In today’s entrepreneurial landscape, venture studios are recognised as a powerful force, offering early-stage companies a unique blend of mentorship, resources, and operational support. These organisations operate as a hybrid between an accelerator and an incubator, extending strategic partnerships that’s more than just capital investment. However, as a startup founder, entering into a partnership with a startup studio can be one of the most critical decisions you’ll make.
While such partnerships provide access to expert teams, networks, and hands-on guidance, it’s essential to carefully monitor the potential partnership. Before taking the plunge, asking the right questions can help ensure that the partnership fits your vision, values, and long-term goals. Presented below are some pertinent questions every founder should ask before deciding to collaborate with a startup studio.
What Is The Studio’s Track Record?
It’s necessary to look beyond the glossy brochures and marketing claims when you’re looking for a venture studio to partner with. Ask for concrete examples of startups that the studio has built and scaled. Gain perspective on what their involvement was and how successful these ventures were. Review their portfolio to learn about the industries they have supported and the stage at which they typically invest or collaborate.
Follow-up Questions To Ask:
- How many startups have they built from scratch, how many have they helped scale?
- What percentage of those startups are still functional today?
Addressing these queries will help you evaluate the studio’s ability to foster sustainable growth and provide actual value once the initial hype settles.
What Level Of Involvement Can I Expect?
Each venture studio operates differently. Some may offer hands-on approach, actively co-building the company; while others may assume a more passive role, sharing resources and stepping back. Learn about their approach to collaboration early on, because this will impact how much control you’ll have as a partner.
Consider asking the following:
- How involved will the studio be in decision-making and what areas will they focus on?
- How often will you meet with the studio team and what kind of oversight will they have over day-to-day operations?
- Will the studio provide operational support such as product development, marketing, or hiring?
What Areas Do They Focus On?
Many experts believe the future of venture studios is vertical. According to these experts, the most successful venture studios will be experts in one specific area. It may start with an industry focus, but many studios will specialise further.
When selecting a startup studio to partner with, consider each of these elements in this figure and understand if your interests are aligned with it or not. You may devote 5-10 years of your life to your new startup, it’s crucial that you’re on the same page.
- Do you want to spend 5+ years of your life building a startup in the B2B enterprise?
- How about 5+ years in B2C mobile gaming in Asia?
Look for a studio that specialises in a specific area that you’re interested in. The more specialised the better because it should maximise the odds of success.
Will the Studio Help You With Funding?
Apart from operational support, many venture studios also assist with fundraising. However, their approach to funding can differ drastically. Some studios offer seed funding as part of their model, while others may connect you with venture capital or angel investors.
Questions You Should Ask:
- Does the studio offer initial seed funding, and if so, what are the terms?
- Will they help with future fundraising efforts?
- What is their track record for raising subsequent rounds of funding?
It’s essential to learn whether the association with the studio will be a long-term one, helping you raise funds when necessary, or if they expect you to go at it alone after the initial stages.
What Resources and Networks Does the Studio Offer?
Startup studios are meant to build and fund startups. Before partnering with one, find out what they’re providing and the work they’ll do with/for you.
One of the most significant advantages of partnering with a venture studio is access to their resources and networks. However, not all studios provide the same level of support. Enquire about the accessibility to specific resources and how they can boost your startup’s growth.
Major Questions Include:
- What kind of expertise does the studio’s in-house team offer (marketing and tech development)?
- At what stage does the studio offer funding?
- Will you have access to the studio’s network of investors, mentors, and industry experts?
A venture studio with industry expertise and strong connections can attract opportunities doors that might otherwise be tough to achieve. However, it’s vital to understand the relevance of those resources to your specific venture.
What’s the Exit Strategy Of The Studio?
Every startup has an end goal, whether it’s scaling to profitability, going public, or being acquired. Knowing how the studio visualises your exit can help align your long-term goals with theirs. Some studios may opt for a quick exit to garner returns, while others may be focused on maintaining long-term businesses.
Crucial questions to ask:
- Do they prioritise long-term growth, or are they more focused on short-term gains?
- What is the studio’s chosen timeline for exits?
- What role will the studio play in initiating the exit process?
If your vision is to build a company that stands the test of time, partnering with a studio that pushes for a quick exit may not align with your objectives.
What Is the Studio’s Culture and Philosophy?
Effective cultural alignment between a startup and its partners is crucial for a strong collaboration. The studio’s work ethics, values and philosophy should resonate with your vision as a founder. It’s crucial to dig deeper into how the studio operates, how they perceive risk, and their overall process of building businesses.
Pertinent questions to explore:
- How does the studio approach innovation and risk-taking in the marketplace?
- How does studio deal with setbacks and failures?
- What are their core values when it comes to building startups?
Knowing the studio’s culture will offer perspective on whether they will be a supportive partner through the highs and lows of building a startup.
What’s the Success Rate of the Studio?
Most venture studios are relatively new, but they can still have an illustrious track record. While exits will ultimately define a successful studio, there are other things you need to consider. For instance, venture studios are supposed to accelerate the process of building and launching startups.
Most startups that partner with a venture studio will require capital (from VCs or alternative sources). Another thing you need to check is whether or not a venture studio has successfully helped its startups raise follow-on capital.
Which raises the following questions:
- Is the startup studio building scalable startups faster than the traditional model?
- Are most of these startups able to raise follow-on capital as they leave the venture studio?
You must try and understand the exits and returns garnered from any studio you’re interested in. But go a step ahead and see if the founders of those startups got a return for themselves.
The Takeaway,
Partnering with a venture studio is an incredible opportunity for founders to accelerate their growth, utilise valuable resources, and gain expert mentorship. However, it’s not a decision to be taken lightly. It is crucial to ask the right questions upfront to ensure that the studio aligns with your long-term goals, values, and vision.
Ultimately, the objective is to build a partnership that empowers your startup to thrive while maintaining control and ensuring alignment with your vision as a founder.