The Great Debate: Operators vs. Financial Analyst as VCs

Venture Capital has become one of the hottest business sectors of the last decade, and with good reason. For founders, a VC investment can be the difference between seeing their idea turn into a unicorn or die a slow death. And for investors, the potential returns in VC can be astronomical. However, as the industry has grown, so too has the debate concerning who makes the better VC: operators or career capital allocators? In this blog post, we'll examine both sides of the argument and try to arrive at a conclusion that benefits everyone.

The argument for operators as the best VCs is pretty straightforward. Former founders who have successfully navigated the startup world have firsthand experience of what it's like to launch, grow, and sell a business. They can relate to the challenges that founders face and provide insights that a non-operator might not be able to. For example, if a founder is struggling to scale their business, an operator VC can provide actionable advice on how to improve their product or streamline their operations.

On the other hand, non-operators argue that their ability to view opportunities from a top-down perspective gives them an edge. They can see patterns and market trends that operators might miss because they are too close to the day-to-day of running a business. Non-operator VCs are also more likely to have experience in multiple industries and can bring that expertise to the table when evaluating potential investments.

The debate over which type of VC is superior is complex and multifaceted. It's important to note that no single approach is universally better than the other. Instead, the best VCs are those who can understand and appreciate both perspectives and marry them to create a more comprehensive view of an opportunity.

One way to achieve this is to have both types of VCs on the same team. This way, the operator can provide on-the-ground insights, while the non-operator can take a more global view. By working together, they are more likely to make sound investment decisions that take into account both short-term challenges and long-term trends.

Another way to achieve a marriage of viewpoints is to encourage VCs to be "multi-hyphenate" in their careers. A VC who has experience as both an operator and a capital allocator is more likely to be able to navigate the complexities of the industry and identify winning opportunities.

In conclusion, the debate over whether operators or career capital allocators make better VCs is not a matter of one being superior to the other. Both types of VCs have unique advantages and insights that can contribute to successful investments. However, the best VCs are those who can combine the perspectives of both types of investors to arrive at a more comprehensive understanding of an opportunity. In a world where startups are changing the status quo across all industries, it's more important than ever to be able to see the forest AND the trees.