Jeff Bussgang, general partner at Flybridge Capital Partners and founder of UPromise

Jeff Bussgang, general partner at Flybridge Capital Partners and serial entrepreneur gave us a talk about his background and his experiences as an entrepreneur. Among other things, Jeff was the cofounder of UPromise (acquired by Sally Mae in 2006 for an spectacular amount), spent some time at BCG, and is an HBS graduate.

• His dad came to the US without money and bootstrapped to make the American dream. He says that he has a "kitchen table MBA" and entrepreneurial DNA since he would talk with his dad every day about business, HR, operations, etc.
• Jeff's first entrepreneurial experience was with Openmarket, which had the IPO in the late 90s at a valuation of $1.2B a the peak market cap was $2.5B.
• He later cofounded UPromise which in 2001 with only 20 slides and 2 people (him and Michael now at General Catalyst Partners) raised $34M at a $90M premoney valuation!!!!. He does not think that this would ever happen again. Through my internship at Care.com I have met a lot of people that were involved in UPromise (Sheila and Ron Marcelo, Donna Levin or Dave Krupinski).
• Then he joined IDG ventures with Chip Hazard. In the first fund they raised $100M in 2002, in the second fund they raised $200M in 2005 and recently they have raised an additional fund of $280M.

Some of the lessons he gave to entrepreneurs:

1. "Value of the network": somebody you know introduces to somebody else. See who is doing interesting things out there. Luck happens for a reason. Put yourself in a position to be lucky.
2. "You can't chase the money". You have to follow the passion of shipping a product, build a new application or build a new market. The money will come.
3. Roles of mentors: Every word and experience could be a lesson. Try to learn from everybody.

He gave some numbers about the VC indutry. For him, a successful VC backed M&A exit is in the range $75M-$150M. If a VC owns 20%-25% at exit, the returned capital is $15M-$50M. If the VC aims a 3-5x return in 5 years, invested per company must be $3M-$10M at post-money valuation of $15-$40M (typically over 2 or 3 rounds).

One colleague asked him if Silicon Valley was better than the Boston area for entrepreneurship. He said that the right place to be is where you want to be for a long time. The network matters so you cannot go hopping in different areas.

Another colleague asked him whether it is true than in the US failure in startups is considered good (e.g., you learn from your mistakes so you do not repeat them in the next venture). He said that failing is acceptable if you went/joined a startup situation that was credible (e.g., well backed up, good market, good people, etc.) because it was a good judgement and you look back and you would have made the same decision. However, failing is not fine if you joined a startup based on a bad judgement (e.g., you joined a startup only because you were offered a lot of equity or you were offered a CXO position)

Finally he was also asked about the role of an MBA profile in a startup. He said that it is difficult to fit in because you are not an engineer and you are not a sales person. A good position to start is product manager.