Considering that 90 percent of startups fail, it’s worth your time to look into what venture studios have to offer and how your startup might benefit from being involved with one.
Let’s dig a little deeper to understand what venture studios do, how they operate, and why they’ve become so popular in recent years.
What is a Venture Studio?
While venture studios come in different forms, a typical venture studio is a powerful combination of capital and operational expertise designed to help founders validate their ideas, refine their product and strategy, and launch their startups. Venture studios often take multiple ideas and early-stage startups through the validation cycle at the same time and provide continued funding and operational support to those that find product-market fit.
A venture studio’s approach is focused on identifying and supporting the most promising founders and startups that have the potential for high growth.
According to Dianna Lesage, founder of Studio Upstart, a venture studio’s goal is “to develop startup ventures until they’re full-blown, wildly successful companies.”
What is the benefit of a Venture Studio?
One of the biggest benefits of using a venture studio is that you’ll have someone to bounce ideas off of and get feedback from. If you’re an entrepreneur, you know that it’s important to have this reliable sounding board.
In addition, many venture studios have teams dedicated to assisting entrepreneurs with various aspects of running a business, such as building your prototype, assembling a team, or even getting access to early-stage funding.
A lot of people make the mistake of thinking that venture studios invest in individual startups, but in fact, they invest in entire ecosystems. They typically offer office space and shared resources to help you get your business off the ground. Think of it this way—with sister companies sharing offices, salaries, and similar resources, each startup can increase its chances of success by lowering the entry barriers for top talent.
Why should you consider a Venture Studio?
If you’re in the early stages of a startup, you should consider partnering with a venture studio for a number of reasons. According to Forbes, the studio market has grown by more that 625 percent over the last seven years, which means venture studios are making a real difference in the entrepreneurial ecosystem.
If you’ve never run a company before, it can be extremely difficult to get someone to invest in your vision. And you likely don’t have the resources to hire a full staff to support your business.
That’s where venture studios come in.
1. Venture studios reduce risk and help your startup succeed.
Because venture studios are typically made up of entrepreneurs themselves, they can make recommendations based on real-world experiences of success or failure. In addition, many of these studios offer access to their full suite of services and resources, including marketing, product, and operational expertise to ensure growth for your company.
2. Venture studios can help you get funding.
A venture studio provides seed capital and mentorship to your startup in exchange for equity. The studio can provide you with the appropriate financial capital, advisors, and expertise you need to scale your idea to the next level. By providing capital early on, the venture studio can minimize risk and help generate a healthy return for you and your startup.
3. Venture studios give you the connections and expertise you need to run a successful business.
Venture studios are a great way to gain access to a network of connections and expertise you need to build a successful business. Most venture studios have a mentorship program to help you get started. By connecting with people from different backgrounds, you can create a business case and increase your chances for success.
4. Venture studios can be a great place to work.
Venture studios are full of resources, new ideas, and great people. These companies give you a safe place to experiment. Not only do venture studios provide you with the resources and guidance you need to succeed, but they also help answer the big question of “How do we scale this?” They can help with growth strategies, new funding rounds, and product roadmaps. Venture studios are a great place to build a team, network with other entrepreneurs, and find the capital you need to fuel your vision.
5. Venture studios can make your startup more attractive to investors.
By bringing together a team of experts from different areas, a venture studio can help you validate your idea and grow your business faster and more effectively. Having a dedicated team of people assisting you with everything from demand generation to product strategy can create a more streamlined approach to launching a startup. By working with other entrepreneurs on ideas, strategies, and product directions, you can give your startup the resources it needs to appeal to prospective investors.
How to get involved in a Venture Studio
According to Global Startup Studio Network, startups that launch from studios experience 30 percent higher company success rates. That means now is the time to get your company involved in one.
But how do you find one that is the right fit for you?
• Do your research on venture studios in your area.
Choosing the right venture studio can be the first and most challenging problem you face when starting your company. Begin by doing thorough online research about reputable studios. Find out if the studio team includes people with experience in your industry. Look at the studio’s track record to see what companies have found success through the partnership, as well as how many companies have worked with the studio.
• Meet with multiple venture studios before choosing one.
Once you have identified a few venture studios you are interested in, reach out to each one to set up a meeting. During this meeting, you should ask them to share more about the experience they have with your type of business, what types of businesses they have worked with in the past, and how much funding they typically provide. And don’t be afraid to ask the venture studio team if they feel they would be a good fit for you. A good venture studio will be honest in their assessment of your partnership and whether or not they feel comfortable with it. After all, they have as much at stake as you do.
• Determine how compatible you feel with the venture studio team.
When it comes to your relationship with a venture studio team, the most important thing to have is a good rapport. You should trust your studio’s leadership and address concerns openly and honestly..
Additionally, it’s important to determine what technical skills you’re bringing to the table and what skills you need from the studio. Key areas to discuss are product design and strategy, product development, business model development, and identifying and reaching early adopters through marketing and sales efforts.
Let your prospective venture studio know how they can help accelerate your growth efforts. And once you choose a studio to partner with, establish clear boundaries up front regarding things such as ownership and contribution expectations, scope of work, and other potential issues.
How To Pitch Your Product to a Venture Studio
Keep in mind that your partnership with a venture studio is a two-way street. Not only are you choosing them, but they are choosing you.
Venture studios are looking for two things: 1) a promising idea and 2) a competent and coachable founder.
When it comes to attracting the interest of a venture studio, the best place to start is to demonstrate you fully understand the problem you’re attempting to solve. The best way to do that is to get away from your desk and go talk to potential customers or people in the industry you’re targeting. You should be able to clearly articulate how your proposed solution will solve the problem the potential customers have helped you identify.
By doing this work up front, you are setting yourself up for a much more productive introduction to the studio, and you are increasing your chances of a successful partnership.
The Bottom Line
Venture studios are the gateway to success for startups now and for years to come. That’s why it’s vital to partner with a studio that shares your vision for growth.
With a mission to make a positive impact on local, digital, and global communities by building startups and supporting those building technology products, the Harmony Venture Labs (HVL) team leverages extensive experience in new venture creation and growth to bring new ideas into reality, cultivate talent, and support founders. With the recent launch of our HVL Studio, we are hard at work refining our validation processes starting with our internally-generated ideas. If you’d like to see if your idea would be a good match for HVL Advisory services or a future partnership with HVL Studios, please connect with us.
Learn more about Harmony Venture Labs and the services we offer today.