The venture capital world is growing by leaps and bounds, and companies like Flybridge Capital Partners are fueling the tech and innovation behind many of the things that are transforming the world. In this conversation, I talk with Jeff Bussgang, general partner at Flybridge Capital Partners about a variety of things surrounding the venture capital space, including how he got started, what his company looks for in a startup company, and how they assess the leadership and team to make a wise early stage investment.

What IS an early stage investment company?

Early stage investments are nothing more than the money provided to promising companies that are not yet producing their products or services but have made significant headway toward the development or distribution of it. The money they receive is often referred to as “seed money” - the money used to enable the development, marketing, and progress of the company to move it toward profitability and sustainability. On this episode, Jeff Bussgang shares how his interest in the entrepreneurial world led him to become general partner of an early stage venture capital firm, and why startup funding is so exciting.

What is a venture capital investment firm looking for in a startup?

When I asked Jeff Bussgang what the team at Flybridge Capital Partners is looking for in an early stage company he gave me a number of criteria they look at to show them there is promise in the company: Innovative potential, leadership and team, the Pied Piper effect, and more. If those sound a bit vague, don’t worry. As you listen to this episode you’ll get a very clear understanding of what each of those things is and why Jeff and his team consider them vital to discerning a good investment from a bad one. It’s all on this episode of the Capital Gains podcast.

The Pied Piper effect is something startup founders need - at least in this case.

If the team at Flybridge Capital Partners is going to get behind a startup financially they want to see that the primary leader of the startup company possesses what they call a “Pied Piper” quality. That means he/she is a person who is a natural leader and attracts the interest of people to the projects they are working on. Jeff Bussgang points to the fact that we all know people whose ventures and projects are naturally of interest to us - and it’s because of who the person is and how they are wired that we are attracted. You can almost smell the excitement and potential because they are a person who tends to make things happen. Find out more about this elusive but tangible leadership quality on this episode.

If you can’t connect with me through a mutual connection, I’m not that interested.

Jeff Bussgang understands that networking and connections are a huge advantage when it comes to making a company or cause successful. So much so that he’s generally unwilling to have serious conversations about funding a startup if their team did not approach him through some kind of mutual connection. He’s convinced that people who know how to make and utilize connections are also the people who will be able to build the relationships that will equip their company for future success. You can hear Jeff make the case himself on this episode.

Outline of this Episode

  • [1:04] Introduction of this week’s guest, Jeff Buskin.
  • [1:54] The types of companies Jeff’s group invests in and what they look for in a winner.
  • [6:50] The “winnowing” process Flybridge uses when evaluating potential companies.
  • [10:50] Signals that a founder or leader is a “Pied Piper” who can build the company.
  • [13:18] What does it mean to be an “early stage” investor?
  • [18:54] Niches Flybridge tends to invest in.
  • [21:58] Sectors on the horizon that Jeff and his team are watching carefully.
  • [24:00] Why Flybridge has a geographic bias toward Boston and New York.
  • [25:23] Why relationships matter so much to Flybridge.
  • [31:23] Jeff’s path to Flybridge.
  • [36:58] The tendency toward entrepreneurism: Is it innate?
  • [39:03] Successes the company has had and what they have learned.

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