What sets apart the next wave of transformative AI companies? How can investors identify founders who will shape the future of technology? Chip Hazard, General Partner at Flybridge Capital, shares his perspective on leveraging deep technical insights and earned secrets to drive alpha in venture capital.
Chip discusses Flybridge’s all-in focus on AI, their approach to pre-seed and seed investments, and the importance of rethinking traditional SaaS models in favor of agentic AI applications. He also explores Flybridge’s portfolio, featuring innovative companies like Melody Arc and Mako, and highlights why the application layer is where the lasting impact of AI will be made.
In his conversation with Steve Brotman, Chip offers invaluable advice for VCs and entrepreneurs, revealing insights on founder traits, market differentiation, and the role of XFactor Ventures in supporting female founders. Whether you’re an investor or a startup founder, this episode offers a roadmap for navigating the AI-driven future of venture capital.
Transcript:
Steve Brotman: Hi, my name is Steve Brotman. I’m the managing partner at Alpha Partners, a fund that focuses on pro rata rights for early and midsize VCs that may not be able to follow on at the growth stage. Today, I have Chip Hazard with me. He’s a General Partner at Flybridge Capital Partners, where he’s been investing in early-stage technology companies since 2002. He’s also the co-founder and investment partner at XFactor Ventures, focusing on backing female founders. With over two decades of experience, Chip has served on numerous boards, including MongoDB, Nasuni, and Procea. His investment interests span enterprise infrastructure, financial technology, digital health, and a growing focus on AI. Chip holds a BA in Economics and Political Science from Stanford and an MBA from Harvard, where he also teaches. Chip, welcome to Driving Alpha.
Chip Hazard: Thanks, Steve. It’s great to be here. I love what you’re doing with this podcast and appreciate what you’re building at Alpha Partners, particularly around pro rata rights for early-stage investors.
Steve Brotman: Tell us, how did you get into venture capital? Was it a planned career path, or is there a story behind it?
Chip Hazard: It was pure luck, honestly. I went to Stanford for undergrad, worked in San Francisco and Europe, then came back to Boston for my MBA at Harvard. After that, I met the partnership at Greylock, one of the oldest venture firms in the industry. They hadn’t hired anyone in 10 years, but I joined them in 1994 and learned from the best. It was a lucky break and a great way to get into the business.
Steve Brotman: Very cool. So, what led you to leave Greylock and start Flybridge?
Chip Hazard: My time at Greylock was fantastic. My first investment went public, and my second was a 10x return. By 2002, the firm was shifting towards the West Coast, but I wanted to stay in the Boston area and build something new. So, I co-founded Flybridge, initially starting with a solo LP fund, and then spun out as Flybridge in 2008.
Steve Brotman: Where did the name “Flybridge” come from?
Chip Hazard: We liked the name because it’s the highest point on a boat, where you can see over the horizon. It felt like a good analogy for what we try to do for our founders.
Steve Brotman: Let’s pivot to your strategy. Your firm has a strong focus on AI. Can you share how this thesis developed?
Chip Hazard: Absolutely. We’ve been investing in AI for over a decade. Initially, we called it data science or machine learning. But with the launch of ChatGPT in 2022, it felt like a Netscape moment—a major shift. We decided to lean into this opportunity. We focus on early-stage investments in AI, primarily in application layer innovations and developer tools.
Steve Brotman: Could you mention some recent notable investments?
Chip Hazard: Sure. We’ve invested in companies like Melody Arc in customer operations, Prime Security for AI-powered security, and Mako, which helps AI models run hardware-independently. These companies align with our strategy of building an ecosystem at the infrastructure and application layers.
Steve Brotman: You don’t focus on chips and foundational models, right?
Chip Hazard: Correct. As a seed-stage fund, we don’t typically invest in capital-intensive areas like chipsets or foundational models. We believe the value over time will accrue at the application layer, similar to how companies like Google and Amazon emerged after the initial internet infrastructure build-out.
Steve Brotman: Is this AI wave the biggest opportunity of our careers?
Chip Hazard: That’s my hope. The pieces have come together—connected devices, massive data sets, and advanced software stacks. It’s the biggest opportunity I’ve seen, and we’re fully invested in it.
Steve Brotman: What traits do you look for in founders?
Chip Hazard: We look for a combination of deep technical insights and domain expertise, what we call “earned secrets.” Additionally, non-resume characteristics like passion, grit, and the ability to inspire others are critical. We want founders who can articulate a compelling vision and attract talent.
Steve Brotman: What about market differentiation?
Chip Hazard: We think a lot about data network effects and the human-AI interface. It’s not enough to just integrate a copilot into an existing SaaS application. The winners will fundamentally rethink the jobs to be done and build trust with users through realistic capabilities.
Steve Brotman: What’s next after this wave of agentic interfaces?
Chip Hazard: We’re still in the early stages of AI capabilities, but we see potential in orchestrating multiple tools to handle complex tasks. There’s also a broader trend towards ambient, always-on applications, and potentially robotics and real-world AI systems.
Steve Brotman: Do you believe AI is eating software?
Chip Hazard: I don’t think software is dead, but AI will be everywhere. Every company will eventually be an AI company. AI is great at generating software, which will reduce development costs and timeframes, allowing for highly customized applications.
Steve Brotman: What advice would you give your younger self in this industry?
Chip Hazard: Be a skeptical optimist. It’s easy to say no, but the skill lies in knowing when to say yes. Develop a strong point of view on the world and challenge your own biases. Also, pick a lane and specialize—it’s key to building deep insights and access to great opportunities.
Steve Brotman: How does Flybridge make investment decisions?
Chip Hazard: We vote on seven criteria to tease out different perspectives across the team. We support high-conviction, non-consensus decisions at the seed stage. As companies mature, our follow-on decisions are more consensus-driven, focusing on execution and market validation.
Steve Brotman: Do you use AI tools in your decision-making process?
Chip Hazard: Yes, we have an internal AI pipeline for sourcing, portfolio management tools, an AI-based investment memo generator, and an AI red team for evaluating our decisions.
Steve Brotman: Is this all internally developed?
Chip Hazard: It’s about 90% internally developed. We use tools like Harmonic for sourcing, and we integrate various AI systems like Perplexity and LLMs.
Steve Brotman: What’s your advice for entrepreneurs?
Chip Hazard: Listen carefully and anticipate organizational challenges as you grow. Timing is crucial when deciding to expand your product line or go-to-market strategy. If you move too early, you risk losing focus; if you move too late, you risk stagnation.
Steve Brotman: Tell us about XFactor Ventures.
Chip Hazard: XFactor is a pre-seed fund backing female founders, addressing a massive market gap. It’s run by a team of successful female founders who have great networks and insights. It’s been a fantastic extension of our efforts at Flybridge.
Steve Brotman: This has been a great discussion, Chip. Thank you so much for joining me.
Chip Hazard: Thanks, Steve. It’s been great chatting, and I look forward to working with you on future opportunities.