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The portfolio operator strategy has potential to boost returns.
We know of numerous instances in which companies took lower valuations to win portfolio operator VCs as investors versus other categories of VCs, because the entrepreneurs so valued the resources a portfolio operator could bring to bear.
In other cases, entrepreneurs have offered board options or other sweeteners to highly attractive portfolio operator VCs.
We find that portfolio operator VCs are building teams of employees that are unusually large for the VC industry and include many people with strong operational backgrounds.
These larger teams tend to be accompanied by a transition toward pyramidal organizations, which are increasingly becoming the norm in portfolio operator funds.
Based on a range of sources, we believe that most funds with well-developed portfolio operator models have top-quartile returns (typically above 20percentt IRR in the relevant time periods).
Similar(51)
There are three common categories of VCs in terms of attitude and practices toward investing and portfolio company support: financiers, mentors, and portfolio operators, ranked in order of increasing level of operational involvement.
The most common service portfolio operators offer their portfolio companies is recruiting assistance.
3. Portfolio Operators: "We have a structured, standard process for adding value".
However, unlike mentors, portfolio operators do this in an institutionalized and structured way.
Portfolio operators agree with mentors that their unique personal and fund assets can be used to develop their portfolio companies.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com