I love this tear down and the example w Sara. She has a clear idea and isn’t a good fit for a venture studio, or one with lighter touch (and equity expectation).
Thank you for sharing this story in detail. It’s really important that founders understand exactly what a good venture studio does, and how to best leverage them to achieve their goals.
Since it’s a relatively new model, there is still a lot of misunderstanding about their role vs a VC, and I wholeheartedly agree that a venture studio needs to supply capital in addition to expertise.
In this case you shared, it sounded to me like the studio was acting more as an advisory service, taking equity and cash for services in lieu of fees. That raised alarm bells fonr me right away.
Equity and cash for services is fairly common in studios, it's a question of clearly defining the services. Plus, a key component imo is the funding - studios have to write a check into the startups they're incubating/creating/working with.
My post wasn't clear -- absolutely services and resources are part of the deal, but it definitely should come WITH capital investment. Without investment, it's just a consulting + dev shop, which is fine, but should be advertised as such.
I love this tear down and the example w Sara. She has a clear idea and isn’t a good fit for a venture studio, or one with lighter touch (and equity expectation).
Thanks Campbell.
Thank you for sharing this story in detail. It’s really important that founders understand exactly what a good venture studio does, and how to best leverage them to achieve their goals.
Since it’s a relatively new model, there is still a lot of misunderstanding about their role vs a VC, and I wholeheartedly agree that a venture studio needs to supply capital in addition to expertise.
In this case you shared, it sounded to me like the studio was acting more as an advisory service, taking equity and cash for services in lieu of fees. That raised alarm bells fonr me right away.
Equity and cash for services is fairly common in studios, it's a question of clearly defining the services. Plus, a key component imo is the funding - studios have to write a check into the startups they're incubating/creating/working with.
Glad you found the post helpful!
My post wasn't clear -- absolutely services and resources are part of the deal, but it definitely should come WITH capital investment. Without investment, it's just a consulting + dev shop, which is fine, but should be advertised as such.
100% agreed!