There is, however, help available now in the form of mentors, investors, advisors, incubators and accelerators. Venture studio is another way an entrepreneur can build his idea and reduce the likelihood of failure. But what is a venture studio and how is it different from an accelerator or an incubator?
It’s different
Shishir Goel, founding partner GoGroup, says a venture studio differs from incubators and accelerators. Incubators support early-stage startups by providing resources such as office space and infrastructure, mentorship, and a collaborative environment to help refine their business models and develop the products/services. GoGroup is an independent venture studio with a strong international presence.
Accelerators help startups that have achieved some level of product-market fit to rapidly scale up through a time-limited, cohort-based programme by offering mentorship, curriculum, access to investors and, sometimes, funding.
“Venture studio is different because it focuses on the earliest stages of the startup. It creates and develops startups in-house by running a structured process to study the industry, find the gaps that exist, come up with ideas and validate them through their network in the market. After that, the venture studio teams up with founders to build and scale up new companies on those business models from the ground up. A venture studio brings some critical resources to the table — process of building a startup, access to other entrepreneurs & investors, connections to industry experts and talent to name a few,” says Goel.
Goel adds that a venture studio is a very hands-on approach to venture building as compared to an accelerator or incubator.
Managing risk
Completely eliminating risk in entrepreneurship is not possible, but it is feasible to reduce the chances of failure. One way entrepreneurs can increase their chances of success is to be associated with a venture studio.
According to Goel, when a founder starts in a venture studio, he has access to many resources. This can be in the form of knowledge, which comes from industry experts, access to investors, access to other entrepreneurs, a structured process of building a startup, access to capital, and so on.
“So, without all these, a founder might have a great idea, might be very hardworking, can execute but could run in a different direction, and thereby spend time on things that might not matter. And in a startup, time is money, so instead of wasting time on things and figuring out later the mistakes made, in a venture studio, one can really learn fast from industry experts, entrepreneurs, and investors and build things properly from day zero,” says Goel.
This, however, does not guarantee success but the usual pitfalls can be eliminated and the risk associated with starting up can be reduced.
Choosing the right studio
When it comes to choosing the venture studio, Goel says a founder needs to first look at the people running the studio, the experience they have in building companies in the past, the kind of portfolio they have backed and if they have helped the ecosystem to grow.
“There are other factors to consider, like the support they provide the founders and the connections in the industry they have. What is also very important is for an entrepreneur to find out the equity structures in place. A lot of venture studios might rip off the founders in terms of equity. At the end of the day, an entrepreneur builds the company and a venture studio cannot keep the majority of the equity stake. Founder needs to have control, and needs to have autonomy,” says Goel.
Julius Gerhard, founder and MD, Trustspace, is building a software startup that enables companies to comply with international IT security standards. His venture is based at GoGroup’s Berlin office.
Gerhard says when you want to build something that has not been built so far, you, by definition, need to take new paths. In the end, you need to have a product that convinces customers to not only sign up with you but to continue to work with you. Along that way, you need an exceptional team, across focus areas and verticals within the company.
“GoGroup has been an operational partner, coach, and investor in our journey so far. We have worked together with GoGroup on building and improving our business right from day zero. GoGroup has assisted us in most of the steps of company building so far — from setting up an entity, to setting up the fundraising process, putting us in touch with relevant people for investments and sales, helping us hire the initial team, building up the technology capabilities in-house and so on. We work very closely on a day-to-day basis from the same office. The strong alignment and shared long-term perspective of our success would not be possible if investor and operational partner would not be interlinked — and this setup generates these by default,” says Gerhad.
Who does what?
In this setup, what work is done by a venture studio and what are the responsibilities of an entrepreneur? Goel says a venture studio does the market research, collaborates with industry leaders, generates ideas and does the initial market validation. Since founder-idea fit is extremely important, it then finds and teams up with founders who can build and nurture those ideas from the ground up.
Once the founders are on board, they work with the studio to set up that company and define the relevant structures. The studio continues to act as a coach to the founding team on multiple fronts including, but not limited to, hiring, fundraising, product and operations. The studio can also provide the required manpower and resources for certain teams.
When it comes to the responsibilities of an entrepreneur, they are always in control and are the final decision makers on all aspects of company building. They are the ones who hire their team, run the day-to-day operations, deal with external stakeholders and build the product.
“It’s collaborative and the venture studio takes a very hands-on approach. So, wherever I say the venture studio takes a lead, it works alongside the founders. For example, a venture studio may do the market validation initially, but when a founder and his team are on board, they are free to explore the market further and to validate the hypothesis. Similarly, in fundraising, the founder is the key, but if they need any support on how to structure it, how to pitch, and who are the people to reach out to, the venture studio helps. At the end of the day, the founder is the person building the company, the person who is in the driver’s seat and has the autonomy to run and build that company,” adds Goel.
