January 18, 2023
Venture Builders are platforms meant to build and sometimes help early-stage startups grow, scale, and exit respectively. They do this by providing them resources like space, team, marketing and other solutions, advising, tech support, network and last but not least access to funding. There are a few things you can do to make respectively your venture building platform work better:
Take stock in new businesses — By buying a piece of the startups at your studio, you can make sure that your interests are aligned with theirs and add value with your knowledge and connections.
Invest time and services in exchange for equity — venture builders can help with money, but they can also invest time and services in the first place in exchange for equity.
This can help you get the most out of your startup investments and make sure you have a lot riding on their success.
Use your network to your advantage — Startup studios often have strong networks of industry experts, investors, and other important people who can help the startups in their portfolio. By using these connections, studios can help their portfolio companies find, screen, and get help from startups.
Charge for expert services — Studios can also make money by charging startups for providing expertise or set of specific services. This applies mostly to the venture studios operating by agency model or technology transfer, for instance. This can help the studio make more money and also help the startups while creating jobs for their expert network.
Pay experts and service providers with sweat equity — Instead of paying experts and service providers with cash, startup studios can also think about using sweat equity (carry) from the portfolio as payment.
This can give experts and service providers a reason to work harder to make sure that the startups in the studio are successful.
Reinvest in the best startups — Studios can also think about reinvesting in the best-performing startups in their portfolio, which can help to drive more growth and value. They don’t need a dual structure (Studio + fund) to do that well.
Build a portfolio of startups from different industries and stages of development. Lastly, studios can improve their performance by building a portfolio of startups from different industries and stages of development. This can help spread risk and give the studio a better chance of being successful.
Raise continuously and progressively — For venture studios, it is important to make it easy for investors to invest at any time, in order to attract and retain capital. This can be done by providing a seamless and user-friendly online platform that allows investors to quickly and easily invest in the studio’s portfolio companies through FAST tokens. This platform should be accessible from anywhere and at any time, allowing investors to make quick investment decisions and take advantage of opportunities as they arise. Additionally, the platform should be designed to be compliant with securities regulations and provide investors with transparency, immutability and security of transactions. By making it easy for investors to invest at any time, venture studios can attract and retain more capital, and ultimately drive growth and success for their portfolio companies.
Fungible Asset-backed Security Token, or FAST, is a technology platform that lets people buy and sell privately held securities, like those issued by startups. There are a few reasons why studios might not be able to work at their best without FAST or a similar platform:
Venture capital (VC) funds and special-purpose vehicles (SPVs) may not be flexible or liquid enough. SPVs and VC funds can be good ways to invest in startups, but there are some problems to think about. First of all, these funds usually need a track record and endless patience and connection to attract investors. Lastly, the carried interest (sweat equity) from these funds isn’t always easy to use to pay experts on a large scale, which can make it harder to find and keep top talent.
On the other hand, FAST makes buying and selling privately held securities easier and more liquid. This makes it a better choice for studios that want to improve their performance. Lack of liquidity can make it harder to re-use capital and put it to better use. For studios to be able to cover their operating costs and put more money into startups to increase diversification, they need to be able to quickly recycle capital. Without the money that FAST or a VC fund gives them, it might be harder for studios to do this. But FAST has a number of benefits in terms of liquidity that can help studios improve the performance of their portfolios. For instance, FAST lets studios invest in startups in small amounts over time, which can be better for managing risk. Also, unlike closed-ended funds and SPVs, investors and operating partners can join FAST at any time, which makes it easier for networks to work together.
Lastly, FAST lets studios get more money without selling startup shares. They can do this by selling FAST tokens, which are economic interests in the whole portfolio. This can help studios keep their stake in the startups while still recycling capital to use more effectively.
FAST gets rid of administrative work and gives better options for getting cash — Using FAST or a similar platform can help cut down on the paperwork needed to buy and sell privately-held securities. It can also give everyone involved better liquidity options. This could help studios work better and more efficiently. People often underestimate how much work it takes to manage a portfolio of privately held securities, but FAST can help to make this process easier in several ways. For example, FAST can make it easier to track and manage ownership interests by automating the process. This makes it less important to keep records by hand.
Also, FAST can offer a clear and open platform for buying and selling securities, making it less likely that mistakes or misunderstandings will happen. By using FAST, studios can focus on helping their startups grow and develop instead of being bogged down by paperwork.
If you want to improve the performance of your studios and are thinking about using FAST or a similar platform, we recommend that you run some scenarios to see what the benefits might be. By simulating different situations and looking at the results, you can learn more about how FAST can help your studio work better. This can include looking at the effects of different investment strategies, figuring out how liquid and flexible FAST is, and figuring out how to get more people involved in the network and recycle capital more effectively.
There is always an option to run a FAST without counting on investors.
About the Author
Consilience Ventures, one of the first fully tokenized VCs in the world, was co-founded by Kevin Monserrat. He co-founded Consilience to help communities and organisations establish asset-backed tokens that are compliant (FAST) so they can raise money, make investments, and reap more.
Prior to starting Consilience, he oversaw deal flow, marketing, portfolio support, investor relations, and important partners as Head of Microsoft's Scale Up Ecosystem in London.
