Venture Studio Landscape: A Quick Overview

Before diving into how the research applies to Novy, it’s helpful to understand how venture studios compare to other early-stage organizations (ESOs) like Pre-seed VC funds, accelerators, and founders-first VC funds. 

Here’s a quick breakdown of the key differences:

1. Pre-seed VC Funds (VC): These funds invest in new ventures that have already passed the inception stage, gained some traction, and need funding to grow further. They typically rely on a well-developed due diligence process and select ventures based on criteria such as market potential and founder experience. While they offer mentoring and networking, their control over the companies is relatively limited, with most decisions remaining in the hands of the founders.
   
   
   

2. Startup Accelerators (ACC): Accelerators provide educational programs and mentorship to help new ventures validate their business models quickly and inexpensively before making investments. The operational control they exert over ventures is limited, and founders retain full decision-making power during the acceleration process.
   
   
   

3. Founders-First VC Funds (VC-FF): These funds invest in the founders themselves rather than the startup idea. They typically invest earlier in the venture cycle, often at the ideation stage, and help founders validate concepts. After this phase, their role aligns more with traditional VC funding.
   
   
   

4. Venture Studios (VS): Unlike other ESOs, venture studios create new ventures from scratch, starting at "stage zero." They generate ideas, validate concepts, build MVPs, and handle customer development while maintaining full operational control over the ventures in the early stages. This hands-on, de-risked approach is often associated with higher equity stakes in the ventures they create. After spinning out companies and securing external funding, venture studios act more like traditional VC funds.
   
   
   

How Max Pog’s Research Applies to Novy’s Approach

Max Pog’s research provides valuable insights into the venture studio landscape and how Novy’s model aligns with or differs from industry trends. Let’s take a closer look at how the 2024 findings apply to us.

Venture Studio Survival: Key Trends

The research indicates that venture studios, especially those that operate with diversified revenue streams like hybrid models, have higher survival rates. At Novy, we are currently focused exclusively on creating healthcare ventures, but as we grow, we may consider integrating more support services to diversify our revenue. This approach could provide us with financial stability as we build out our portfolio of companies.

Pre-seed Investment: More Money, More Risks

Venture studios are known for investing heavily at the pre-seed stage. According to the research, venture studios typically take higher equity stakes than other ESOs because they have more operational control over the ventures they create. At Novy, we’re not just funding companies—we’re actively building them from the ground up, which means we have a much higher level of involvement than traditional VCs or accelerators. This gives us more control over the early stages of the ventures, but it also means we carry more risk. We see this as an advantage, however, as it allows us to have a direct impact on the success of each company.

Focus on One Venture Per Year: The Slow and Steady Approach

Max’s research suggests that venture studios that launch fewer ventures per year tend to perform just as well, if not better, than those that launch more ventures. At Novy, we’re taking the approach of focusing on one company per year. This allows us to dedicate significant resources to each venture and ensure that we’re setting up each one for long-term success. The research supports this strategy, as it suggests that the quality of ventures may matter more than the quantity when it comes to success.

Equity Stakes: Smaller Might Be Better

Interestingly, the research shows that venture studios that take smaller equity stakes (less than 20%) tend to have better success rates. While many venture studios take larger equity positions in the companies they create, Novy focuses on building strong partnerships with our founders, allowing them to retain more control while still giving us a meaningful stake in the company. This insight reinforces our belief that success comes from collaboration and trust, not just from ownership.

MVP Development: Lean is Key

The research also highlights the importance of developing lean MVPs, particularly when it comes to reducing risk at the early stages. At Novy, we focus on lean MVP development to quickly test ideas, gather feedback, and iterate before investing significant resources. This aligns with the research, which shows that lean MVPs can lead to higher success rates by allowing startups to focus on what truly matters—validating the product-market fit before scaling.

Final Thoughts: How Novy Is Navigating the Venture Studio Landscape

Max Pog’s research offers a wealth of insights into the venture studio landscape. At Novy, we’re committed to using these findings to refine our approach, adapt our strategies, and ultimately build companies that have a lasting impact on healthcare. While the venture studio space continues to evolve, one thing is clear: success comes from a mix of strategic focus, operational flexibility, and continuous learning.

To read the full paper, visit https://inniches.com/big-venture-studio-research.

Let us know what you think or if you have any thoughts to share. We’re all in this together, learning from each other and building a stronger future for healthcare.