The Transition from Operators to Angel Investors
Understanding the landscape.
Hey Readers 👋
Welcome to New Economies, where we explore the latest technology trends shaping our world. In this edition, we highlight the impact that current and former operators are having on the startup ecosystem—and why startups should consider including them on their cap tables.
Over the years, I have met hundreds of operators who are genuinely eager to deepen their understanding of startups. These high-profile individuals are interested in advising, joining as employees, potentially serving on boards, starting their own companies and investing in early-stage startups.
This resource is designed to help you, as an operator, plant the seed and embark on your entrepreneurial journey, and to help you, as a founder, identify potential operators who may be interested in supporting you.
🚀 Throughout this edition, we discover:
The impact operators are having on the startup ecosystem
Which notable tech companies are producing founders
The fundraising landscape for Operators starting companies
Resources for you as operators to start planting your entrepreneurial contributions to the startup ecosystem
Resources for founders to identify potential operators for their startups
A database of 800+ operators advising and investing in early-stage startups!
Let’s dive in!
Unicorn Founder Factories
When startups become household names, an incredible network effect emerges. Early employees often become angel investors, and some go on to launch their own startups or even VC funds, as we highlighted in the last edition of New Economies. As shown below, these well-known tech companies have contributed to the launch of hundreds of new startups, with 59% receiving VC funding, 40% raising between $1M and $10M, and 28% raising over $10M. The U.S., U.K., Israel, and France are among the leading countries fostering this new wave of startups. Although these fundraising stats are only European focused, it highlights the impact these operators are having on the ecosystem.
Throughout our research, we have identified a few key trends:
Product & Engineering Operators: Operators with a product and engineering background are the most common profiles investing in early-stage startups.
Geographic Concentration: A large number of these operators, now turned angels, are based in the U.S. and Europe.
Tech Giants as Startup Factories: Companies like Uber, Airbnb, and X (Twitter) have collectively spawned over 800 startups. Former employees of these giants are now launching their ventures and, in turn, investing in and advising early-stage startups.
VC Funding Success: Approximately 60% of former operators successfully raise VC funding for their startups.
Why startups should include operators on their cap table
Operators bring diverse perspectives and specialised expertise in areas including Sales, GTM, Marketing, and Technical domains. They are usually deeply connected within the ecosystem and can assist in solving challenges which the startups might be facing. Even if they can't address the specific issue, they likely know someone in their network who can.
Operators also bring credibility, they have witnessed how early-stage companies scale and fail, they are key people to bounce ideas off as the startup ideates and changes over time. On top of this, they are great sounding boards, especially key to early-stage startups that may not be able to foresee upcoming obstacles.
How to involve operators within a startup
Finding the right operators can be a challenge, but here are a few effective ways to engage with them:
Office Hours: If you've raised capital from a VC, or plan to, leverage their in-house experts or operator networks. These operators are available to offer advice during designated office hours.
Informal Advising: Operators are often open to occasional discussions and brainstorming sessions. Reach out with a brief, concise message to initiate a conversation.
Operators investing in your startup:
Direct Investment: They invest capital and are available for support as needed.
Investment + Board Seat: Suitable for later-stage startups, they invest and take a more active role by joining your board.
The types of operator profiles you could consider:
Operators who have either worked or work at a notable tech company.
They are actively angel investing.
They have held a Senior or Head of position across: GTM, Marketing, Product & Sales.
4-5(+) years of experience. These profiles, at a minimum, are usually willing to support early-stage companies and likely have credible experience.
🚀 In a hurry? 5 Reasons on why you should include an operator along your startup journey:
They are a friendly resource for advice
They bring fresh perspectives and see challenges you might face in the future
They may be interested in investing in your next round
They are well-connected
They can open doors for you such as potential customers or investors.
Ways Operators Can Engage with Startups
Our dataset of 800+ operators has shown us that many operators with credible experience are now dedicating time to support early-stage startups. Here’s why you should consider doing it:
A fresh perspective
Founders often need different perspectives when building their companies and value credible advice. With your experience, you can support the best founders, share your industry knowledge, and help them overcome challenges.
A new economic landscape
By supporting and investing in early-stage startups, you can help create a new generation of wealth. While investing in early-stage companies comes with risks, your support can increase their chances of success.
Founders change the world
Take AI, for example. You can either be part of the change and get deeply involved with the ecosystem, or miss out on the greatest opportunity in tech right now. By supporting founders in your domain or industry, you'll stay ahead of the curve on emerging tech trends, which may open up opportunities such as investing in additional startups, joining another company as an advisor, board member, or employee.
Joining a VC fund
As an operator, you also have the option to join a VC fund, giving you access to a broader range of startups. Here are three ways to engage with VCs:
Scout Programs: VCs provide a small amount of capital for you to invest in early-stage startups.
Portfolio Mentoring: Typically through accelerators, these programs invest in hundreds of startups annually and have advisor networks accessible to most operators.
VC Funds, Angel Networks & Syndicates: You can join an operator-focused syndicate or fund as an LP if you're ready to start investing in startups.
🚀 In a hurry? 5 Reasons why you should be more involved with the tech ecosystem as an operator
Supporting startups will bring fresh perspectives and ideas to you for future opportunities.
Your opportunity to start angel investing.
Many of your operator peers are already likely mentoring or supporting a few startups. This opens up new opportunities for you such as deal-flow sharing and further collaborations.
Growing your network by meeting the brightest founders fostering innovation.
Giving back to the ecosystem. You are in the fortunate position where you are today. This is a great opportunity to start giving back!
If you are interested in learning more about early-stage startups, by becoming a premium subscriber to New Economies, you can access hundreds of startups looking for people like you to join their team as an investor, advisor or potential board member.
The Operators VC Landscape
Upgrade to access the data in full. By upgrading and becoming a premium member, you also receive:
For Startups & Investors: The full dataset of 800+ Operators advising & investing in early-stage startups.
For Investors: Access our data room of startups founded by operators with hundreds added monthly.
For Operators: The complete list of scout networks, operator networks & funds you should know about. All the resources to kick-start your startup advising and investing career.
For Startups: $1M in startup discounts at the likes of Hubspot, Intercom, Notion, Datadog, MongoDB and others.
For All Premium Subscribers: Access to all future premium newsletter editions featuring hundreds of startups in our regular industry market maps.
Access 800+ incredible operators advising and investing in early-stage companies once you subscribe.
❤️ If you enjoyed this article and see you next time!