Startup Studios Reduce Risk
Using prototyping to reduce risk in startup studios
Startup studios — companies that birth startups — reduce risk in several ways, but one of those ways is through rapid prototyping with key stakeholders — including investors.
In the typical model of startups — investors do not partake or heavily influence the prototyping. Their preference is to have a functional product with active users and paying customers before investment (there are always exceptions).
In the startup studio model, the founder and first investor (in this case the studio and partners) usually meet before much prototyping has been done — if any. This enables investors to share knowledge before testing is done and also establishes a co-creator relationship between the founder and investor. The partners of the studio may even be in the same building and can ‘pop in’ and interact with the entrepreneurs more frequently to provide insight and ask key questions as the team tests and builds.
In the typical startup-investor interaction, the normals of the relationship is quite the opposite. The investor — being bombarded with startups continuously — encounters a founder and in a short window asks key questions to understand the concept, measure how you have progressed toward the key milestones (users, revenue, partnerships). Usually the investors position is a default state of ‘no — not yet…let me learn more’ while the founder is trying to get them to ‘yes’ before they die.
The startup studio model positions the first investors in a way that they want to share their insight and feedback more readily and influence the outcome of the testing instead of rendering judgement — thus allowing founders to iterate more quickly and with greater success.
By iterating more quickly in a shorter period of time, especially with ‘new to the world ideas’ that have greater risk from the inception, you increase the long term likelihood of the venture succeeding.
If you found this insightful, like the post and comment below. To get more tips on startup studios sign up here.
Best,
Sergio Marrero
Co-Founder, Rebel One — RBL1.com
