Why venture studios are going to bloom in 2022
Let us first view the first and essential component of any studio - the EiR or the incoming Founder of the portfolio venture. At large, studios are most beneficial for the following types of founders:
First time founders
2nd time founders with an idea but no team/co-founder
Ex-founder ready for a new journey and open to new ideas
MENA region is ramping up for its first large-scale success stories and, we expect, what Rocket did for Europe at the time, will happen in MENA too - namely, the “graduating” senior leads in these companies will look for new places to be and new startups to launch. This is where studios come in with their attractive offering of funding and resources.
Here are 3 core reasons why the studios will be blooming in the upcoming 12-18 months:
Deal flow engine for later stage VCs
The studio is the creator of venture assets, allowing the investors to have access to all investments in the portfolio, diversifying the risk and offering standardized access to ventures. Studios entering into the partnerships with the VCs on the pre-seed stage (i.e. VCs are investing into a studio itself) allow both VCs and their portfolio to have easy access to the later stage financing and, in essence, matchmake the investor from early on. Such sustainable deal flow may be available for the VCs coming at seed or Series A round, having observed the company from the starting point. Longer time to consider and review the team and operations for such investors further de-risks the investments in this early stage inherently risky asset class. Long terms corporations will foster the relationships beneficial for the whole trio in this picture - the startup, the VC, and the studio.
(much needed) hands-on support and operational expertise
The on-demand capabilities of the studio allow each of the startups in making access to the trusted partner for marketing/business development/hiring/legal/financial needs with the speed of the bullet train. With 59% of founders feeling duped when reflecting on the support investors offer, one ultimately turns the attention to the earlier stage, founder first type of investors and studios are just like that. In addition to offering the wealth of the network for their portfolio and connecting to later-stage investors, founders need on-the-ground support to help them get through the spikes in demand or product development and supplement the knowledge where they may lack it. Having a partner who had “been there” is an incredible asset in helping the first-time founders navigate the ecosystem, add human empathy to that and we have a category winner.
Speed to market
With capital being considered a secondary value of the investor, the “how” of the spending of the resources becomes a priority in the discussion. From idea to validation to the iterative development and launch, the speed to market is something that studios praise themselves for. With the vast resources available at the palm of your hand AND the compound knowledge of all other founders in the portfolio, the growth from 0 to a 1 becomes easier and quicker, as you are supported by the whole community.
Capital with Capability.
