Dealflow | December 11, 2019

Operator Collective taps operator wisdom, and capital, for new $45 million fund

Dennis Price
ImpactAlpha Editor

Dennis Price

ImpactAlpha, Dec. 11 – Founders get the glory, but it’s the operators behind them that build the companies.

Mallun Yen, co-founder of SaaStr, wants to harness the skills and experience of coders and lawyers and engineers. Yen’s Operator Collective raised $45 million from more than 100 such operators from companies including Stripe, Gusto and Slack. Nine out of 10 of the investors are women and 40% are people of color.

The thesis: Limited partners with diverse backgrounds and deep operational experience can help the fund invest in and support entrepreneurs overlooked and undervalued by traditional venture capital funds.

“Our approach to venture investing is the same as how we build companies — with collaboration, inclusivity, efficiency, and transparency as part of our DNA,” said Yen. 

Early portfolio

Already the fund has backed seven business-to-business companies, including Guild Education, a Denver B Corp that reskills frontline workers, and inclusive hiring platform Searchlight. Both firms recently raised investment rounds (see “Reskilling frontline workers, Guild Education becomes a B Corp unicorn“).

Institutional backers

“Operators are the people who actually build companies,” said Cynthia Muller of Kellogg Foundation, one of the fund’s institutional investors, which saw an opportunity to reduce systematically bias in venture capital. Last week, Kellogg backed Harlem Capital, which closed a $40 million fund to invest in U.S. companies led by women and founders of color. “We saw the value in what Mallun is building,” says Muller.

Other investors in the first-time fund included University of Minnesota, Michigan State University, Bloomberg Beta, Kapor Capital, the Perkins Fund, and Gingerbread Capital.