption rather than top-down sales — a playbook successfully implemented at other Flybridge portfolio companies like MongoDB. We are #proundinvestors and look forward to working with Valentina, her co-founder Kyle Dumont (both of whom were in my Launching Tech Ventures class a few years ago), and the entire AllSpice team as they seek to realize their vision.

But this funding announcement isn’t our run of the mill portfolio company funding announcement. That is because AllSpice and Valentina are also the 100th company founded by a woman to join the Flybridge Community in the last five years. These 100 companies have been founded or co-founded by over 150 incredibly talented women.

Several years ago, we started asking ourselves some hard questions as we saw, again and again, the alarming statistics that ~ 85% of venture capital was going to male-only founding (Read more...)

Are VCs Racist? Explaining The Capital Gap

This post is by Jeff Bussgang from SEEING BOTH SIDES

Over the holidays, there was a bit of a firestorm on Twitter over comments made by venture capitalist Joe Lonsdale of 8VC regarding VCs and racism. The original tweets and resulting dialog inspired me to write this post in an attempt to address the question that was posed: how do we explain the fact that only 1% of VC capital goes to Black founders? “Are VCs racist?” Or perhaps a better-framed question, “Why is there such a persistent race gap in the VC industry?” As we look ahead to 2022, I believe this issue is one of the most important ones that our industry needs to grapple with.

For context, I have been examining the systemic biases in the tech industry for a number of years as a result of three hats that I wear. First, through my day job as a practicing venture capitalist — I cofounded a NY and Boston-based early-stage VC fund, Flybridge Capital roughly 20 years ago. Second, through my civic work at Hack.Diversity — a workforce development nonprofit I co-founded six years ago that provides a pathway for young Black and Latinx professionals into the tech ecosystem. And finally, through my part-time work as a member of the faculty at Harvard Business School where I recently created a course with my colleagues Professors Henry McGee and Archie Jones called Scaling Minority Businesses, a field course where we study the impact that systemic racism, lack of access to capital, and lack of access to customers has (Read more...)

The World Has (Finally) Gotten Flatter

This post is by Jeff Bussgang from SEEING BOTH SIDES

I am a huge Thomas Friedman fan. As someone who has cousins from both Lebanon and Israel (thanks to the messiness of WW II and its impact on our family history), I simply adored From Beirut to Jerusalem. And he has been all over the impact of climate change and the world’s obligation to shift to renewable energy (see Hot, Flat, and Crowded). So when he published The World Is Flat in 2005, I lapped up his utopian vision of an integrated, globalized world. 

But in retrospect, Friedman’s book was quite a bit ahead of his time. When reviewing the actual data, his description of a flatter world where ideas and capital freely flow, knowing no boundaries, simply did not pan out. Or at least, until COVID. After decades of stubborn roundness, the world has dramatically shifted – particularly in Startupland – to finally becoming remarkably flat.

A Flat World: Delayed Reaction

Friedman’s predictions, and those of other globalization enthusiasts, faced strong skepticism after the book’s publication. As economist Pankaj Ghemawat wrote in Foreign Policy in 2009 in an article titled “Why the World Isn’t Flat”: “The most astonishing aspect of various writings on globalization is the extent of exaggeration involved. In short, the levels of internationalization in the world today are roughly an order of magnitude lower than those implied by globalization proponents.” Examining a range of data sets — from global migration to foreign direct investment (FDI) — Ghemawat showed the extent to which globalization had, (Read more...)

A Spoonful of Rational Exuberance

This post is by Jeff Bussgang from SEEING BOTH SIDES

A young VC, when his hair was less gray, hanging with the former Fed Chair

Many people forget that former Fed Chair Alan Greenspan’s now-famous reference to “irrational exuberance” was in 1996. At the time, he asked the provocative question: “How do we know when irrational exuberance has unduly escalated asset values?”

Investors are asking themselves this poignant question over and over again in recent months. When my Flybridge partners and I were preparing for this week’s annual investor meeting, we stepped back to reflect on how to balance the obvious exuberance we are seeing in the market with our robust optimism that there are sound, fundamental reasons behind this exuberance. We came up with the phrase, Rational Exuberance, as the best way to capture the moment that we find ourselves in. Yes, valuations have soared and we VCs are all paying more as we construct our portfolios. Yet, like other top firms in the industry, we are realizing that for our best companies, the scale of market opportunities has proven to be much larger than previously anticipated. Our entry price may be 30–50% higher, but we are investing in companies that are exhibiting 3–5x higher exit potential. That’s a trade we will take over and over again. Let me unpack why we — and many others — have come to this conclusion.

Rational Exuberance?

Valuations have soared to a record high in the last few years, particularly in the public markets. For example, the NASDAQ has increased 105% in the nineteen months since (Read more...)

Why Entrepreneurs Should Slow Down

This post is by Jeff Bussgang from SEEING BOTH SIDES

A few months ago, I wrote about the ridiculous increase in velocity that we are seeing in the venture capital market in my post, Velocity and Venture Capital: 11. Now that summer is upon us, I want to reflect on the subtle value of slowing down, particularly from the standpoint of an entrepreneur.

Summer has always been a time to take a breath and slow down. Now that the United States is entering into a post-pandemic phase, we have yet another reason to take things a bit slower and stop obsessing over efficiency and speed. One of my more popular tweets in the last year was:

No alt text provided for this image

I was reminded of the value of slowing down in the last few days by one of my founders who is in the midst of closing a massive financing at a “unicorn” valuation. The company is on a tear, having grown 30x in revenue year over year. In a moment of candor, he confided to me, “I hope the new investors will let me slow down. We need to make sure we are building for scale and to do that, I need to be more deliberate in our growth.” Like the tortoise in the famous Aesop’s fable, sometimes we need to proceed slowly and steadily to win the race.

Here are a few of the benefits of slowing down, and where entrepreneurs may want to focus their energies this summer:

  1. Solidify Your Scalable Team. CEO coach Marshall Goldsmith has a brilliant book, What (Read more...)

After 30 Years, Crossing The Chasm Is Due for a Refresh: Why Markets Are Larger Than They Appear

This post is by Jeff Bussgang from SEEING BOTH SIDES

When I was at Open Market in the 1990s, our CEO gave out the recently published book, Crossing the Chasm, to the executive team and told us to read it to gain insight into why we had hit a speed bump in our scaling. We had gone from 0 to $60m in revenue in four years, went public at a billion-dollar market cap, and then stalled. We found ourselves stuck in what author Geoffrey Moore called “The Chasm” where there is a difficult transition from visionary, early adopter customers who are willing to put up with an incomplete product and mainstream customers who demand a more complete product. This framework for marketing technology products has been one of the canonical foundational concepts to product-market fit for the three decades since it was first published in 1991.

Recently, I have been reflecting on why it is that we venture capitalists and founders keep making the same mistake over and over again — a mistake that has become even more glaring in recent years. Despite our exuberant optimism, we keep getting the potential market size wrong. Market sizes have proven to be much, much larger than any of us had ever dreamed. The reason? Today, everyone aspires to be an early adopter. Peter Drucker’s mantra, innovate or die, has finally come to pass.

A glaring example in our investment portfolio of market sizes is database software company MongoDB. Looking back at our series A investment memo for this disruptive open source, (Read more...)