Founder-Turned-Venture Capitalist Jeff Bussgang On Helping Build A Unicorn, Co-Founding A Company That Sold For $300 Million, And Now a Best-Seller Author and Harvard Business School Professor

In the dynamic world of startups, few figures personify the full arc of the entrepreneurial journey like Jeff Bussgang. A computer science graduate from Harvard with a passion for artificial intelligence since the 1980s, he has navigated nearly every phase of company building.

Jeff’s VC firm, Flybridge Capital, has invested in top-tier companies like MongoDB, Topline Pro, BitSight, and FalconX.

In this episode, you will learn:

• Jeff Bussgang’s career spans the full founder-to-investor arc, combining deep technical roots in AI with decades of experience in entrepreneurship and venture capital.
• He emphasizes that startup success relies on execution, adaptability, and enduring through market downturns, not just timing or capital.
• Flybridge Capital, which Jeff co-founded, focuses on early-stage AI startups with moats like proprietary data, systems of record, and intuitive human-AI interfaces.
• Jeff believes modern founders must leverage AI as a force multiplier to experiment faster, discover insights, and extend capital efficiency.
• Pattern recognition in VC boils down to three key factors: world-class teams, huge markets, and a bit of luck.
• His latest book, The Experimentation Machine, reframes product-market fit in the AI age, stressing rapid iteration and defensibility through execution.
• Jeff’s enduring advice to founders: choose partners with integrity, capability, and chemistry—success is a long road best traveled with the right people.

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About Jeff Bussgang:

Jeff Bussgang is a Senior Lecturer at Harvard Business School (HBS) as well as co-founder and general partner at Flybridge Capital Partners, an early-stage venture capital firm with offices in Boston and New York City and over $1B under management across six seed funds and nine network funds.

At HBS, he teaches Launching Technology Ventures, a popular class for MBA students starting companies (i.e., founder) or pursuing startup careers (i.e., “joiners”). Before becoming a venture capitalist, Bussgang was an entrepreneur, cofounder and president of Upromise (acquired by Sallie Mae) and an executive team member at Open Market (IPO 1996).

In addition to The Experimentation Machine: Finding Product-Market Fit in the Age of AI, he is the author of a book for startup joiners, Entering StartUpLand: An Essential Guide to Finding the Right Job and Mastering the VC Game, an essential guide for entrepreneurs raising capital and building their startups.

He has also authored over fifty HBS case studies, teaching notes, and book chapters regarding startup management and entrepreneurship. He started his career with The Boston Consulting Group and holds an MBA from HBS and a BA in computer science from Harvard College.

Jeff is an active community member, particularly in the areas of social justice, diversity, and equity. He co-founded and serves as board chair of Hack.Diversity, a nonprofit that breaks down barriers for underrepresented professionals in tech.

He co-founded and serves as board chair of LEADS, an economic and leadership development program that invests in diverse communities to build civic infrastructure. Jeff is also an active board member at an educational nonprofit, Facing History and Ourselves, which uses lessons of history to challenge teachers and students to stand up to antisemitism, bigotry, and hate.

Connect with Jeff Bussgang:

• LinkedIn
• Crunchbase
• Jeff Bussgang
• TheOrg

Read the Full Transcription of the Interview:

Alejandro Cremades: Alrighty, hello everyone and welcome to the DealMaker Show. So today we have an amazing guest.

Jeff Bussgang: Thank you.

Alejandro Cremades: You know, we have a guest that I’ve been a fan of for quite some time now. And, you know, we’re talking about a founder—a founder turned investor. He’s also written some really exciting books. The latest one—we’re going to be talking about it today as well.

Alejandro Cremades: And again, brace yourself for a really incredible conversation about everything that you can think of—whether it’s building, scaling, financing, exiting—he’s done it all. He’s also doing it right now from the other side of the table.

Alejandro Cremades: And without further ado, let’s welcome our guest today, Jeffrey Bussgang. Welcome to the show.

Jeff Bussgang: Thanks, Alejandro, great to see you.

Alejandro Cremades: So, originally born in the Boston area in 1969. So, give us a walk through memory lane. How was life growing up for you?

Jeff Bussgang: Yeah, I was actually born in Cambridge, just across the river from Harvard University. And my dad was a tech entrepreneur who had survived the Holocaust and came to Boston to go to MIT and then earned his PhD at Harvard.

Jeff Bussgang: While he was at MIT, he came up with a theorem called the Bussgang Theorem, which is a well-known theorem in the world of applied math and physics. And so, I very much had a technical kitchen table MBA with a tech entrepreneur dad back in the ’60s, ’70s, and ’80s.

Jeff Bussgang: I taught myself how to program back in the PC era, fell in love with the Apple II, II Plus, PET Commodore—the whole thing—and went to Harvard and studied computer science at Harvard. Alejandro, I sort of blush when I say this, but in 1987, as a freshman, I came to Harvard to major in computer science and AI in particular—so NLP, neural networks, etc.

Jeff Bussgang: It’s sort of a funny thing to think about the arc of these things that, four decades later, I’m still working on and investing in AI.

Alejandro Cremades: I mean, AI nowadays—the consciousness is absolutely crazy compared to back then. So, I guess what caught your eye around AI back then?

Jeff Bussgang: Well, I fell in love with the idea of natural language processing and the ability to communicate with AI, pass the Turing test, parse grammar, language, read—took graduate courses in NLP and computer vision to read and recognize images. I just thought the whole area was fascinating.

Alejandro Cremades: So obviously, problem-solving sounds like it was exciting to you, you know, being an engineer, right? Now, one of the things that the two fathers shaped that—you know, you went to New York and you went to the Boston Consulting Group.

Alejandro Cremades: And what I like about the consulting world is that it allows you, in firms like BCG, to be able to grab one big problem and kind of break it down into small problems so that then you can tackle them.

Alejandro Cremades: How do you think, let’s say, the experience of being in the consulting world helped you with the way that you approach problems as well?

Jeff Bussgang: I think you said it beautifully: analytical thinking, problem-solving, strategic thinking, value pools and value creation. And of course, I became very skilled at PowerPoint, which is an important skill—communicating at a very young age and synthesizing complex issues and problems at a very young age.

Alejandro Cremades: So, business school—obviously, it had to be Harvard, man—you know, which has been in your heart since the beginning of your career. I guess, what do you think pushed you towards shifting gears and going back to business school?

Jeff Bussgang: I wanted to be a tech entrepreneur like my dad and, simply put, I thought an MBA would be beneficial. And I was very lucky—in 1993 when I arrived, in 1994, I saw the Mosaic browser and completely fell in love with the idea of the internet as a potential business environment.

Jeff Bussgang: I wrote what was one of the first articles in Harvard Business Review on that topic and joined a seed-stage internet startup in 1995 when I graduated in the spring of ’95.

Alejandro Cremades: Now, back then, you probably had a bunch of classmates that were starting their own companies. I mean, you knew you wanted to be a tech entrepreneur too. So why did you join another team versus going out on your own?

Jeff Bussgang: Well, first I’ll say no one was starting a company back then—absolutely no one. I was one of only a handful that went into an internet startup. And I just loved the idea of the company, OpenMarket, which was backed by Greylock.

Jeff Bussgang: It had raised a couple million dollars, had a small team, and had this vision—a very ambitious vision at the time in 1995—of turning the internet into a commercial environment and providing the tools and the platforms and the infrastructure to enable that.

Alejandro Cremades: And how was that journey like? Because you guys took the company public. There was the unicorn valuation. I mean, that’s quite the experience for being the first rodeo.

Jeff Bussgang: Yeah, it was a rocket ship—going public in 1996 at a time when not a lot of internet companies were going public at billion-dollar valuations. It was like 20 years before Aileen Lee coined the term “unicorn”—we were a unicorn.

Jeff Bussgang: And we really just had a terrific rocket ship ride. And I had the opportunity and privilege of learning how to scale—in the language of today—and build a valuable company in a very rapid timeframe.

Jeff Bussgang: We had a sign outside of our office window on the highway in Kendall Square: “Can you code? Visit openmarket.com.” We hired a few hundred people in the first year or two, scaled very rapidly, built a lot of products.

Jeff Bussgang: And I had the privilege of ending up on the executive team well before I was ready, and I just had an amazing ride.

Alejandro Cremades: And also the privilege of being exposed to complex situations, like, for example, a tense communication or situation between the CEO and the founder. What happened there?

Jeff Bussgang: Yeah, it’s a classic pattern that we see time and time again in the startup ecosystem. After we’d gone public, we had hired—just before we went public—a professional CEO, who was an amazing leader, and the founder stepped aside and became board chair.

Jeff Bussgang: The professional CEO took us public, built a professional management team, changed over the team. I was the one remaining holdover from the founder’s era to the professional executive era.

Jeff Bussgang: And, you know, fights about—or disagreements about—strategic direction ensued. Some fights ensued, and the two decided that only one of them should remain. There was only room for one of them.

Jeff Bussgang: And so, the board had to make a decision. And those are very difficult decisions for boards to make, and boards don’t have all the information. They asked a couple of us on the executive team for our opinion.

Jeff Bussgang: And, you know, I sort of had that dramatic boardroom moment where you’re sitting in the waiting room, the board invites you in, you walk in, there’s a panel of board members. In my case, I’m still in my twenties, everybody’s very senior, there’s billions of dollars at stake.

Jeff Bussgang: And, you know, we just had very difficult conversations and made difficult decisions. Ended up sticking with the professional CEO, who did a fantastic job. I’m still friends with both parties, and it ended up being a great outcome for the company.

Jeff Bussgang: We ended up—at the time that I left, in late 1999, early 2000—at a two-and-a-half-billion-dollar market cap. And the company was really an important player in the internet 1.0 infrastructure days.

Alejandro Cremades: So let’s talk about that moment where you leave, because you left to now take the reins of your own future and to really become an entrepreneur and start your own business—Upromise. So how does the whole idea of Upromise come knocking to you?

Jeff Bussgang: So, the founder of General Catalyst, David Fialco, had just started General Catalyst and reached out to me and connected me with a guy named Michael Bronner, who had been a marketer—had started a firm called Bronner Comm, Bronner Schlossberg, which had then turned into Digitas, gone public, and been very successful in the marketing world.

Jeff Bussgang: And he had this vision, along with Michael Bronner, of creating a loyalty program and combining loyalty marketing—Michael’s expertise—with the internet and internet commerce—my expertise.

Jeff Bussgang: And so he introduced the two of us. We fell in love professionally and developed this company together and had just a great run, building what ended up being a financial services backend behind a loyalty frontend to help families save money for college—like a frequent flyer program through their everyday spending.

Jeff Bussgang: And that money would go into a tax-free 529 account, which had just been created by the Bush administration.

Alejandro Cremades: So obviously there you also survived the dot-com crash, which was quite a big and tough fight to take.

Alejandro Cremades: I guess, what did you learn from cycles? Because there’s probably a bunch of people on the line who haven’t experienced what it looks like to be part of the boom and then the crash.

Alejandro Cremades: In this case, you’ve not only experienced that, but you’ve also experienced different cycles as well. So what was your big takeaway, and what are your thoughts around financing cycles or life cycles in the market and economies?

Jeff Bussgang: Yeah—and just to give a little context—we raised our first round of financing at Upromise. We raised $34 million at a $114 million post-money valuation.

Jeff Bussgang: So it was an extraordinary first round for a handful of founding team members and 20 very good PowerPoint slides, but we didn’t have anything. We were pre-revenue, pre-product, pre-partners.

Jeff Bussgang: And that round closed in March of 2000. The market crashed. And in late 2000, I was faced with a very difficult decision—of trying to raise more capital to fuel our hyper-growth or to hunker down.

Jeff Bussgang: And we decided to go for it. And we ended up in a very difficult financing—raising $55 million in a strong follow-on financing. And then using that capital—the $90 million total—to really hunker down and build what ended up being a quite valuable business that Sallie Mae eventually acquired for $300 million.

Jeff Bussgang: But we went through some tough times. We had a bunch of layoffs. We had to reconfigure the strategy. We brought in new team members, including a new CEO. My co-founder had stepped aside, and we brought in an outside CEO—that caused additional changes, cultural changes.

Jeff Bussgang: And I guess what I would say is that staying true to the mission is really what got Upromise through that difficult period. And the mission, in our case, of helping families save money for college and helping our brands be more efficient and effective in their marketing—and just keeping everyone really focused on the mission through the ups and downs.

Jeff Bussgang: And making the very important point that there are things externally we can’t control. We can’t control the external market. We can’t control the fundraising market. But there are things we can control. And let’s be excellent at what we can control.

Jeff Bussgang: Let’s build an excellent product. Let’s solve an important problem that people care about. And then a good business will ensue.

Alejandro Cremades: So then, in this case too, how was that moment like—when you were alluding to it—when the company got acquired and those papers were inked? I mean, how did that feel for you? Because, I mean, first company that you start, first outcome like that—I mean, it’s pretty amazing.

Jeff Bussgang: Well, I had left just before to start Flybridge. And the story of starting Flybridge is that both Upromise and OpenMarket were backed by Greylock, among other firms like General Catalyst.

Jeff Bussgang: And one of the Greylock partners, who at the time was a friend of mine, Chip Hazard, had left Greylock and spun out—as Greylock was shifting the locus of their activities west. Historically a Boston firm, it was transitioning to become a West Coast firm.

Jeff Bussgang: And Chip invited me to start Flybridge with him. And then we also brought on board another Greylock partner from Boston named David Aronoff. And so, the opportunity to start a venture fund and have another swing at a founding story—at a time when Upromise was in a good position and, as you said, was acquired and it was a good acquisition.

Jeff Bussgang: With a pretty special opportunity. And for many people out there who think about starting their own funds and trying to pursue their own journeys, those are really important inflection points—where you have to decide who you want to work with, who you want your partners to be, and what strategy you want to have. Twenty-three years later, Chip and I are still…

Jeff Bussgang: …the partners at the firm, side by side, working on this. David has retired from the firm—he’s partner emeritus—but he’s still a partner in the old funds. That’s a pretty long journey together.

Jeff Bussgang: And there aren’t a lot of venture funds that have two founding partners who have been together, side by side, working for 23 years. So maybe we’ll talk about that. But having that crucible moment of deciding what do you want to do and who do you want to do it with was really what hit me back then.

Alejandro Cremades: And why really go to the other side of the table, you know, versus keep going at the building and scaling? I mean, obviously here you’ve built another firm, another company, but in this case on the other side of the table. So why shift gears in terms of where you were sitting at the table?

Jeff Bussgang: So, having gone through a couple of cycles with two companies—over some pretty amazing ups and downs, acquisitions, M&A, IPO, different economic cycles—I just felt like maybe I had something to give to entrepreneurs. To coach them along the way and help them avoid all the mistakes that I had made as a founder.

Jeff Bussgang: And also having the opportunity to do it with somebody who I really respected tremendously in Chip, and later in David—who were close friends and folks who I thought, maybe this could be my last job. You know, maybe I could—even at the young age of, at the time, I was 32 or 33, I can’t remember which—but yeah, at the time, I was in my early 30s, and I could look back on what has now been two-plus decades and say, we’ve really created something of value that’s enduring.

Alejandro Cremades: Now, for you guys, it’s been quite the run. 300 companies that you have invested in, a billion across seven seed funds, two opportunity funds, and really amazing companies that you’ve been able to back—such as MongoDB.

Alejandro Cremades: For those listening, we’ve also had Kevin Ryan, Elliot—the co-founders there—FalconX, and BitSight. I guess… let’s take those three, for example, which were some of the highlights of the journey here. Obviously, many highlights, but if we had to surface three that the listeners could identify, could be those. What would you say were the ingredients that those three shared?

Alejandro Cremades: When it comes to—let’s say—a lot of people talk about pattern recognition on the investment side. What do you think those three companies had in common?

Jeff Bussgang: Well, it’s a little trite to say this, but team and market are the two most important things in the success of a venture. And you can see that through line across all three. It also takes a little bit of luck—maybe a lot of luck.

Jeff Bussgang: And as investors, we have the privilege of being alongside entrepreneurs who—collectively—maybe we get a bit lucky. MongoDB is one example of that. That was an incredible team that spun out of DoubleClick. DoubleClick was a Greylock-backed company in the advertising space—one of the OG internet companies in the New York tech scene. It had been successful, gone public, and was acquired by Google.

Jeff Bussgang: They learned how to build an enduring, valuable company—learned what excellence looked like—and endeavored to pursue that in this very dynamic database market. We, at the time, thought the database market would be maybe an $8 billion dollar market.

Jeff Bussgang: And taking on Oracle and IBM at the time—never mind Microsoft—seemed a bit crazy. But we thought there was a stance of a platform shift into this whole NoSQL world, with the internet application era and the cloud era, that maybe a great technical team could hit that market window.

Jeff Bussgang: And they really hit it beautifully. Now it took some—you know—twists and turns, but we had three CEOs over the life of the company. And, as you noted, the company went public and is now worth somewhere between $15 and $20 billion, and is one of the most important anchor pillars of the New York tech scene in today’s era—and proved, for the first time in a long time, to the critics that you could build a real tech company in New York. A native New York enterprise software company.

Jeff Bussgang: But the thing that I would observe about MongoDB was the product was great—like, really great. Open source, download, immediate and obvious benefit right away for the developer.

Jeff Bussgang: It had a developer-driven adoption model—so bottoms-up instead of top-down. Nobody was calling the head of Goldman Sachs IT. Instead, individual developers would be downloading it, putting it into their applications. And you fast forward a year or two, and Goldman Sachs is calling MongoDB and saying, “Hey, I’ve got your application running in my environment in 20 or 30 places. I need to have a relationship with you all.”

Jeff Bussgang: And then finally, the market tailwinds were incredible. What we thought was an $8 billion market turned out to be a $40 or $50 billion market as data exploded. So, it sort of combined a lot of elements: tailwinds, very good execution, a very good technical product, and a really quite novel—at the time—distribution strategy, what we would now call product-led growth or PLG.

Alejandro Cremades: Now, I have to mention this—I love the books that you’ve written, which I think also touch on many of these ups and downs you’ve experienced in your journey.

Alejandro Cremades: The first one, which actually came out in 2011, Mastering the VC Game—I mentioned this offline, but I bought that one in hardcover and also in audio. It was so good.

Alejandro Cremades: And it really taught me the ins and outs of the whole dynamics between venture capital and founders. And I’m wondering—for the people that are listening—what do you think could be their biggest takeaway if they were to read that book right now?

Jeff Bussgang: The one word I would summarize that book with is: alignment. That, as an entrepreneur—and from the lens of an entrepreneur, which is what I wrote the book focused on—seeking VCs that are aligned with you.

Jeff Bussgang: And running the process that you’re running—the fundraising process—like a sales process. You have to be very strategic. You have to have a pipeline. You have to have a value proposition. You have to have compelling reasons to continue along each stage in the process. But to ensure alignment throughout the entire way—because you can get somebody on the cap table, but you can’t get them off the cap table.

Jeff Bussgang: And so really ensuring alignment throughout the entire end-to-end process is really the essence of Mastering the VC Game.

Alejandro Cremades: And what about Entering Startupland? What can they take out of it?

Jeff Bussgang: So Entering Startupland, the insight there was that joiners have a place in the startup ecosystem. That founders are the mad magicians that everybody puts on the pedestal, but behind every single one or two or three founders, there’s employee number four to 400—the joiners—that help build the company and create the enduring value.

Jeff Bussgang: And so I wanted to create a book that allowed joiners—people who really aspired to get into the startup ecosystem but may not have the brilliant idea or may not self-identify as a founder—to give them a roadmap on how to get in and what to do once they got in.

Jeff Bussgang: I was trying to answer the questions that many of my students at Harvard—we’ll get to my maybe last 15 years of teaching at Harvard Business School—but many of my students would come to me and say, “How do I break into this startup ecosystem? I have general skills, but I don’t really know how to navigate it.” And I really wanted to answer that question with Entering Startupland.

Alejandro Cremades: Well, without a doubt, I mean you’ve been teaching there at HBS for quite a while. And one of the things I want to talk about real quick here is the latest book you published.

Alejandro Cremades: And this book is so timely. Literally, you published it in 2024.

Alejandro Cremades: Sorry—it came out in 2025. But really, the whole idea and putting this to work came out—I think it was 2024—when you literally wrote this thing.

Alejandro Cremades: Now one thing that is incredible—it’s called The Experimentation Machine. And it’s basically about finding product-market fit in the age of AI. And it is just incredible, because now AI has literally exploded.

Alejandro Cremades: And one thing that really comes to mind here—especially you being, you know, we were talking about pattern recognition and great companies like MongoDB, FalconX, BitSight—I guess now in this world of AI, how do you think things are shifting when it comes to, for example, the habits and behaviors of being a 10X founder and how you use AI to your advantage?

Jeff Bussgang: Yeah. So first, thanks for the shoutout to the book. I’ve got it here.

Alejandro Cremades: I got it too.

Jeff Bussgang: Yeah, thank you. I appreciate you gassing it up. And yeah, the insight from the book—I wrote the book, as you note, over the course of 2024. I was—you know, Flybridge is an AI-focused seed-stage venture capital fund, investing out of our two offices in New York and Boston.

Jeff Bussgang: And I also teach entrepreneurship and technology ventures at Harvard, as you mentioned. And at HBS, I was working with all these students who are AI-first founders. So I’m seeing these two populations leveraging these modern AI tools to accelerate their work. And I just came up with this idea of the book and of the 10X founder—the founder that’s leveraging timeless techniques—customer discovery, experimentation, building MVPs, developing earned secrets and insights…

Jeff Bussgang: …executing on novel go-to-market techniques with these timely AI tools—and doing so to be that much better. Not just 10% better or 20% better, but like the mythical 10X developer—being 10X better than the average founder. And I sort of begin the book with this idea: I don’t know if AI is going to replace founders anytime soon, but founders who use AI are absolutely going to replace founders who don’t use AI.

Jeff Bussgang: And making sure that all the founders out there are leveraging these modern tools in their work—that’s really the essence of the message of the book.

Alejandro Cremades: And what about competitive moats too, in this new era of AI?

Jeff Bussgang: It’s really the question, Alejandro, that all of us as investors—and that all the founders out there—are thinking about, which is: Hey, if software development costs are plummeting, and if it’s so easy to rapidly build application software, where’s the moat?

Jeff Bussgang: If I build something, my competitor can fast-follow and copy me. And it’s a question that the big software franchises are asking themselves. You look at the big application software franchises like Salesforce, Adobe, and Workday—they’re all paranoid about this question.

Jeff Bussgang: And we’re all investing—the entire venture capital system, Flybridge and others—are all investing in startups that are going after those franchises and opportunities. And so, I would say—let me make a macro observation, and then I’ll make three micro points. The macro observation is: I don’t know if there is a competitive moat anymore.

Jeff Bussgang: It might be the case that there is no one big single competitive moat—that instead, this is about execution and speed. And maybe, as somebody else has put it, there’s a series of small competitive moats that you establish as you execute as a startup.

Jeff Bussgang: And that builds brand and distribution and a system. And then the system is the competitive moat. But the three things that we look for—in addition to a founder who can understand and execute very rapidly and build that system…

Jeff Bussgang: We look for proprietary datasets—the ability to establish some proprietary data—so that the general-purpose models aren’t doing exactly what you can do. You know, this problem of “ChatGPT killed my startup” every time there’s a new release of OpenAI’s platform.

Jeff Bussgang: So: competitive moat. Second is around the insight that you really want to build a system of record—a platform that, if you’re in the enterprise software world, people are using all day, every day.

Jeff Bussgang: So, we have a portfolio company called AllSpice, which is focused on helping—it’s the GitHub for hardware engineers. It’s helping hardware engineers do designs, and it’s this great cloud-based collaboration platform.

Jeff Bussgang: And those engineers are in the AllSpice environment—engineers from places like Meta and Waymo and, you know, satellite companies—they’re using this platform. Blue Origin—they’re using this platform all day, every day to design their products.

Jeff Bussgang: So that’s a really important thing—to become a system of record. And third, having an insight into the human-AI interface. There’s something really special about ChatGPT and all the chatbots when they came out.

Jeff Bussgang: These AI capabilities existed before—GPT-1.0, GPT-2.0, GPT-3.0. GPT-3.5 comes out and they throw the chatbot interface on top, just as a throwaway—as an experiment.

Jeff Bussgang: And the thing takes off because they nailed the human-AI interface. They manifested all these incredible AI capabilities in a way that was accessible to humans. And so, looking for those really powerful human-AI interfaces—and I’ll give you one example on that.

Jeff Bussgang: We have a portfolio company, Topline Pro, which helps service pros with their sales, marketing, and customer service—service pros like electricians and plumbers and roofers and landscapers.

Jeff Bussgang: And when somebody is on the roof fixing a shingle, you know, they don’t have time to be on their desktop building a website or communicating with customers. They’re on the roof. And so they needed agentic AI capabilities to help them with website building, marketing, sales, and customer service.

Jeff Bussgang: But these are roofers and landscapers—they’re not tech experts. They’re not going to build AI agents. And so, Topline Pro had to build this really incredible interface to make that powerful agentic AI capability accessible to the service pros in a very seamless way. And that’s what they’ve done. And they’ve now grown to thousands and thousands of customers—an incredible platform.

Jeff Bussgang: So, it’s those types of things, Alejandro, that we’re looking for when we look for companies that we can invest in.

Alejandro Cremades: Now, in your book, you also talk about startup valuation. And obviously, it’s more like an appendix, you know, what you have in there. But, you know, it’s quite a science, as you put it. How should founders think about valuation? How to approach that, really?

Jeff Bussgang: The first thing I say is: develop the milestones that you think represent a valuation inflection point. So, you are wherever you are today. After the next 12, 18, 24 months, what are the three or four milestones that—if you achieve them—you will hit that magical valuation inflection point and can double or triple your valuation?

Jeff Bussgang: And then think about how much capital you need to get to those milestones—and give yourself a little bit of a cushion. That’s the amount of capital you should probably raise in this round, whether it’s the pre-seed or seed round.

Jeff Bussgang: And then apply the rule of 20 that I’d like to encourage founders to think about, which is: sell only about 20% of your company. You’re going to have three, four, or five rounds between now and the end zone.

Jeff Bussgang: And even in the modern AI age—where you can build companies with less—maybe you can stretch out that seed round further. But you’ll probably have three or four rounds. You shouldn’t sell more than 20%. So, if it takes you 18 months to hit those important milestones and $2 or $3 million, the rule of 20 says a $10 to $15 million post-money valuation is sort of the benchmark.

Jeff Bussgang: And then think about what’s market. What are other people raising money at that have similar components in terms of quality of team—whether they’re repeat founders or first-time founders—quality of market, how big the market size, quality of the progress, the momentum…

Jeff Bussgang: And then build from there. So, we see pre-seed rounds—$10 to $15 million post—often $2 to $3 million dollar rounds. Seed rounds, maybe $4, $5, $6 million being raised at $30, $40 post.

Jeff Bussgang: And then Series A rounds—$10 to $20 million, $60, $80, or $100 million post—all sort of following this pattern.

Alejandro Cremades: Well, you know, for those of you listening, you know, you heard it right there—go get your copy of The Experimentation Machine. So do it right now. Now, I guess one question that comes to mind too is—there’s quite a shift happening in venture capital. People are talking about it as wave three of some sorts. Now, private equity, entrepreneurship, and venture capital all coming together as one.

Alejandro Cremades: What are your thoughts on this, Jeff? I mean, you’ve seen a lot. Where are things heading?

Jeff Bussgang: Well, there are two observations that are happening at the same time. On the one hand, it’s never been easier and cheaper to start a company and get traction. And so many entrepreneurs are seed-strapping.

Jeff Bussgang: They raise the seed round—maybe the $2 to $3 million round, as I said—maybe a $4 million mango seed. And then they’re stretching that further and further because you don’t need to hire 10 to 15 employees in your race to the $1 million ARR magic threshold. You can do it with two or three employees and tens—or hundreds—of AI agents, as I talk about in the book.

Jeff Bussgang: So, the early-stage players like ourselves are having to fight to win our spot in those early-stage companies because there are fewer and fewer windows due to the seed-strapping phenomenon.

Jeff Bussgang: And then to build enduring, really big companies that have a chance to go public, that have global distribution and a powerful brand—you still need hundreds of millions of dollars, in some cases billions of dollars.

Jeff Bussgang: And so you’re seeing these mega rounds being raised by the Perplexities of the world and the Anthropics of the world as they build franchises—as they build what they hope will be tens of billions of dollars, if not hundreds of billions of dollars, of value.

Jeff Bussgang: And you need really big funds to write those checks. So, the General Catalysts of the world and the A16Zs and the Lightspeeds are raising larger and larger funds to write those mega checks.

Jeff Bussgang: And that’s this bifurcation in the market. You’ve got more and more competition at the seed stage for a smaller pool of cap table room. And then you’ve got a lot of competition for those few mega winners—the obvious winners…

Jeff Bussgang: That are just trying to get to the pre-IPO and IPO rounds accordingly.

Alejandro Cremades: That’s incredible. Now, let’s say I put you into a time machine, Jeff, and I bring you back in time to that moment where you were coming out of getting your degree at Harvard Business School. And let’s say you have—now, I mean obviously at that point you were going to go to your first startup, you know, as an employee—but…

Alejandro Cremades: Yeah, still, you were intrapreneurial back then. You were joining something that still was being created. But let’s just say you had the opportunity of being able to have a sit-down with your younger self—that just threw the cap up and was celebrating graduation and thinking about what’s next.

Alejandro Cremades: And let’s say you’re able to show up and have a conversation with that younger Jeff. And you’re able to give that younger Jeff one piece of advice before launching a business.

Alejandro Cremades: What would that be and why—given what you know now from being involved in two successful startups and investing in 300 startups—you have only one shot, one piece of advice. What would you say to that younger Jeff?

Jeff Bussgang: Buy Amazon stock.

Jeff Bussgang: No—the real advice I would give is: choose your partners wisely. And that goes for co-founders, investor partners—even life partners. I’ve been married 31 years. I’ve had a partnership with Chip Hazard, my co-founder at Flybridge, for 22, 23 years.

Jeff Bussgang: And you just got to be really thoughtful—because if you build enduring partnerships in life and in business, then all else kind of falls into place.

Alejandro Cremades: So obviously, you know, partnerships in love is tough to give advice on—but let’s say partnerships in business. Given what you’ve seen, what should be the three key ingredients that, let’s say, folks listening right now should look for—maybe in a co-founder or something along those lines?

Jeff Bussgang: The first I would say is trust. You’re investing each other’s money. Your fate, success, and ups and downs are dependent on each other’s decisions.

Jeff Bussgang: Sometimes those quiet decisions—when you have that crucible moment. Sometimes it’s the things you do when no one’s looking. The small decisions you make, the deals you decide to pursue, the emails you decide to respond to, the meetings you decide to take.

Jeff Bussgang: And so, having a really high degree of trust that the individual you’re partnering with has your interests and the team’s interests at heart—I think—is really critical. So, that’s sort of a trust and character point.

Jeff Bussgang: The second is competence. So, in addition to character and trust, you want to make sure you’re dealing with somebody who’s competent—who’s really world-class at what they do. And I’m very blessed in working with Chip on both fronts.

Jeff Bussgang: And the third is fun. Like—you’ve got to have fun along the way. If you’re not having fun, it’s really just not going to feel worth it to get on that red-eye and to get up at six in the morning and to…

Jeff Bussgang: Work on that weekend deck or project or whatever. So: character/trust, competence, and fun would be the things I would focus on.

Alejandro Cremades: I love it. Jeff, for the people that are listening and would love to reach out and say hi, what’s the best way for them to do so?

Jeff Bussgang: Yeah—hit me up on LinkedIn. It’s probably the best. You can just message me, or shoot me an email: je**@*******ge.com.

Alejandro Cremades: Amazing. Well, Jeff, thank you so much for being on the DealMaker Show today. It has been an absolute honor to have you with us.

Jeff Bussgang: Thanks, Alejandro. Really great to see you.

*****

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