One year ago we launched Operator Collective as a new model for venture investing. We dismantled the traditional fund structure and rebuilt it from the ground up to optimize for bringing in operators from diverse backgrounds. Pictures from Operator Summit and our launch party – both near the end of 2019 – show bright faces giddy with hope and anticipation. We had no idea what this year would bring, of course. No one did.
The world has changed so much since those photos up there, but despite the once-unimaginable challenges 2020 brought, we steadied on. We set out determined to rise the tide in the venture ecosystem, create an access point for operators from underrepresented backgrounds, and bring our broad skill sets to support the next generation of game-changing tech founders. We stayed focused on investing in humble, lifelong learners from all backgrounds who share our belief that culture, diversity, and operational excellence are a key part of building truly great companies. We believed this would lead us to companies with better financial performance, especially in challenging times when the cracks are amplified.
What we ended up with was a fund that included more than 130 operator LPs – 90% women, 40% people of color — who’ve built and scaled companies like Stripe, Zoom, and Salesforce. And what does an enterprise-focused fund with a diverse LP base look like one year after our public launch? I’m a data-driven person so I thought I’d share some numbers.
We leverage our community for deal flow
Every investment begins with deal flow, so let’s start there. We built Operator Collective to be a more collective approach to venture investing. Creating a collaborative model to serve as more of a flywheel than a traditional funnel would allow us to concentrate more time and energy on what is most sought after by our community: efficiently engaging busy operators.
First, we believed a diverse and active community of LPs would lead to a great number of warm and contextual intros to high potential founders. As it turns out, LPs are our #1 source of referrals.
We also believed that if we built an operator-focused fund, other VCs would see the inherent value and refer deals to us, deals they were leading or in which they were considering investing. And VCs who are outside of Operator Collective referred our second highest number of deals.
Finally, founders are our next most significant source. We love it when our “customers” refer other customers – it’s the ultimate validation.
We love to invest in the unsexy
We’ve made 10 core investments and 13 supporting investments. Our focus remains on early stage enterprise/b2b startups, with a preference for the unsexy – the often not-visible solutions that have the potential to transform industries in need of disruption. COVID has accelerated the digitization of the workplace, and we’re fortunate that 3 of our core investments are receiving pre-emptive follow-on rounds already.
Here’s how our first-year investments break out by sector:
- 31% are in productivity platforms, like SetSail (revenue data analytics) and Spekit (digital enablement)
- 22% are in developer solutions, like Balsa (tools for builders) and Hex (data project sharing)
- 17% are in financial or insurtech solutions, like Fast (payments), Cube (FP&A planning), and AgentSync (insurance licensing)
- 17% are in workforce platforms, like Guild Education (re-skilling workers) and Textio (business communications)
- 13% are in regulatory and compliance solutions, like Ironclad (contract lifecycle management) and DataGrail (data privacy)
We invest in founders from all backgrounds
Given our LP base, there’s often a presumption that we only invest in female founders or founders of color – but that’s not the case. We’ve always looked to invest in founders from all backgrounds. Studies show that funder diversity has a natural trickle-down effect on the companies and types of founders being funded, and our data supports that.
Looking at our portfolio companies:
- 74% have a founder of color (48% Asian, 17% Latinx, and 9% Black)
- 35% have a CEO of color (17% Asian, 9% Latinx, and 9% Black)
- 57% have a female founder, while 35% have a female CEO
- 30% of our companies have a female CTO or technical co-founder
- 13% of our companies were founded by an all-female team
We anticipate and expect these numbers to bounce around over time, and we’re always striving to be deliberate at expanding to reach beyond our current immediate networks.
There’s no finish line in the fight for equal opportunity
We are still in early days, and we have much work ahead of us. We’ve already been busy thinking ahead to where and how we can improve in the future, but as our first year comes to a close, we’re also taking a moment to reflect on what this collective has done so far. We set out to create a new kind of venture fund, one that brings together the most respected operators in the world to find, invest in, and support the next generation of amazing tech companies, and it’s working.
An enormous thank you to our operators, our founders, our collaborators, and of course our dedicated Operator Collective team for believing in our vision and joining us on this inaugural journey. We would not be where we are today without you. I can’t wait to see what this collective can accomplish together from here. Let’s do this!
