1--Confidential

Entrepreneur @ NW

Jeff BussgangGeneral Partner

Flybridge Capital Partners

May 24, 2011

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Entrepreneurship is About Passion

04/07/2023 2

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And Ingenuity

“It's 106 miles to Chicago, we've got a full tank of gas,half a pack of cigarettes, it's dark, and we're wearing sunglasses."

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Summary View

• We are in the middle of an unprecedented boom in technology and innovation – A true “Golden Age” for innovation and

entrepreneurship

• Growth opportunity ahead of us is more rapid, and global, than ever before

• Despite many changes, Venture Capital plays a critical role in the ecosystem

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Context for My Perspective

• General Partner at Flybridge Capital Partners, early-stage

VC firm based in Boston, $560M under management 50+ portfolio companies, investing out of Fund 3 ($280M)

• Entrepreneur-in-Residence at Harvard Business School

• Former entrepreneur Cofounder/President Upromise (acq’d by SallieMae)

VP at Open Market (IPO ‘96)

• Author: Mastering the VC Game

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Today Are Glory Daysfor Technology and Innovation

• We have made unprecedented advances in technology over the last 10 years…

• …and we ain’t seen nothing yet!

An explosion in computing power, connectivity and entrepreneurship with an outlook for accelerated growth over the next 10 years

• Social media and networking• Broadband penetration• The “i” generation, training “Net

Natives – iPod, iPhone, iPad• ‘Cloud computing’• Nanotechnology • Completion of the Human

Genome Mapping project• Synthetic Biology• Green consumer• Renewable energy

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Bubble-Driven orFundamentals-Driven?

IPO Filed

IPO, $10B valuation

$65B valuation $15-25B valuation

$10B valuation

$8-10B valuation

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Intellectual Capital – academia, innovation, diverse industries and ideas

Venture Capital

Advisors, Angels, Accelerators

Successful Companies – to partner, poach and/or sell to

Why Is This Happening Now?Ingredients for a Vibrant

Start-Up Ecosystem

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Why Now? Contextual Forces

Lean Start-UpsCloud Computing Moore’s Law

Reduced Cost To Experiment

Opportunity for Angels & VCs

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• $2.9 trillion – VC-backed businesses combined sales (20% of total business revenues in US)

• 12 million – jobs at venture-backed companies (12% of US work force)

• 1,000 – number of active VCs who make investment decisions

• $4 billion in initial investments

• Give me a lever long enough, and I will move the Earth. - Archimedes

VC Impact: Huge Leverage

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Venture Capital:Regional Comparison

California: $11.0B

New York: $1.3B

Boston: $2.4B

Total VC Investment 2010: $22B

Source: NVCA 2011 Yearbook

Illinois: $0.6B

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Deep Pockets:High risk tolerance and additional funding for follow-on rounds

Swing Big:VCs don’t invest in niches, they invest in transformative ideas that can build large companies

Experience Matters:VCs have “seen the movie” over and over again and can help avoid pitfalls to find the path to success

Value-Add:VCs provide domain experience, industry contacts, and strategic planning

Why Raise VC Money?

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Typical Investment Criteria

• Tangible things investors like to see:– Very big market– Unfair advantage– Attractive business model– Unique technology or business model approach

• Intangible things investors like to see:– “Pied Piper” – an ability to recruit and retain a great team,

partners– Interpersonal chemistry– Movie, not a snapshot

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VCs vs. Angels

Will want some control (voting, board, veto)

Will want to own 20-40% each

Will want to be very actively engaged (they get paid to do this!)

Can add tremendous value and be great business partners

Can be total disasters Typically rational actors,

commercially-driven, but if inexperienced…

Will want no control (“send me an annual email”)

Will want to own 1-10% May want to be engaged

or not (often a hobby, sometimes a personal mission)

Can add tremendous value and be great business partners

Can be total disasters Typically rational, but if

unsophisticated: naïve irrational, emotional

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Changes In VC Landscape

• Shrinkage

• Liquidity Challenges

• Transparency

• Secondary Markets

• Angels, Super Angels and Seed Funds

• Competing to be “Entrepreneur Friendly”

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Shrinkage: VC Commitments

0

5

10

15

20

25

30

35

2006 2007 2008 2009 2010

VC CapitalCommitments

$ Billion

Source: NVCA 2011 Yearbook

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Conclusion

• Unique and special time for entrepreneurship

• Unique and special time for technology and innovation

• Role of VC critical, valuable, evolving but rare

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THANK YOU!

Jeff BussgangGeneral Partner

Flybridge Capital PartnersMay 2011

Blog: www.SeeingBothSides.comTwitter: @bussgang

Email: jeff@flybridge.comBook: www.jeffbussgang.com