Why Founders Gravitate Toward Operator-VCs: The Value of Experience Beyond Capital In an ecosystem where product cycles are seemingly short and founder burnout is real, having a partner that has walked the same path can make all the difference, not just in raising another funding round, but in building sustainable businesses.

In the ever-evolving landscape of Indian startups, where capital is increasingly commoditized, founders are looking beyond just cheque sizes. Strategic partnerships have become more important, especially with VCs who've been in the trenches.

Operator-VCs: former founders, ex-CXOs, or seasoned business builders who have previously lived the entrepreneurial journey, and now sit across the table as investors. The industry sees that the shift is not just anecdotal, but visible in the number of operator-led venture capital firms.

Sandeep Murthy, Partner and Managing Director at Lightbox, feels that 'empathy' has a lot to do with this shift, and entrepreneurship being a lonely journey, with only a few people around who have gone through the hustle themselves.

"An investor who shows up once a quarter and asks a couple of questions is not going to be able to relate enough to the journey of the founder. But if you're an investor who's going to sit at every turn of the journey, become an active part of solving problems, engage at every step, and understand the business almost as well as the founder, then the entrepreneur doesn't feel as lonely," said Murthy.

The founder would much rather interact with an investor who's checking in day-to-day rather than one who just asks why revenues are down and why a certain target was not met, added Murthy.

Over 40 per cent of emerging VCs globally now come from operational backgrounds, including former startup founders, tech executives, or product leads, according to an earlier report by INSEAD's Global Private Equity Initiative.

In fact, Karthik Reddy, co-founder at Blume Ventures, emphasized the importance of pattern recognition in venture capital but cautions against rigidly applying past formulas

"Our business is a business of matching patterns, but people mistake patterns for formulae. But the only stories worth telling are those built by exceptions," said Reddy in a blog Run by Sajith Pai, Partner at Blume Ventures.

A 2024 report of SaaSBoomi's 2024 Founder Insight Survey, which took into account more than 250 Indian SaaS founders, 67 per cent preferred VCs with operational experience over those from purely financial backgrounds.

The report cited that 73 per cent said that operator-VCs aided in faster decision-making support, 65 per cent voted because of better hiring and team building advice, and 58 per cent felt that the hands-on guidance during pivots and crises was a crucial factor.

The biggest factor might be the experience that the operators bring, because they have lived through it. Understanding the emotional aspect of the founder's life becomes an important element with empathy coming into play, with a steady build of credibility and trust, especially when things go sideways.

Tarun Davda, Managing Director at Matrix Partners India, said in a company blogpost, "There are examples of successful operator-VCs and non-operator-VCs. But the best operator-VCs often win trust faster because they've been there and made mistakes.

Increasingly, even early-stage accelerators and angel syndicates in India are prioritizing operator involvement. The Indian Venture Capital Association (IVCA) reported that over 50 per cent of newly registered domestic funds between 2022 and 2024 have at least one partner with startup or tech-operational experience.

In an ecosystem where product cycles are seemingly short and founder burnout is real, having a partner that has walked the same path can make all the difference, not just in raising another funding round, but in building sustainable businesses.