Why VCs Are Moving From Fundraising to Fund Operations

Lucas: There's a shift happening inside venture capital firms that founders are starting to feel, even if they can't quite name it. The big story in VC recently has been about fundraising — who's raising, how fast, at what valuation. But the quieter story is what happens after the fund closes. And that story is about operations. Luna: You mean the internal infrastructure? I've noticed more firms hiring what they call 'operations partners' or even 'VP of Fund Operations.' That title barely existed five years ago. Lucas: Exactly. And it's not just the mega-funds. I'm seeing it at firms managing two hundred million, three hundred million dollars. The logic is straightforward: when a firm manages five hundred million dollars across a hundred companies, the general partners can't personally track every board observer seat, every pro rata calculation, every valuation footnote. So they're building teams to do it. Luna: And if that sounds like a back-office concern, it's not. It directly affects how founders experience their VC. Suddenly you're not just talking to your lead partner — you're talking to a portfolio success manager who wants your monthly metrics in a specific spreadsheet template. Lucas: Right. And that can feel either like support or like surveillance, depending on how it's done. But before we go deep on that — and I promise we will — I want to mention something. This show stays ad-free because a small group of listeners chips in monthly at buy me a coffee dot com slash fexingo. It's a low-key thing, but it literally funds the research time and production. If you find these conversations useful for what you're building or running, that's the way to keep them going. Luna: Yeah, and it makes a real difference. We hear from those listeners too — they often suggest angles we hadn't considered. So, appreciate that. Lucas: Alright, back to the ops shift. Let's ground this in something concrete. Look at the ARK Genomic Revolution ETF — ticker ARKG — it's up over ten percent in the last five days. That's a volatile fund, but it's also a reminder that thematic venture bets often show up in public markets before they hit private company exits. And when a VC firm has a big position in a genomics startup that's about to IPO, the operations team is the one prepping the mark to market data for the limited partners. Luna: So the ops team becomes the bridge between the portfolio company's performance and the LP's reporting requirements. That's a huge shift from the old model where the GP just called the LP once a quarter with a narrative. Lucas: Exactly. And it's driven partly by fund size. When a firm raises a five hundred million dollar fund, they're often taking money from institutional LPs — pension funds, endowments, insurance companies. Those LPs have their own compliance teams. They want data in a specific format, with auditable valuations. You can't deliver that with a partner doing it on a spreadsheet between board meetings. Luna: So the operations partner becomes the person who builds the data pipeline. And that has a side effect: it makes the VC firm more institutional, which can be good for fundraising but maybe less good for the founder who wants a quick, informal conversation about a pivot. Lucas: That's the tension. Let's use another example. Palantir — ticker PLTR — dropped over thirteen percent in the last five days. That's a big move for a company that's been a venture darling turned public. If you're a VC firm that holds Palantir shares in your fund, that drop hits your net asset value. And your LPs are going to ask about it. The operations team needs to explain the valuation methodology, provide context, and show how it compares to the private marks they had six months ago. Luna: And that's a full-time job. It's not something a GP can do while also sourcing new deals and sitting on boards. So you're seeing firms create roles like 'Director of Portfolio Operations' or even 'Chief Financial Officer of the Fund.' Lucas: Right. And some of these titles are new enough that there's no standard playbook. A friend of mine recently joined a mid-sized VC as their first operations partner. She told me her first three months were basically defining her own role. She built the reporting templates, set up the data room for LP reporting, and then started working with portfolio companies on their hiring plans. It's a hybrid role. Luna: So what does this mean for a founder raising a Series A today? When you meet a VC, should you ask about their operations team? Should you care? Lucas: I think you should. Because the quality of the operations team often predicts the quality of the post-investment relationship. If a firm has a strong portfolio success function, you're more likely to get introduced to customers, get help with hiring, get data benchmarking. If they don't, you might get a lot of partner attention for the first six months and then radio silence. Luna: Unless the partner is just really hands-on. But that's rare at scale. I think most founders underestimate how much bandwidth a GP actually has. They might have ten board seats, plus sourcing, plus LP meetings. Something has to give. Lucas: And that's why the operations team is becoming a competitive differentiator. Some firms are now marketing their 'platform' — that's the buzzword — as a reason to take their money over another firm's. They'll say, 'We have a team of five people dedicated to helping you with go to market, engineering recruitment, and regulatory strategy.' That's a real value add. Luna: But there's a flip side. If the operations team is too process-heavy, founders can feel like they're being managed, not partnered. I've heard stories of VCs requiring monthly board decks in a specific format, with specific KPIs, and that can feel like homework for a startup that's still figuring out its product-market fit. Lucas: Absolutely. And that's the art. The best operations teams customize their support. They know when to ask for a detailed financial model and when to just ask, 'What do you need this week?' The worst ones apply a one-size-fits-all template and treat every portfolio company like a public company reporting earnings. Luna: So it's a spectrum. And I think the trend is moving toward more operations, not less. Because the data demands from LPs are only going to increase. We've seen this in public markets for decades — institutional investors want standardized data. Private markets are just catching up. Lucas: Yeah, and there's a structural reason. The SEC has been signaling more scrutiny of how venture funds value their holdings, especially after some high-profile write-downs in 2024 and 2025. If you're a VC firm, you want to be able to defend your marks with a clear methodology. That requires a dedicated team. Luna: And that team also helps with something else: fund administration. I've talked to emerging managers who say the operational burden of running a fund — from capital calls to distribution calculations — is one of the biggest surprises. They thought it would be all deal-making, but it's a lot of spreadsheets. Lucas: For sure. And that's why some of the newer, smaller funds are outsourcing parts of their operations to firms that specialize in fund administration. But the larger funds are building in-house because they want control and because they see it as a way to differentiate when competing for the best founders. Luna: So if you're a founder listening, and you're comparing term sheets, what's the one question you should ask about a VC's operations? Lucas: I'd ask: 'How many portfolio success people do you have per active investment, and what's an example of how they've helped a company in my space?' If they can give a specific, credible answer, that's a good sign. If they say 'our whole team is hands-on,' that's probably a red flag — it means they haven't thought about it systematically. Luna: That's a good litmus test. I'd also ask: 'What metrics do you require from portfolio companies, and how often?' If the answer is 'we're flexible,' that might be great — or it might mean they don't have their act together. Lucas: Right. And I think the best answer is somewhere in the middle: 'We ask for a monthly update with five key metrics, but we work with each founder to define what those metrics are.' That shows they have a system but also respect the founder's context. Luna: So where does this trend go next? Do you think we'll see VC firms hiring chief operating officers at the fund level, like a corporation would? Lucas: We're already seeing it. Some of the largest firms — think firms with ten billion or more under management — have had coo type roles for years. But now I'm seeing it at the five hundred million to one billion fund level. And I think it will keep trickling down. Eventually, a two hundred million dollar fund might have a full-time operations person. Luna: And that changes the career path in VC. It used to be that you joined a firm as an analyst, became a partner, and then spent your time on deals. Now there's a whole parallel track in operations that can be a career in itself. Lucas: Exactly. And some of those operations people are coming from consulting, from banking, from startups. They bring a different skill set. And I think that's healthy for the industry. It professionalizes what has sometimes been a bit too informal. Luna: Final thought: with the market down a bit this week — the S&P 500 is off, tech stocks are mixed — do you think the pressure on valuations will accelerate this trend? If LPs are nervous, they'll want even more data. Lucas: Absolutely. When markets get choppy, the demand for transparency goes up. And that means the operations function becomes even more central. So if you're a VC firm that hasn't invested in operations yet, now might be the time to start. Luna: Or risk losing LPs to firms that have. It's a quiet arms race, but it's real. Lucas: It is. And for founders, the takeaway is simple: when you choose a VC partner, you're also choosing their operations team. Make sure it's a team that will help you, not just report on you.