Does operational experience help a VC?

Nic, I agree about the relationship side of things but that can be offset if someone sitting opposite you has been there and done it successfully before and can help you avoid all the pitfalls that crop up. Sitting opposite a pure financier will not mean you get the most from your investor, in my view.

Charlie - my point here is that no one background is any better than any other. In my experience of sitting round board tables financing and consulting types (which is mostly where I come from) can be prone to over application of theoretical models and insufficient appreciation of the practical realities of business whereas the most common weakness of operational types is to try and repeat the things that worked for them before with insufficient understanding of how things are different this time round. Both of these are matters of experience and can be overcome by time spent working with many businesses, which I think is ultimately the best single thing to look for.

Hej that's an interesting post because it breaks a commonly and wrongly shared idea, and thanks to share about "The second bounce", this will be a good reading in August!;-)

If there is one outstanding VC between all it is Michael Moritz, he's got my highest consideration not only because he is a good Christian (any miracle here?:)) but most of all because I don't see any other VC on earth who possibly has any similar "star record", he is THE "serial"; only half of one of those hits would have hyper satisfied any LPs of any European VCs: YHOO (I recall: 25% if the shares for $m1 with IPO less than a couple years later in the range of $b5 valuation if my memory's correct), GOOG, Apple, Paypal, Youtube (despite Youtube's exit looks like a double "self-service" off GOOG where he was seating on the board...) etc.

The other interesting point about your post's question applied to MM's background, besides the fact in had no operational background in a start-up, is that his previous experience was dealing with "Intelligence", information, IT oriented... very curious guy, with unique ability to manage information, exploit its essence and develop a vision out of it. I remember I was explaining precisely this about five years ago to someone in London precisely about this operational background subject!...:) Then a virtuous circle is coming into place to reinforce this key initial edge (big brands names attracting the best deals...)

After this being said, MM had excellent academic background enabling him to have and develop further this vast set of functional competences VC requires in human resources, strategy, marketing, finance, operations... the flair he has, not coming from any start-up operational background either, might result more from good intuition on people rather than academic courses...

Now I think I know at least a couple companies which should interest MM... ;-))

Thanks David - I think you are right in saying it largely comes down to good intuition and judgement on business and people, and no one background is much better than any other for this

Yes, absolutly.

But more important than operational experince can be to be more open minded and to take the effort to understand a unusual business concept, what most VCs are not willing to do so.

99% of them even do not respond to email requests ... Listen carefully VC Fund investors...!

If they do answer to email requests and do not step into a dialogue with the entrepreneur, how can they find the 'next big thing' and make money for their Fund investors?

My experince with VCs is that they are looking for the 'next big thing', but still want something which has an 'proof of concept', means an other copy of something. And this is definitly NOT the next big thing!

A good example for this is Google, they went two years searching through Silicon Valley to raise funding for their SE. Nobody has finance them.

They raised one million privately - 'love money' through family and friends, set up their SE and than the big 'vorward thinking' (I laugh) VCs gave them their first funding.
They simply jump on the rolling train, with very low risk!

Imagine what has happen if they 'should not have' raised this first one million of 'love money' from familiy and friends! Today we've had no Google!

In my opinion 99,99% of VCs out there do not recognize 'the next big thing' when it slaps them directly in their faces. They want a GURANTEED profit, with low, very low risk, better no risk!

With this kind of attitude the most of them will never get the opportunity to be invested in the 'next big thing'!

This may seem obvious but aren't the Top 100 stats only relevant in the context of overall 'market' composition? In my experience with VCs, there seems to be an overwhelming number of bankers and consultants in the field with a generally lower representation of C-level executives. If that's the case, than a 20-25% make up in the Top 100 by C-Level execs may actually indicate a categorical anomaly rather than a neutral or weak showing.

Nic, do you have a sense of the percentage of total VCs who come from an operational background?