Outside a small university in the Midwest, I was having coffee with Carlos, a rising star inside a mid-sized manufacturing company. He had a track record of taking small teams and growing them into successful product lines. However, after a decade working for others, Carlos was interested in building and growing a company of his own. I asked how much he knew about how to get started. He said that from what he read, the path to building and funding a company seemed to be: 1) come up with an idea, 2) form a team, 3) start testing minimal viable products, 4) raise seed funding, 5) then obtain venture capital.
Entrepreneurs, Is a Venture Studio Right for You?
Startup founders often look to incubators and accelerators to help them find product/market fit and raise initial capital. But there’s another option for entrepreneurial founders who want to go out on their own but maybe lack the right idea or team. Venture studios don’t fund an existing idea — they incubate their own ideas, build a minimum viable product, find product/market fit and early customers, and then recruit entrepreneurial founders to run and scale the business. Examples of companies that have emerged from venture studios include Overture, Twilio, Taboola, Bitly, Aircall, and the most famous alum, Moderna. However, in exchange for de-risking much of the early-stage startup process, venture studios take anywhere from 30% to 80% of a startup’s equity. The author explains how venture studios work, why they might be an attractive option for some entrepreneurs, and what questions to ask if you’re considering joining one.