The landscape of startup funding is undergoing a profound transformation. While traditional venture capital (VC) has fueled innovation globally, a new model—the venture studio—is emerging as a more generative, collaborative, and radical source of new businesses.
At its core, the venture studio model shifts the focus from passively funding external ideas to actively generating and supporting innovation from within. This approach addresses key pain points in the traditional system and creates a powerful new path for innovators.
The Problem with Traditional VC Funding
The traditional venture model, while successful, creates significant hurdles for innovators:
- Idea Reliance: Founders must have a fully formed idea and bring it to the VC team for funding.
- The Business Gap: Many brilliant innovators struggle to secure funding because they are innovators, not business people. They often lack the capabilities to pull together the necessary business material, such as market sizing, total addressable market (TAM), and financial modeling, needed to convince investors.
- Team and Support Deficits: Funding can be denied not because of the technology’s value, but because the founder cannot pull a strong team together.
The Studio Model: Generative Investment
The venture studio overcomes these challenges by offering a model of generative investment. It is not just a place for raising money for ideas; it is a place for raising money and raising ideas.
How the Studio Nurtures Innovation
- In-House Business Capabilities: The studio provides essential business services and capabilities in the broadest sense, making it easier and quicker for innovators to bring their concepts to market.
- Team Creation and Refactoring: Studios help create new teams, often refactoring the original teams that brought the concept forward, ensuring the right mix of talent is in place.
- Crowd Infusion: The studio model, particularly with crowdfunding, is designed to bring ideas, concepts, and new directions into the studio from a broad base of international investors, including both professional investors and the general crowd. This community-driven approach means the community that invests also becomes the community that generates ideas and concepts.
This generative approach means an initial concept can be taken to the crowd for feedback and then developed in three or four different directions, potentially creating multiple products or businesses.
Radical Innovation vs. Incremental Invention
For a studio focused on breakthroughs, it’s essential to distinguish between invention and innovation:
- Invention is often a variation on what already exists—it’s a new way of doing something, but not radically different (e.g., a new car model with better features). Plenty of money can be made from incremental inventions, and a studio will generate many of them.
- Innovation is about a radical shift in our point of view. It requires radically new answers to basic questions (who, what, why, where, when, and how).
A prime example: Designer Don Norman’s radical concept that “The car is an accessory to the smartphone”. The car is merely a delivery mechanism; the smartphone is the true interface that controls the mobility service. This is a radical shift in perspective.
The Necessity of Risk
For true innovation to occur, an organization must be willing to embrace risk. A focus on 100% successful projects is a sign of not being radical enough. Innovation requires seeing “some failures,” “some things which go wrong,” and “some things which are so crazy that they actually don’t work”. The possibility for innovation lies in this attitude.
Research and the Power of the Crowd
Innovation is often sparked by communication and collaboration, bringing many minds together to create new concepts. Research within the studio model focuses on understanding where there is room for incremental invention, where there is room for innovation, and where no work is being done at all.
Crypto as an Enabling Technology
One key area for radical research is crypto (blockchain), viewed not as an investment vehicle, but as an enabling technology.
- Transactional Efficiency: Crypto offers a secure, low-cost, and extremely fast transactional system , opening up possibilities for new business models, especially for micro-transactions and people in emerging economies.
- Certification and Authority: It is a powerful way to provide certification of ownership and authenticity. This is transformative for international work permits, fine goods, and other real-world objects that require a verifiable chain of custody.
- Fractional Ownership: Blockchain enables fractional ownership of large or expensive assets, allowing more people to participate in markets and communities by owning a small share.
The crowd is a continuous engine for the studio—it is an engine of finance, investment, ideation, research, testing, and marketing. This “crowd infused” approach ensures the community is part of every aspect of the venture creation journey.
