A Chat With Lightspeed’s Co-Founder Barry Eggers On AI & Market Cycles

Barry Eggers, Co-Founder and Managing Partner at Lightspeed Venture Partners, is a luminary in the venture capital industry. With 28 years of experience investing in groundbreaking companies and shaping Silicon Valley’s evolution, he has been named multiple times to the Forbes Midas List of top VCs. As a pioneer who co-founded Lightspeed in 2005, Barry has helped transform it into one of the most powerful VC firms in the world, with $25 billion in Assets Under Management and a portfolio of over 500 companies across enterprise, consumer, health, and fintech sectors. In 2022, Lightspeed raised over $6 billion in new capital, further solidifying its dominance in early and growth-stage investing. During our conversation, Barry shared his insights on the transformation of Silicon Valley, the rapid rise of AI, venture investment strategies, and the qualities that define exceptional founders and VCs.

Having grown up in Sunnyvale, Barry has witnessed the metamorphosis of Silicon Valley firsthand—from cherry and apricot orchards to the epicenter of global innovation. Looking ahead, he believes Silicon Valley will remain a powerhouse for emerging technologies, particularly in AI, robotics, and climate tech. While innovation is now more globally distributed, the Valley continues to be a magnet for top entrepreneurs and researchers pushing the boundaries of technology.

When reflecting on market shifts and investment surprises, Barry highlighted one of his most unexpected investments, Snapchat, which was originally sourced by his daughter. Initially skeptical about its potential, he soon realized the unique appeal of ephemeral social media. On the enterprise side, he emphasized that the shift to cloud computing caught many by surprise, but AI is disrupting industries at an even faster pace. The sheer speed at which AI is being integrated into enterprise applications suggests we are only in the early innings of a transformative wave.

As the AI landscape continues to evolve, Barry discussed the challenge of building defensible AI startups. He noted that product-market fit in AI is fleeting, and companies must continuously innovate to avoid being leapfrogged. Beyond just access to models, AI startups need differentiated data, network effects, and unique applications to maintain a competitive edge.

Considering the massive influx of venture capital into AI, Barry acknowledged that the VC industry has a tendency to overcapitalize emerging markets, and AI is no exception. However, he believes that while early funding may be concentrated in a small set of companies, the broader potential of AI remains untapped. Over time, new use cases will emerge across industries, leading to the rise of market leaders in sectors beyond foundational models.

Lightspeed has made strategic bets across the AI stack, investing in infrastructure leaders like Anthropic, Mistral, and xAI. While the infrastructure market is taking shape, Barry also sees enormous potential in the application layer, where AI is enabling the emergence of new category-defining companies, similar to how cloud computing did in the past.

With AI’s disruptive potential, venture funds must strike a balance between capturing upside and managing risk. Lightspeed maintains a diversified portfolio across sectors, knowing that only a handful of investments will drive outsized returns. AI is a massive wave, but ensuring exposure to multiple sectors helps hedge against overconcentration risk.

Reflecting on contrarian bets that paid off, Barry shared Lightspeed’s investment in SolarEdge, a solar inverter company that initially faced skepticism as a commodity business. Despite near-failures, the company ultimately went public and reached a valuation of over $10 billion, proving that contrarian bets can yield extraordinary outcomes. Similarly, he sees semiconductors as an overlooked sector poised for a resurgence, given their critical role in AI, autonomous vehicles, and next-generation data centers.

He explained that true success in venture capital rarely comes from following the crowd. Investors who chase popular markets often struggle to achieve exceptional returns. Instead, he stressed the importance of identifying opportunities before they gain mainstream attention. Being early to a market or betting on an overlooked sector, even when others hesitate, is often where the biggest wins are found.

Looking back at past economic cycles, Barry highlighted that downturns often produce resilient startups that master capital efficiency early on. While periods of excess capital create fast-growing companies, sustainable businesses must eventually demonstrate profitability. Companies that are forced to be disciplined from the start tend to develop stronger, more enduring business models.

Beyond financial capital, Barry emphasized that founders should carefully evaluate their venture partners. He noted the importance of long-term capital support and strategic partnership, explaining that while most VCs provide standard services like customer introductions and hiring support, the real differentiator is how a VC acts during tough times. Founders should evaluate how investors behave when faced with challenges, ensuring alignment on vision and decision-making.

When discussing what makes an exceptional founder, Barry noted that the best founders don’t necessarily need constant VC guidance. Instead, they display resilience, creativity, adaptability, and strong team leadership. Exceptional founders navigate obstacles with persistence while fostering a culture of innovation. While identifying such leaders early is challenging, those who successfully weather difficulties often emerge as industry changemakers.

Similarly, hiring the right VC partners requires a focus beyond traditional backgrounds in product, engineering, and finance. While domain expertise is crucial, Barry believes intangibles such as persistence, selling skills, emotional intelligence, and resourcefulness are critical. Given that venture capital requires initiative and independent thinking, self-starters with high competitiveness and hustle tend to thrive.

For those looking to break into venture capital, Barry advises first defining whether they are early-stage or late-stage investors. Early-stage VCs must anticipate markets and build companies, while late-stage VCs focus on metrics, valuations, and market trends. Additionally, given the specialization of modern VC firms, aspiring investors should develop expertise in a particular sector to differentiate themselves.

Barry Eggers’ journey reflects the evolution of venture capital from its early days to today’s globalized, fast-moving landscape. His insights reinforce that while trends shift and capital cycles ebb and flow, the essence of venture investing remains the same—spotting innovation early, backing resilient founders, and staying ahead of the curve. As AI, semiconductors, and new frontiers in tech continue to reshape industries, venture capitalists who embrace change and take bold, contrarian bets will define the next era of market leaders.

Barry concluded our conversation by encouraging the next generation of venture capitalists and entrepreneurs. He emphasized the need for fresh talent in the industry and expressed his hope that young professionals would take on the challenge of building innovative companies or backing visionary founders. He wished me luck on my VC journey, underscoring the importance of both investors and entrepreneurs in shaping the future of technology and business.