Investor vs. Operator VC

Which is best?

“two Minions character figure on red table” by Justin Lim on Unsplash

There’s an ongoing debate in the Startup industry:

What type of experience makes for the ‘best’ venture investor?

“Best” in VC terms means delivering the highest return on invested capital. This should be an easy debate to settle!

BUT… the numbers are not conclusive one way or the other. You can read the CB Insights analysis here.

AND… there are clearly great examples to justify both sides of this debate. Read Fred Wilson’s post on the subject here.

I’m not attempting to settle the debate once and for all. This is not a deep dive on the returns data segmented by VC type.

Instead my observation is simple…

We’re not asking the right question and it’s not a binary answer.

VC firms are created by teams of people and VC investing is a multi-disciplinary activity. VC funds need to be good at raising capital, picking winners, persuading founders to work with them, negotiating and transacting deals, being valuable board members, managing a portfolio and selling companies to return capital to their Limited Partners.