Operator VCs are catching on in Europe. Former founders and startup employees raising their own funds has been a trend in the US already for many years.
What started back then as a bunch of operators taking early steps into the investment world, are now Founding GPs of some of the most renowned VC firms: among those Peter Thiel (Founders Fund), Paul Graham (Y Combinator), and Marc Andreessen (Andreessen Horowitz).
What makes operator VCs so successful? Having travelled the road themselves, operators have hands-on experience in building companies. This enables them to deeply understand founders and their problems at specific stages along their journey. In doing so, former operators can leverage their unparalleled network of:
a) Talent that can support either as early employees, executives or mentors,
b) Follow-on investors across various funding stages (some of which they had perhaps on their captable themselves), and
c) Customer contacts that can help validate ideas and accelerate traction.
The ignition of operator VCs does not happen overnight. It is instead a natural development as an ecosystem matures. The first operators take secondaries and exit proceeds off the table, place first angel tickets, move on to forming syndicates (perhaps even “mafias”), and ultimately raise their own funds to support the next generation of operators in a more institutionalised way.
Most recent examples in Europe include Wise-founder Taavet Hinrikus (Plural VC), Glovo-founder Oscar Pierre (Yellow Fund), and Pitch-founder Christian Reber together with Blinkist-founder Niklas Jansen (Interface Capital).
So, why do we keep hearing about these new funds setting up shop now? Because timing has never been better. During the current market turbulences, three things come together providing fertile ground for the acceleration of new operator VCs:
→ There have never been more exits than in 2021 (in Europe alone close to 2,500) with combined proceeds of over €120bn (Source: Dealroom).
→ Historically and infamously, recessions, market pullbacks, and economic downturns have been some of the best times to found and invest in startups. This included among many others Slack and Airbnb which saw strong participation from the - back then - emerging operator VCs mentioned in the first paragraph.
→ European Early Stage as an asset class has had strong tailwinds over the last 2-3 years, proving that there are attractive opportunities.
With every new cycle, new opportunities arise. It is exciting to see so many operators now switching sides of the table and giving back to the next generation of founders in the European ecosystem. However, while the network, access to dealflow, and operational experience of operators are often unmatched - the legal and administrative complexity of setting up funds remains a high barrier for many. Especially for those who are used to handy digital products, the experience of the traditional fund setup process is far from being joyful.
We want to tear down this barrier. The bunch OS allows operators to open standardized investment entities that are a) easy to understand, b) can be managed fully digitally and c) have significantly lower setup and management costs. We are on a mission to enable those who dare to take risks. Talk to us about how to start your fund with bunch.
We are excited to keep you posted throughout our journey to build the operating system for private market investors. From the time when one had to call the bank to make a stock investment and high fees restrained most people from entering the market, public markets have already seen drastic improvements.
However, the private markets are lagging behind. We want to take out the friction to free up time for fund managers, investors, and founders to support the projects tackling the challenges of tomorrow.
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