But how many of them die and why? And what is the future all studios dream about?
1. According to the Venture Studio Index, 2/3 of studios are inactive or have ceased operations.
2. Reasons? Two types
3. Internal: no initial funding, weak team, complex model, hard to attract great founders, cash flow problems.
4. External: investors don't understand the model, no standards and benchmarks, making it challenging for investors and co-founders to evaluate studios. After people see some cases when studios take 80% of equity and struggle with attracting experienced founders & fundraising into startups – they put a cross on all venture studios.
5. The external problems exacerbate internal ones. It might feel for venture studio founders that they are paddling against the current.
6. Despite this, there are dozens of successful studios, which (despite huge skepticism) create great companies, raise tens & hundreds of millions into funds, and employ thousands.
7. To solve the internal problems, studios have to:
– learn & execute the best practices in the industry
– get access & share the scarcest resources: investors & great founders – both familiar and optimistic about venture studios.
8. To solve the external problems, there should be:
– a lot of education, content & activities around venture studios (you should start your venture studio blog or podcast after reading this :grin:)
– studio standards should be developed (aka SAFE from Y Combinator for startups, which has simplified fundraising since 2013, or the 2/20 model for funds, which has been present for 50+ years)
– benchmarks should be defined for easier evaluation by investors & founders.
9. Look at the picture. The current state of studios is – Early Adopters (in terms of Technology Adoption Lifecycle). There is a chasm between the Early Adopters and the Early Majority.