4 ms·

I really respect the attempt at trying something new here, but framing it against a traditional VC model might be a bit of a mistake (on the journalist's behalf

by cl42 7y ago

I really respect the attempt at trying something new here, but framing it against a traditional VC model might be a bit of a mistake (on the journalist's behalf?). I'd suggest thinking about this as an innovation on the venture studio model, or later-stage accelerator model (e.g., YC's Series A cohorts). I've spent the last few months toying with the idea of a venture studio and the economics are hard to swallow for some founders and for later-stage VCs... A model like this, where you get an operating, experienced serial entrepreneur to help you and kick your ass... I like that a lot. It's different and worth following, if nothing more.

mike_d 7y ago
> framing it against a traditional VC model might be a bit of a mistake Google Ventures for example has a similar capital services model. Once you took money, you had access to a pool of GV folks who could help you with design, finance, engineering, etc. Having this talent to tap in to helps you avoid spending early money on things that aren't worth a full FTE but need to be solved. The only thing new here is that they took out the writing of the check first.
bjornsing 7y ago
> I've spent the last few months toying with the idea of a venture studio Me too. :) > and the economics are hard to swallow for some founders and for later-stage VCs... Can you elaborate on that a bit? What model are you considering and what constraints do you see?
- cl42 7y ago
  Sure, happy to. The concern I've had others raise + I agree with is that really great founders don't want to give up a portion of their founding equity to a venture studio, and "hired guns" won't be as good at this stage. I think if the venture studio founder has a really great track record (e.g., Max Levchin) or access to a lot of capital, then this might be different. If I were a Series A investor, I might take issue with the initial cap table being so diluted by a venture studio, but I' not a Series A investor. I'm being very pithy here-- happy to discuss at any point if you'd like.
  - staticautomatic 7y ago
    I think this model is a dream for a solo founder. I'd trade equity for a team instead of cash without hesitation. If you don't have co-founders, you're going to spend most of the money you raise on talent anyway, and you're gonna have to give your talent equity to boot. You might well spend most of your money on talent even if you do have co-founders. I would totally jump at the opportunity to take something through the early stages with a venture studio before raising money. It makes a lot of sense for a lot of reasons-- just probably not to certain kinds of founders or investors.
  - wkey 7y ago
    Also, kind of depends on the goals of the start up. Not all want a big exit after several series of funding. Others are looking for some scaling, consistent cashflows, etc.
  - bjornsing 7y ago
    > If I were a Series A investor, I might take issue with the initial cap table being so diluted by a venture studio How diluted do you think it would have to be to make the economics work for the venture studio? Where do you think a Series A investor might start taking issue with the dilution?

by cl42 7y ago

mike_d 7y ago

> framing it against a traditional VC model might be a bit of a mistake Google Ventures for example has a similar capital services model. Once you took money, you had access to a pool of GV folks who could help you with design, finance, engineering, etc. Having this talent to tap in to helps you avoid spending early money on things that aren't worth a full FTE but need to be solved. The only thing new here is that they took out the writing of the check first.

bjornsing 7y ago

> I've spent the last few months toying with the idea of a venture studio Me too. :) > and the economics are hard to swallow for some founders and for later-stage VCs... Can you elaborate on that a bit? What model are you considering and what constraints do you see?

cl42 7y ago
Sure, happy to. The concern I've had others raise + I agree with is that really great founders don't want to give up a portion of their founding equity to a venture studio, and "hired guns" won't be as good at this stage. I think if the venture studio founder has a really great track record (e.g., Max Levchin) or access to a lot of capital, then this might be different. If I were a Series A investor, I might take issue with the initial cap table being so diluted by a venture studio, but I' not a Series A investor. I'm being very pithy here-- happy to discuss at any point if you'd like.
- staticautomatic 7y ago
  I think this model is a dream for a solo founder. I'd trade equity for a team instead of cash without hesitation. If you don't have co-founders, you're going to spend most of the money you raise on talent anyway, and you're gonna have to give your talent equity to boot. You might well spend most of your money on talent even if you do have co-founders. I would totally jump at the opportunity to take something through the early stages with a venture studio before raising money. It makes a lot of sense for a lot of reasons-- just probably not to certain kinds of founders or investors.
- wkey 7y ago
  Also, kind of depends on the goals of the start up. Not all want a big exit after several series of funding. Others are looking for some scaling, consistent cashflows, etc.
- bjornsing 7y ago
  > If I were a Series A investor, I might take issue with the initial cap table being so diluted by a venture studio How diluted do you think it would have to be to make the economics work for the venture studio? Where do you think a Series A investor might start taking issue with the dilution?