Startup Studio Insider on How to Pitch Your Startup Studio To Investors
Startup studios continue to rise. Also known as venture builders, startup studios have become the solution to manage the pain points that come with building startups, specially when it comes to effectively setting early-stage processes that lead to startup success. However, as any other business model, the capital needed to get up to speed is high and investor pockets open too slowly.
Oftentimes studio fundraising is an iterative process that requires patience, planning and experimentation. Different types of investors need different approaches. Getting capital from traditional VC-s for a studio fund is a big challenge. Mainly because they used to do single-venture deals. In this article, Startup Studio Insider, a community dedicated to cover the growth of the startup studio model will cover below how important it is for studios to have an established framework that helps them with a proper fundraising strategy.
Success of startup studio fundraising is built on strong foundations:
- Timely and coherent vision
- Viable strategy
- Capable Leadership
- Winning Core Team
- Portfolio traction
- Optimal financial-organizational structure
Luckily, investors tend to be more open to invest in innovative structures, such as startup studios. Startup studios have effectively set up core structures that allow them to finance their operations and startup creation efforts. As such, startup founders can feel secure that their project is not only in the right hands in terms of a knowledgeable and capable team of experts but also backed by the right financials.
So how can startup studios best leverage this to increase their chances of success with investors? The best way is to emphasize the potential benefits that studios bring to investors such as:
- Industry insights from early-stages of the startup building process
- Flexible and customized schedule of payments to the investors
- Faster processes from ideation to launch
- Higher ownership at a lower cost and less impact of failure
- Shared focus on the sustainable long-term growth of the ventures launched
From a traditional investor attitude, one of the most essential questions to ask themselves is how will startup studios help exit companies successfully. As such, it is important for studios to share a number of messages across when pitching for investors in order to meet their criteria.
Communicate the Studio Approach
Be clear and transparent on your metrics. The amount raised, expected returns, studio funnel. Be prepared for a challenging due diligence. This won’t happen in the first few meetings, but it’s good to be prepared for everything.
Build A Sense of Trust
Highlight your Leadership Team’s achievements, personal strengths, network. And also show the Core Team behind your venture production system. Build up and show an advisory board that covers all the competencies relevant to your studio.
Showcase A Strong Venture Portfolio
Spend the right time to explaining the market sector you are targeting. Why that market? What are the future trends? Where are the pain points and the opportunities? And tie it together with your team: what makes you the best builders in this area?
Meet the Funding Budget
Show the investors the startup progression from zero to independence and all the way to exit. Highlight why it will be beneficial to entrepreneurs and startups to work with you. Why is it better to take your smart capital instead of other pre-seed or seed programs?
In Conclusion
Whichever stage of the startup studio funding process you find yourself, it is important to understand that startup fundraising is essential for getting any business off the ground. From growing your team to sourcing more sophisticated resources to develop your business plan and scale over time, funding plays a critical role in the growth and success of startup studios and their portfolio companies. To learn more about startup studios, check out Startup Studio Insider.
