Throughout the Proterozoic δ13C values for preserved n-alkyl lipids are more positive than for syngenetic kerogen. This pattern is the inverse of biosynthetic expectations. It has been suggested that this isotopic inversion results from selective preservation of lipids from 13C-enriched heterotrophic populations, while the bulk of kerogen derives from primary producers. Here, we formulate a degradation model to calculate the 13C content of sedimentary total organic carbon and lipid. The model addresses two scenarios. The first scenario explores preferential preservation of heterotrophic lipid, thereby quantifying the existing hypothesis. In the second, we suggest that an inverse signature could be the result of prokaryotic phytoplankton contributing the majority of the total ecosystem biomass. Photosynthetic prokaryotes bearing a relative 13C enrichment would contribute much of the resulting preserved lipids, while primary eukaryotic biomass would dominate the total organic carbon. We find that our hypothesis of a mixed primary producer community generates inverse isotopic patterns while placing far fewer requirements on specific degradation conditions. It also provides a possible explanation as to why there are large variations in the 13C content of the isoprenoid lipids pristane and phytane relative to n-alkyl lipid, while the difference between n-alkyl lipid and kerogen is more constant. Our results suggest that the disappearance of the inverse 13C signature in the late Ediacaran is a natural consequence of the fundamental shift to oceans in which export production has a higher ratio of eukaryotic biomass.