Should operators invest on the side while holding a full-time company role?

Phil Libin · Jan 4, 2017

Running a company requires relentless focus — working on interesting things not fully aligned with the company's interest makes things go sideways — whereas an investor can legitimately work on a basket of things

His own experience: things went great when he focused and sideways when he pursued interesting tangents

4:51 20VC: Evernote's Phil Libin on The Pros and Cons Of Moving To VC, The Future For Bots & Having Marc Benioff & Reid Hoffman As Mentors

Jack Altman · Nov 3, 2023

Early stage founders spending real time on investing is too expensive for them

Scope: applies to early stage founders specifically

0:00 20VC Roundtable: Why Early Stage Founders Should Not be Investing, Why Great Founders Have Low EQ, How the Structure of VC Firms Will Change, Will Founder-Led Funds Compete with Sequoia & Is Investing a Team Sport?

Jack Altman · Nov 3, 2023

Early-stage founders should not spend real time investing — the time cost is too expensive until the company can tolerate you being away for a month

in the early years, when constraints are the dominant force, any blocker on the CEO's time carries costs that are very hard to make up for; only once his own company reached scale did he find incremental hours past ~50 a week stop being valuable

Scope: 'early days' means several years, not one; there is genuine learning from investing — founders, markets, business models, the venture ecosystem; once a company is large enough, investing becomes worthwhile

21:46 20VC Roundtable: Why Early Stage Founders Should Not be Investing, Why Great Founders Have Low EQ, How the Structure of VC Firms Will Change, Will Founder-Led Funds Compete with Sequoia & Is Investing a Team Sport?

Ryan Petersen · Nov 13, 2023 · hedged

Angel investing has not net improved him as a CEO, because any time spent away from Flexport is probably net negative for Flexport

It gave him useful perspective on the VC world and fundraising, but it inevitably consumes time, and maximizing Flexport's success would mean spending all his time on Flexport

Scope: it did help him understand the VC game and fundraising; he still values the learning and founder friendships for non-financial reasons

45:18 20VC: Flexport's Ryan Petersen: Reflections on Leadership from 13 Years Leading Flexport, Why Velocity not Speed is Most Important in Company Building, How Money Creates Inefficiencies in Scaling, The Future of Trade with China & Why Remote Work is so Cha

Harry Stebbings · May 12, 2025

Founders who have raised money from VCs should not also raise outside LP money for a fund, because the duty to build the company and the duty to optimize a portfolio are at odds.

Money raised from investors deserves your time on the company; a fund creates a second obligation to optimize a portfolio that pulls you away

Scope: investing your own angel money is fine

45:17 20VC Exclusive: Mercury Founder Launches First $26M Fund | Why Founders Should Take the Highest Price | Why Serial Entrepreneurs are Better | Why AI Is So Overhyped | The Future of Venture Capital with Immad Akhund

Max Junestrand · Jan 26, 2026

Founders cannot angel invest seriously while running a company

You can't focus on it, so you can't make good decisions; writing a small friendly check is fine but doing it seriously is not possible

Scope: small $10k checks into friends' companies are acceptable

58:14 20VC: From Only OpenAI to Die-Hard Anthropic: The Downfall of OpenAI in Enterprise | Harvey vs Legora: Legal AI is a Winner Take All | $7M ARR in a Single Day and Raising $200M Across 3 Rounds with No Deck with Max Junestrand, CEO @ Legora

Adam Foroughi · Apr 27, 2026

Founders should not angel invest.

To invest you must sell shares in your own company for liquidity and then chase a return KPI that diverts you from the day job; every second not committed to the core business is an unmeasurable loss that compounds and makes success less likely.

Scope: stated as his own choice — he no longer invests

71:27 20VC: Applovin: $160BN Market Cap, $5.48BN Revenue, $10M EBITDA Per Head | Why the Best Do Not Need Mentorship | Why Founders Should Not Angel Invest | Why Kindness in Business Will Slow You Down with Adam Foroughi

Des Traynor · Jul 18, 2022

Angel investing makes an operator better by exposing how little tolerance outsiders have for excuses, which sharpens how you anticipate outsiders judging your own company

When a founder explains away lack of traction with the loss of a VP of Engineering, he nets it out to 'we couldn't get it done' — yet internally at Intercom he catches himself making the same kind of excuse

Scope: based on ~50-60 checks written

13:36 20VC: Why Being First Does Not Matter, Why Defensibility on Day 1 Does Not Exist, Three Core Elements To Move into Enterprise Effectively and What Makes Truly Great Product Marketing Today with Des Traynor, Co-Founder @ Intercom

Delian Asparouhov · Jul 29, 2024

Founders should not take the highest-priced offer in a competitive round; a reasonable price sets the company up for long-term success

Varda has never taken the highest-priced offer in any of its rounds, choosing instead what was in the appropriate range for long-term success

50:57 20VC: Twitter's Most Controversial VC Delian Asparouhov on Inside the Walls of Founders Fund: What the World Does Not See | Why Western Europe Will Be Like the Third World | Why SaaS as an Industry Might Be Dead

Immad Akhund · May 12, 2025

A founder-CEO running an external fund is legitimate when it is transparent and mutually reinforcing for both sides — but that only works for founders in a special position

Mercury sells to startups, so his investing generated the first 30 alpha customers and Mercury's success generates dealflow and the ability to win; his co-founders endorsed it as part of what makes Mercury work

Scope: requires full transparency with LPs; Mercury remains his main job; probably not true for most entrepreneurs

46:06 20VC Exclusive: Mercury Founder Launches First $26M Fund | Why Founders Should Take the Highest Price | Why Serial Entrepreneurs are Better | Why AI Is So Overhyped | The Future of Venture Capital with Immad Akhund

Carles Reina · Apr 11, 2026

There is no fundamental conflict between being an operator and running an investment vehicle — the two run in parallel and each contributes to the other

67:56 20Sales: ElevenLabs: Why We Set a 20x Sales Quota | How to Structure Sales Compensation Plans | Customer Success: 'Total BS' or Growth Engine? | Building an AI Sales Machine: What Tools & Tactics Must CROs Adopt Today with Carles Reina

Josh Browder · May 18, 2026

Being a founder and an investor simultaneously makes you better at both, and founders should prioritise doing right by whoever believed in them first

Investing taught him things that helped DoNotPay such as the SEO strategy; founders love working with other founders and hate professional money managers, which is why founder-investors like Lachy Groom and Delian are among the best

72:43 20VC: Turning Peter Thiel's $100K into $10M Angel Portfolio | The One Man Accelerator at The Four Seasons | Why VCs Can Be Sharks and What Founders Need to Know | Why Stocks and Cash are BS and You Should Invest in Land with Josh Browder

Harry Stebbings · May 6, 2022

Operating founders should not raise external funds; they should angel invest or take secondary instead

A 1-2% increase in their own company's enterprise value earns them far more than a $5-10M fund would, and taking outside money creates a real obligation to LPs that competes with running the company

Scope: angel investing and taking secondary are fine

48:21 20VC: Why the Traditional Seed Fund Model No Longer Works, Why Multi-Stage Funds Investing at Seed Bring Signaling Risk but also Less Pressure, The One Criteria All Potential Sales Hires Need to Have and The Clear Signs of 10x Sales Hires with Jason Lemki

Jake Gibson · Jul 14, 2023

Founders who run funds on the side and lead deals are doing something indefensible

Being there for founders round the clock during crises like SVB is incompatible with running your own company; you can't do both

Scope: occasional or strategic angel checks by founders are fine; objection is specifically to leading rounds

38:52 20VC: Why Fund Sizes Should Be Smaller, Should Founders Also Have Their Own Funds, Is Emerging Markets Investing Gone, Is Fintech Investing Dead & Who Will Be The Winners and Losers in VC in the Next 10 Years with Sheel Mohnot, Co-Founder @ BTV

Tom Hulme · May 8, 2024

Founders raising side funds is worrying and generally a bad idea

Running a side fund is effectively building a second company concurrently, and only a handful of people have ever managed to build multiple companies at once while company-building is already ridiculously hard

26:48 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Harry Stebbings · Oct 16, 2024

A sitting CEO raising and deploying an outside fund is a distraction from the core company and unfair to the investors who backed that company — angel investing your own money is fine, but managing other people's money is not how it should be.

Time spent investing other people's money is time taken from the company whose investors backed you.

Scope: draws a line between personal angel investing and managing outside capital

40:54 20VC: Why Founder Mode is Dangerous & Could Encourage Bad Behaviour | Why Fundraising is a Waste of Time & OKRs are BS | Why Angel Investing is Bad for Founders to Do and the VC Model is on it's Last Legs with Zach Perret @ Plaid

Zach Perret · Oct 16, 2024

A fund structure with full-time partners is the right way for an operating founder to invest, because it gives maximum leverage on a few hours a week

Three full-time people run it while he spends a few hours a week talking to entrepreneurs, unlike angel investing which consumed time without meaning

41:33 20VC: Why Founder Mode is Dangerous & Could Encourage Bad Behaviour | Why Fundraising is a Waste of Time & OKRs are BS | Why Angel Investing is Bad for Founders to Do and the VC Model is on it's Last Legs with Zach Perret @ Plaid

Immad Akhund · May 12, 2025 · hedged

Running a real fund rather than just angel checks is worth it because building an institution scales his ability to help entrepreneurs and have a bigger impact

Working with a partner and more capital lets him scale the portfolio approach beyond what a few personal angel investments could do

Scope: first fund, approaching with an open mind rather than a fixed plan

47:45 20VC Exclusive: Mercury Founder Launches First $26M Fund | Why Founders Should Take the Highest Price | Why Serial Entrepreneurs are Better | Why AI Is So Overhyped | The Future of Venture Capital with Immad Akhund

Sri Batchu · Jul 26, 2023

Team members investing outside of work is acceptable and even beneficial, provided the core job is being done well

Context switching across different spaces builds intuition and creativity, which matters in growth because there's no playbook and you must generate your own ideas; the strategic part of the job isn't measured in hours in and out, and a constant treadmill has diseconomies of scale

Scope: in moderation; only if not distracted during work hours and the day job is done

41:20 20Growth: Biggest Growth Lessons from Instacart and Opendoor, Why 70% of Growth Experiments Should Fail and How to Fail Fast, How to Hire a Growth Team; Secrets and Tips & Why Operator Investors WIll be the Best Investors in 10 Years with Sri Batchu @ Ram

Jack Altman · Nov 3, 2023

Companies should let employees do outside work such as angel investing and board seats, as long as they complete the job on their plate; a company shouldn't demand 90% of someone's waking hours

It's good for the employees, and having other activities has always been part of the culture he wanted

Scope: conditional on the employee doing their full job; acknowledges he may be at the far end of the spectrum

28:42 20VC Roundtable: Why Early Stage Founders Should Not be Investing, Why Great Founders Have Low EQ, How the Structure of VC Firms Will Change, Will Founder-Led Funds Compete with Sequoia & Is Investing a Team Sport?

Harry Stebbings · Jul 14, 2023

It is disrespectful to LPs for a founder to raise outside capital for a second vehicle on top of the company they already raised millions for

Taking external capital is an incredible responsibility and LPs gave money for you to do the thing you said you would do

Scope: no problem with founders angel investing their own money; the objection is to managing outside LPs

39:43 20VC: Why Fund Sizes Should Be Smaller, Should Founders Also Have Their Own Funds, Is Emerging Markets Investing Gone, Is Fintech Investing Dead & Who Will Be The Winners and Losers in VC in the Next 10 Years with Sheel Mohnot, Co-Founder @ BTV

Harry Stebbings · May 8, 2024

A founder who raises a side fund is sending a bad signal to the investors who backed their company

Taking money from people is an immense responsibility, so raising a second pool from a different group implies something about your commitment to the first

27:23 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Carles Reina · Apr 11, 2026

More operators should also be investors

Founders want to be backed by other founders and the best operators, and if you're already deploying time to help companies you may as well do it with institutional money

67:03 More operators should invest

Harry Stebbings · Apr 11, 2026

Operating while investing only works for people who have reached a certain echelon; for a rank-and-file seller it would be a dereliction of the promise to devote their best efforts to the company

Taking someone else's institutional money is a great responsibility, and a rep spending their evenings studying drone companies instead of their territory isn't doing their job

67:33 Only viable above a certain seniority echelon

Carles Reina · Apr 11, 2026

Doing both operating and investing only works if you prove every single day that you are the hardest working person in the office

You owe hard work to both the company and to your investors and LPs

68:32 Only if you are provably the hardest working person

Sri Batchu · Jul 26, 2023

An operator-investor should refuse even to take meetings with anything competitive, perceived as competitive, or potentially competitive down the line; and where their employer might buy a portfolio company's software, must be explicitly above board that they won't influence purchasing

44:49 Operator investors must avoid any competitive conflict and disclose purchasing influence

Immad Akhund · May 12, 2025

A diversified ~60-company, non-lead fund with ~$150k average checks is the right structure for an operating CEO investor.

As an active CEO he can't lead rounds because he can't give companies that time; he gets strong deal flow because the best entrepreneurs want him on the cap table, and he isn't competing with leads like Sequoia or Founders Fund, so co-investing alongside them is better; with small non-lead checks the math points to 60 companies rather than 100-200.

32:33 Diversified non lead portfolio with modest checks fits operating ceo investors

Jude Gomila · Feb 11, 2020

Whether a founder should angel invest depends on the founder's type: those who feel it will be a distraction should not, while those who learn through mental models, networks and analogies gain a lot from it

Different people learn differently — craftspeople need focus and learn by doing, while others learn from chaos, abstractions and stories; Jude found investing invaluable for being a better CEO

34:36 Fit depends on founder learning style not a universal answer

Jason Lemkin · Nov 30, 2022

Running an operating business and community alongside investing keeps an investor genuinely fresh on some problems, but yields only a narrow set of investable insights.

SaaStr Inc. doing $40M and working with 200 CMOs keeps him current on sales compensation, commissions and CMO problems, and he knows the pain of rebuilding a sales team — but it only surfaces a few 'Riverside-esque' opportunities.

16:13 Running an operating business while investing keeps you current but yields only narrow investable insight

Jason Lemkin · May 6, 2022

Founders raising large external funds while running their startups is now inevitable and no longer worth objecting to, even though it used to be a bad sign

The train has left the station — there will be 50 founder-run nine-figure funds, so whether he and Harry approve is irrelevant

47:52 Operating founders running external funds is now an inevitable trend not worth resisting

Jason Lemkin · May 6, 2022

The math on founder-run funds does work for the founders: a $100M fund at 4-5x plus secondary from their own Series B is a genuinely attractive outcome alongside running the company

Splitting ~$100M of carry with a partner, plus $20-30M of secondary cash, plus scaling the startup to a decacorn is a world founders want to live in; being at the center of a hub lets them deploy $100M effectively, and these funds typically only need one decacorn to work

48:50 Founder run fund economics genuinely benefit the founder alongside running their startup

Zachary Bookman · Dec 6, 2024

Making fewer investments is the better policy; small checks written just to support friends or OpenGov investors were unnecessary overweighting on privates

Those support checks added private exposure without purpose

48:12 Fewer larger personal checks beat many small support investments

Des Traynor · Jul 18, 2022

The learning from angel investing comes from unscheduled, asynchronous time with founders rather than from the check itself, so he deliberately minimises scheduled time

The check buys a stream of information — a new puzzle to unravel and a view inside either a struggling or a humming business — which is what he actually enjoys and learns from

14:48 Angel investing value comes from unscheduled informal time with founders not the check itself

Auren Hoffman · Nov 3, 2023

A dual-threat operator-investor cannot take all the first meetings and needs help vetting deals, so should only meet the ones that look super special

you have another full-time job, so your filter has to be products you've used and loved or referrals from people you trust

21:22 Operator investors must filter meetings to only super special referred or loved products

Auren Hoffman · Nov 3, 2023

Investing isn't a special drain on a CEO — any time not spent on the company is bad for the business, so the only real question is whether the CEO keeps the main thing the main thing

dating, marriage, parenting, working out and seeing friends are all equally 'bad for the business'; it's all a trade-off

22:58 Investing is not a special drain any time away from company is an equivalent tradeoff

Auren Hoffman · Nov 3, 2023

LPs should welcome a GP who is also an operating CEO because that fund will perform better via access to better deals, while it is the VCs backing that CEO's company who have the real reason to object

An active CEO gets into better deals, so the fund benefits; the cost lands on the company's cap table, not the fund's LPs

23:51 Lps should welcome operator ceo gps since fund benefits from better deal access

Harry Stebbings · Nov 3, 2023

An LP would be right to be angry at a founder-GP who draws management fees while spending no time on the fund and whose own company is failing

24:16 Lp anger justified if founder gp neglects fund and company fails

Jason Lemkin · Nov 3, 2023

LP side letters formally demand exclusive devotion to the fund, but in practice LPs only care about returns and will tolerate outside activities they perceive as an edge

All they care about is returns; if they see the outside activity as an edge, they accept it

24:31 Lps formally demand exclusive devotion but tolerate outside activity perceived as edge