⚙️ Venture Studios: Everything you need to know
Founders Factory Startup Bulletin #36
Welcome to the Founders Factory Startup Bulletin—“Created for founders, by founders”.
We bring you a round-up of startup and investment stories, key learnings from founders, and insights from the Founders Factory team.
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There are countless risks that you’ll face in the early stage of building your startup.
These include, but are not limited to:
Your idea is no good
You’ll struggle to find a good co-founder
You can’t afford to hire anyone to help you build
You don’t have enough money to build
Etc.
To summarise all of these in one point—you lack the experience, expertise, and resources to build a foolproof business. And all these things are something you’ll find under one roof at a Venture Studio. In short, venture studios are organisations that build startups from scratch, turning concepts into commercially viable businesses.
We’re big advocates of the Venture Studio, unsurprisingly. We’ve built nearly 90 businesses from scratch over the past 8 years. In today’s newsletter, we peel back the curtain and show you everything you need to know about Venture Studios.
Also in today’s Startup Bulletin:
⭐️ Our top recommended reads
⭐️ Highlights from the Founders Factory portfolio
⭐️ Events, opportunities, jobs, & more
💡 Venture Studios—Everything you need to know
At a Venture Studio, ventures are developed and nurtured from an early stage, in-house—at Founders Factory, we accept both studio-led (developed in-house) and founder-led (brought by the founder) concepts, as long as the latter meet our investment criteria. The idea is that, by assessing concepts (for viability, feasibility, venture-backability, etc) at the idea stage, you can derisk many of the challenges that businesses face later on.
Different stages
Concepts go through various stages of a venture studio, meeting certain requirements along the way. These are:
Venture Design. This is when concepts and ideas are hatched, tested, and validated through external research, identifying market conditions, and assessing existing competitors. This typically looks like a 12-week sprint, at the end of which ideas must go through an investment committee for approval.
Venture Build. After approval, the concept enters the Build stage and initial capital is deployed. The studio team—including a studio lead and venture builder—join the project, and the search for a founder begins (unless the concept is founder-led). Clear goals are set and assessed through fortnightly studio meetings, as well as a halfway challenge session to see if the venture is on track.
Spinout & Accelerator. After completing Build, ventures go through another IC to see if we want to spinout the venture and deploy additional capital. If approved, the business joins our Accelerator, a 6-month programme to start to scale the business.
Benefits
✅ Support heavy form of VC
Capital is a commodity: the type of support you can receive is what differentiates an investor. We’re strong advocates of lower cash, higher support models as being the preferred route for early stage ventures.
✅ Lower risk (in theory)
By validating concepts before they enter build through the venture design process, this limits chances of ventures falling flat when they go out into market or start looking to raise capital
✅ Bias towards diversity
By derisking ideas before founders join, venture studios open up opportunities to founders typically underrepresented by the venture ecosystem (particularly those who can’t financially afford the risk, or who lack access to the support network that can assist you in starting a business).
✅ Compounding experience & knowledge
By going through the same process for each venture we build, we constantly review and capture learnings on what is working and what we can do better. With each venture, these learnings build and give us a better idea of what good ventures look like. In theory, this means our chance of success should increase over time.
📚 What we’ve been reading this month
The State of the State of AI Report (Air Street Capital)—Nathan Benaich looks back on five years of his ‘State of AI Report’ to track broader trends across the industry
The Mars Colonisation Tech Stack (Contrary)—what are the technical challenges we’ll face trying to reach and colonise the Red Planet?
Using TikTok as a Search Engine (Adobe)—how a generation is tapping into TikTok’s search powers
Vision Pro Apps: The Good, The Bad, The Ridiculous (The Verge)—reviewing the VR headset’s new suite of tools
🚀 Highlights from the Founders Factory portfolio
Trusted Housesitters, the pet sitting marketplace, announced a management buyout by Mayfair Equity Partners, valuing the business at $100m
Two of our startups were named in the 2024 Startups 100’s Best New Startups list—Acre, the innovative mortgage platform, and Scooch, the AI-powered pet healthcare subscription platform
Tech Nation announced the cohort for their returning climate programme. Again, Bower Collective, Carno, and Furbnow all feature
Our Product team shared their perspectives on “What does 2024 hold for product managers?” with Mind the Product. Read insights from Jacob, Val, and Serena here
Jamie Rowles, head of climate investors at FF, wrote an OpEd on “Turning climate research into climate impact” in Innovation News Network
🧳 Opportunities, events, jobs
Do you know any aspiring founders in Italy? We’re looking for Entrepreneurs in Residence for our two latest venture studio concepts with partner Mediobanca. These are:
See you next month 👋
Interested in reading more of the same insights? Check out the Founders Factory blog, and previous newsletters.