The Rise of the Venture Capital Operating Partner
You've definitely heard of Entrepreneurs in Residence, but what about venture capital Operating Partners?
While both are about capability building for venture success, the "how" is different.
Entrepreneurs in Residence
Entrepreneurs in Residence (EIRs) are successful serial entrepreneurs between startups.
The goal of this relationship is for the EIR to launch a startup that the VC firm will fund. EIRs may also help the VC investment team evaluate new investments (though they are not expected to source and lead new investments) and support portfolio companies by sharing their knowledge, expertise, and network.
Operating Partners (OPs) are seasoned business leaders dedicated to working with portfolio companies to help them succeed.
The VC OP role was adopted from private equity and given a distinctive twist by the venture capital sector. In traditional private equity, OPs are proven business leaders that have established track records of building shareholder value. Ordinarily, OPs focus on strategic planning, commercial growth, operational efficiency, and financial controls. From interim management to board members and advisors, OPs leverage their industry experience to solve problems facing portfolio companies.
One of the difficulties for successful early-stage VC firms is that eventually, their portfolio will consist of a mix of companies at varying stages of growth, all vying for operational support. Therefore, it is often the role of the VC OP to ensure that post-investment operational support is scalable, impactful, and accessible across the portfolio regardless of the company's growth stage.
What this looks like varies from VC to VC.
The Rise of the VC Operating Partner
As the Australian startup ecosystem matures, the VC firms that invested in early-stage companies a decade ago now find themselves with a portfolio of later-stage companies facing different challenges.
Last year, Blackbird Ventures and AirTree Ventures, two of Australia's top-tier VC firms, added operating partners to their ranks. Both Robyn Denholm (Blackbird) and Gillian Findlay (AirTree) are seasoned operators - former COOs, CFOs, and board chairs of globally renowned companies - now charged with:
Helping startups across the portfolio, but especially a handful of their most ambitious late-stage companies, reach their growth goals faster.
Upgrading the operational efficiency of every company in the portfolio, no matter their stage.
However, the rise of operating partner roles isn't a trend exclusive to top-tier firms. Grok, Mike Cannon-Brook's family office, recently added operator in residence Bryan Rollins (ex. Atlassian) to their team, and Tenacious Ventures, a first-time fund, has me!