Building a Startup Studio is hard.
The business model is complex, the core team is at odds, securing investment is a challenge, deal flow is elusive, and new Studios have no domain authority making it feel impossible to “get the word out”.
I have been involved in the Startup Studio ecosystem since 2018.
It all began with a blog I started purely out of curiosity. From there a community of Startup Studio pioneers was formed. Through relationship building (the Startup Studio ecosystem is smaller than you think- everyone seems to know of everyone!) I connected with a Studio called Untapped Ventures, which was in the early days at the time. Untapped was (and is!) a hybrid VC firm/ Studio with an ambitious vision and a small but tenacious team.
After working with Untapped in a freelance capacity for a while, I came on as full-time Chief of Staff in January of this year (2021).
This front-row seat to building a venture builder has been thrilling and I’ve learned what feels like a lifetime of lessons in just a few months.
Research is great… but when you’re actually on the front lines doing the work every day- the insights are unique.
In this post, I would like to share some of my less-obvious takeaways and some counter-intuitive wisdom with you.
Team Organization is Important- Hierarchy is Dead
The most important element in the Startup Studio formula is talent.
Your team is all you have.
Ideas will die quickly, resources run dry, trends change, and the economy shifts. The one singular constant you can fall back on is your team.
The core team within a Studio handles everything from finding unique deal flow to actually building the internal ventures from the ground up. You need smart, driven, forward-thinking self-starters on the core Studio team.
For specifics on core team development and roles, watch this video.
On one hand, each individual needs to be independent- they can run with an idea and project manage it from inception to scale (or invalidation). On the other hand, each individual needs to be flexible- can they collaborate with the team at large to manage priorities and ensure all the balls stay in the air?
Check your ego at the door- even the CEO sweeps the floor in a Studio. Respect and appreciation are currency.
You should seek to build a team with varied skillsets where someone is an expert in “A” and someone else is the expert in “B”. When it’s time to make “A” decisions- default to the “A” expert. When “B” problems arise, the team will look to the “B” aficionado.
Make it clear what everyone’s superpowers are- but leave the hierarchy behind. It’s unnecessary and old school.
Choose a Thesis and Stick To It
I’ve written a lot about the structure of Startup Studios and one of the key elements is the thesis/ focus.
As you’ll see in the graphic above- the “focus” part of the equation varies from Studio to Studio. Some have very niche focus areas (example: Untapped Ventures focuses on building and investing in startups reimagining the Future of Work) while others take a broader approach (example: Madrona Venture Labs invests/ builds in a variety of industries including SaaS, AI, and DTC brands).
In general, the research points to better results coming from more specialized firms. The resources are more transferable from venture to venture, the core team understands the landscape, and the business model gets easier to crack with each venture built because operating in the same space produces patterns that can be recognized over time.
From working within a Studio, I have found the above to be true.
Additionally, it’s much easier to talk to potential investors about your Studio if you have a clear focus. Trying to explain what a Studio is and how one works is hard enough- but trying to succinctly and clearly explain that your Studio builds ventures in 10 different industries is nearly impossible.
My advice is to choose a thesis/ focus and stick with it.
Only after you’ve produced a number of success stories in your space should you broaden your scope.
Fundraising is Hard- Make It Someone’s #1 Priority
In the Startup Studio community I founded, the number one question asked is “how do Studios get funded?”. Additionally, the top viewed articles on my blog and the top watched videos on my Youtube channel are on fundraising.
Fundraising for any company is hard, but fundraising for a company that builds companies? Much harder.
The “story” requires a lot of time, several experiments of trial and error, and many rounds of iteration to get right.
When you know a lot about Startup Studios, it seems so obvious what the advantages are, how big the opportunity is, and why investment is necessary. But, when you’re outside the bubble- it’s actually very complex and hard to understand. There are a lot of moving pieces.
Investors, in particular, seem to have a hard time wrapping their head around what it means to invest in a Studio, so, the natural instinct of Studio leaders is to address every single question and concern in the pitch deck.
This is a mistake.
Investors don’t need to know every intricate detail upfront. What they need is an inspiring, clear, and exciting story to fall in love with. This “story” requires a lot of time and effort to get right. As the Studio leadership team, you need to be sure you’re explaining the opportunity (Market Size), overviewing your thesis/ focus area (UVP), and pointing to some specific examples of ventures you’ve developed within your Studio (Traction).
Make fundraising someone’s main focus.
Because all of the above work is so strategic and manual- it’s best to make fundraising someone’s main priority. Make it one person’s sole domain to own. The entire team needs to help develop strategy and hunt for investors, but having too many cooks in the kitchen leads to no one taking ownership of this all-important objective. So, make it one person’s main focus.
Marketing is critical
For new Studios, marketing may seem like the very last thing on the to-do list.
When you’re working with a small team, with little funding, and a handful of ventures actively in the works at any given time there are way higher priorities than social media and blog post publishing right? Wrong.
I have found that marketing is an absolutely critical activity for a Startup Studio. For one, investors need to see and hear your Studio’s name pop up a dozen times before they get curious about what you’re doing.
If your Studio team is publishing white papers, articles, videos, sitting on podcasts, commenting on posts, re-tweeting news, and joining in on Clubhouse- eventually investors are going to start to take notice.
Inbound interest is the golden ticket.
Strong marketing positions your Studio as a voice of authority which gives you social capital to work with.
Strong marketing does more than position your Studio as a voice of authority though. Great marketing will build trust in your Studio across the startup landscape. This works to help you find and establish unique deal flow.
Marketing helps startups find you. They’ll come across something you wrote or see a Tweet that resonates with what they’re building and connect to find out more. Unique and exclusive deal flow is one of the main “competitive advantages” for Studios. Finding great deal flow is a hard and manual task- as I said before, inbound interest is the golden ticket.
I suggest hiring a social media specialist with growth hacking capabilities to help your Studio establish authority in your space. It’s hard to pull someone on the core team away from their very important objectives to “do marketing”. Don’t try to fill this need with the wrong person, hire someone specifically for social media, marketing, and growth hacking. You’ll see accelerated results.
It’s not a science, but it is an experiment
One big takeaway is that launching a Studio isn’t a science it’s an adventure fueled by passion and discipline. In the beginning, there are so many unknowns and a million risky assumptions. The key is to run small experiments and validate or invalidate one of your hypotheses. Sometimes it’s just learning what language investors respond best to during a pitch and other times it’s understanding what founders really need help with.
You have to stay focused on the culture within your organization and stay true to your thesis. It’s critical to assign one person to own fundraising but ensure that the team supports that effort in any and all ways. No task is too big or too small. If someone on your team needs help and you have the ability and bandwidth to do so- you do. Period.
Remember to treat your Studio like a startup.
Strong marketing and developing strategic relationships across the ecosystem are critical activities. Get creative and do things that don’t scale. Reach out to startups one by one for access to unique deal flow, build public databases of new ventures in your space,
If there's any big insight I can share from my time working in a Startup Studio thus far- it’s this: give value and it will return back tenfold.
Be honest, upfront, and helpful- these qualities will build you incredible social capital across the Studio industry.