noticeable trend is emerging in venture capital: operators—individuals with firsthand experience running startups—are stepping into the role of investors. These operator-investors are uniquely positioned to win founders’ trust, often becoming early points of contact and gaining access to highly competitive deals.
Their strong networks ensure consistent deal flow and access to high-quality opportunities. Beyond providing capital, they offer empathy and practical support, helping founders deal with the challenges that come with building and scaling a startup.
Having walked the same path, operator-investors bring a deep understanding of the founder journey. This mix of experience, access, and hands-on help is why operator-investors are making such a big impact in early-stage venture capital.
Many begin by making personal angel investments while maintaining full-time roles. However, some go further, establishing funds that combine capital with hands-on support for startups, and this is why an increasing number of founders are choosing operator-investors on their cap tables instead of the typical VC.
In this article we take a look at the different types of operator-investors, and the typical journey of moving from operator angel to full-blown fund manager.
The History of Operator-Investors
The evolution of operator-investors has evolved in the past decade, starting with VC firms hiring former operators.
First Wave
The first wave began when big VC firms like Andreessen Horowitz (a16z) and Sequoia started hiring former operators. These were people who had built and scaled startups themselves. Their experience helped venture funds offer more than money. They provided founders with practical advice, mentorship, and strategies based on real-world challenges.
Second Wave
The second wave saw operators stepping in as angel investors. While still working in startups, these individuals began investing their own money into early-stage companies. Often through syndicates or angel networks, they brought "smart money" to the table. Apart from funding, founders gained access to industry knowledge, networks, and advice. Operator angels also had the advantage of spotting great deals early, thanks to their deep ties in the startup world.
Third Wave
The third wave is operators raising their own funds. These operator fund managers use their tech backgrounds and networks to create funds that offer capital, along with insights, connections, and hands-on support. Their "plugged-in" approach helps founders fill cap tables with investors who truly understand their needs. This wave has redefined what venture capital can offer, blending money with operational expertise.
Starting Out as an Operator Angel
Many operators begin their journey into venture capital as angel investors. While they are still busy running or working in startups, they start making small, personal investments. This allows them to dip their toes into the world of venture investing without taking on too much risk.
Starting Small with Syndicates
The easiest way to begin is by joining syndicates or angel networks. These groups pool resources, allowing operators to invest small amounts while still being part of significant deals. Syndicates also reduce the pressure of doing due diligence alone. Operators can rely on the expertise of the group while learning the ropes of investing.
Defining a Budget and Investment Focus
Most operator angels start with a clear plan for how much they want to invest. This is usually a small percentage of their net worth, often around 5-10%. They also decide on the types of startups they want to back. Many choose industries they know well or startups solving problems they’re passionate about. Having a focused approach helps them make smarter decisions and spot better opportunities.
Building a Track Record of Early Wins
Operator angels aim to build a track record of strong investments early on. These “wins” are startups that grow quickly or gain attention from larger investors. A strong track record attracts more opportunities, helps build their reputation, and opens doors to bigger investments later.
Moving from Operator Angel to Raising Your First Fund
Many operator angels eventually want to start their own funds, but transitioning from an operator angel to raising a first fund is a big step. It requires careful planning, strong relationships, and a clear vision.
If you are looking to that, these are the three most common steps operator angel take to raise their first fund:
1. Building Community and Network for Support
The first step is to build a strong community. This often starts with angel networks or other investing groups. These communities provide advice, but more importantly, they help you connect with potential limited partners (LPs) and valuable deal flow, giving you access to promising startups early on.
2. Launching the Fund with Initial LPs
Your first fund doesn’t need to be large. Many operator fund managers start small, raising money from their immediate network. These initial LPs might be friends, colleagues, or members of your community. Once you secure these smaller checks, you can close your first fund. From there, you can reach out to family offices or funds of funds to expand. Having a clear thesis for your fund helps attract LPs who share your vision.
3. Scaling to Institutional Capital
After proving success with your first fund, you can start thinking bigger. Use your early wins and established track record to pitch institutional investors for your second fund. These might include pension funds, endowments, or large corporations. Institutional capital allows you to scale your investments, back more companies, and take on larger deals.
Typical Challenges of Raising the First Fund
Raising your first venture capital fund is exciting, but as you probably already know, it’s not easy. Below are some of the most common challenges first-time fund managers face.
Building Trust with LPs
LPs are cautious about backing new fund managers. They want to see a track record, but as a first-timer, you might not have one yet. Convincing LPs to trust you often requires strong personal relationships and a clear, compelling investment thesis.
Defining a Differentiated Thesis
The venture capital space is crowded. To stand out, you need a unique investment thesis. This means explaining why your fund is different and how you can deliver better returns. For operators, this often ties back to your expertise and network in a specific industry.
Navigating Legal and Operational Setup
Setting up a fund involves a lot of legal and operational work. You’ll need to create contracts, comply with regulations, and manage the fund’s structure. This can be complex and expensive, especially without prior experience.
Managing Time and Resources
Fundraising takes time—often much longer than expected. While raising capital, you also need to maintain deal flow and manage relationships. Balancing all these tasks can be stressful, especially if you’re also working a full-time job.
Scaling Beyond the First Fund
Even after closing your first fund, challenges don’t end. You need to deliver results to secure LP trust for future funds. This means making smart investments, showing early wins, and maintaining transparency with LPs.
Popular Operator Investors
Operator Angels
- Allison Barr Allen
Company: Fast
- Austen Allred
Company: Lambda School
- Jonathan Swanson
Company: Thumbtack
Solo Operator Fund
- Sahil Lavingia
Fund: shl.vc
Company: Gumroad
- Ryan Hoover
Fund: Weekend Fund
Company: Product Hunt
- Shaan Puri
Fund: Shaan’s All Access Fund
Company: Twitch
Multi-Operator Fund
- Todd Goldberg and Rahul Vohra
Fund : Todd and Rahul’s Follow-On Fund
Companies: Mailjoy, Superhuman
- Siya Raj Purohit and Taylor Stockton
Fund: Pathway Ventures
Companies: AWS, FutureFit AI
- B. Favier, L. Reeder, P. Loganathan
Fund: Graduate Fund
Companies: Palantir, Segment, Letterdrop
Operator & Investor Partnership Fund
- Lolita Taub and Jesse Middleton
Fund: The Community Fund
Companies: Catalyte, Flybridge Capital
- Jyoti Bansal and John Vrionis
Fund: Unusual Ventures
Companies: Harness, Lightspeed VP
- J. Burks, J. Dawkins, B. Givens
Fund: Collab Capital
Companies: Google, Inflex Digital, Techstars
Former Operator Investor
- Andrew Chen
Company: Uber
Fund: Andreessen Horowitz
- Jess Lee
Company: Polyvore,
Fund: Sequoia Capital
- Mike Duboe
Company: Stitch Fix
Fund: Greylock Partners
Operator-Investors as Fund Managers
Operators bring a rare blend of experience, empathy, and action. They’ve been in the founder’s shoes, faced the same struggles, and found ways to overcome them. This makes their support deeply personal and incredibly impactful, so if you’re considering transitioning to a fund manager, there’s never been a better time.
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