The operating experience has become a buzzword in recent years as venture capitalists ramp up their resumes in a quest to differentiate themselves from other sources of startup capital. Now, it looks like we’re seeing the next evolution of that trend.
This year has seen a wave of startup consulting firms looking to raise venture capital of their own to acquire stakes in companies they already work with or align with their practice. In theory, this makes a lot of sense because both consultants and venture capitalists have the same goal at the end of the day: to help companies grow.
“Most join because we provide the capital, ‘plus.’ What is that more? The advantage with us is telling stories”. Director General of the FNDR, James Vincent
But why are so many consultant-led VCs launching now? It’s a particularly difficult time in the broader venture market and the broader economy, as well as being one of the toughest periods for emerging managers and first-time fundraisers. It’s worth noting that all of these funds are raising external capital rather than investing off their balance sheets.
For one thing, startups they were already working with were asking them to do it.