Not All VCs Need Operational Experience. But They All Need Operational Empathy.

At first sight of this data one might think that we need more ex-operators working as venture investors, especially in the UK & EU where this element of diversity lags behind the more developed US ecosystem. However, it’s worth recognizing that operational experience doesn’t necessarily make a better VC, as a few notable investors have <a href="https://avc.com/2017/05/investor-vcs-and-operator-vcs/" rel="noopener ugc nofollow" target="_blank">pointed</a> out <a href="https://feld.com/archives/2004/06/are-vcs-with-operating-experience-more-successful/" rel="noopener ugc nofollow" target="_blank">before</a>, and as <a href="https://www.cbinsights.com/research/founders-best-venture-capitalist-investors/" rel="noopener ugc nofollow" target="_blank">one preliminary analysis</a> on the topic highlighted. No doubt, operational chops have the potential to translate into more successful venture investing. A <a href="https://www.nber.org/papers/w29907" rel="noopener ugc nofollow" target="_blank">recent paper</a> by economists Paul Gompers and Vladimir Mukharlyamov provides some evidence of this. In their research they found that founders who became VCs after a successful exit of their company do about 28% better than professional VCs at investing in successful companies. (Success was defined as a portfolio business listing on the stock market or being sold at a value higher than the total funding it received.) <a href="https://medium.com/venture-capital-research/not-all-vcs-need-operational-experience-but-they-all-need-operational-empathy-4b03e30a02ce">Click Here</a>