Founder → Funder: Do ex‐founders make better VCs?

Hi! I’m glad you’re here. You’ve made it to issue #66 of VC Demystified🪄.

My name’s Nicole - I’m a Principal at an early stage venture fund, and I know firsthand that VC can often be a black box. Breaking into the industry may feel daunting and resources can seem scarce and inaccessible. I wanted to put together a newsletter to give others the playbook I wish I had when I first started.

Today’s deep dive: An evidence-based look at whether ex-founders actually make better VCs

^{My personal mission is to open as many doors as possible for other people and this newsletter is just one avenue to do that. As always, I will continue to post VC insights daily for free across my socials.}

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Read time: 5 minutes

An evidence-based look at whether ex-founders actually make better VCs

Should you try to be a founder before breaking into venture?

Many entrepreneurs want to work with VCs who have walked in their shoes, and many believe that the best VCs are former founders.

It makes logical sense. Who better to back startups than someone who’s built one?

But does the data support this? The answer: not necessarily.

Let’s dig into the studies and see where ex-founders turned VCs excel and where they fall short.

Study Overviews & Findings

1) NBER Working Paper No. 29907 (Gompers & Mukharlyamov, April 2022)

• Scope: 12,195 venture capitalists tracked between 1990–2019 via VentureSource and Thomson databases.

• Key findings:

  • ~7% of VCs previously founded a VC-backed startup.

  • Founder-VCs with a successful exit had a 30% portfolio success rate (IPO or acquisition), compared to 23% for career VCs and 19% for ex-founders turned VCs without exits.

  • Founder‑VCs with exits outperform by +6.5pp, while unsuccessful founders underperform by ~4pp.

2) CB Insights Study (2017)

• Scope: Thousands of North American VCs analyzed for CB Insights’ “Top 100” rankings.

• Key findings:

  • 38% of the top 100 VCs had founder experience; 62% did not.

  • Six of CB Insights’ top 10 investors have never founded a company. That includes the top two: Benchmark’s Bill Gurley and Chris Sacca.

  • Many all-time greats such as John Doerr (#84), Mary Meeker (#20), and Kirsten Green (#12), came from careers at Intel, Wall Street, or retail investing rather than founding startups.

  • The conclusion: there is no statistically significant correlation between being a former founder and ranking among the top venture investors.

What Ex‑Founders Bring to VC (Based on Data)

Operational acumen & pattern recognition

• The NBER study shows founder‑VCs with successful exits identify promising early‑stage teams better because they’ve lived through the scaling journey.

Founder empathy & deal access

• NBER notes that founders trust investor‑founders more, improving access to competitive rounds and conversion rates.

• Critically, successful founder‑VCs attract higher quality deal flow than both career VCs and unsuccessful founder‑VCs. This advantage compounds over time, as founders selectively seek out backers who’ve “been there” and have a proven success story.

Early-stage strength

• Founder‑VCs are more active in seed and Series A, the stage where their instincts and founder credibility resonate most.

Where Ex‑Founders Often Struggle (According to Research)

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