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6 reasons to believe in the Venture Studio Model

2022-01-07 | Santiago Pérez

The venture studio model keeps growing in the world and Latin America. It doesn’t come as a surprise for the venture capital ecosystem. Studios have been getting a lot of attention since Idealab first started to implement this model back in 1996

It seems like the entire world has changed since then. Today there are around 560 Venture Studios in the world, according to GSSN.

There are many ways to call this Asset Class. Some call themselves Startup Studios, Company Builders, Venture Capital Studios, Venture Builders, etc…

The point is that we all share the particular goal of changing the game on how to build and scale companies from scratch. That’s something every Venture Studio can agree on, even when we all do it in different ways.

That “way” of doing things is what we have synthesized in our methodological approach to company building. You can see the effects of the model by looking at how rapidly it has grown in the past few years.

The growth rate goes up to 625% in the last seven years, getting to a point where there is at least one Venture Studio in each region of the world.

Polymath is the Venture Studio for Latin America. In the last 9 years, we have focused our work on ideating, validating, and scaling companies to empower the middle-class of LATAM.

As we enter a new era of entrepreneurship in Latin America with Venture Capital growing more than 2X during 2021, we keep focusing our efforts on using human-centered design to create technologies and business models that solve the biggest and more urgent problems of a segment that has been underserved by business: The middle-class.

Latin America craves a social and economic boost. Real social and economic development will come from efficient and vibrant solutions designed to enable and empower the middle class.

We believe the Venture Studio model is the right way to achieve that breaking-through moment in the ecosystem for the region, we are convinced it is.

Here are 6 reasons to believe in the Venture Studio Model.

1. Methodology goes first

Over nine years building companies leveraging the Venture Studio Model has helped us to develop a methodology that reflects our founders, EIRs, and talent learnings in the company building process.

We learned from our failures and successes and now we have a methodological approach to understanding a market’s needs and developing scalable digital solutions.

Following this approach, we have explored over 200 business concepts which have led us to launch 11 companies into the market.

Download our company building playbook to learn more about our process.

Company Building Methodology
Company Building Methodology

2. Talented and diverse teams across the Studio

People are an important part of what we do. We wouldn’t be here if it wasn’t for talented, risk-taker and a little bit crazy individuals that share our view of purpose and transformation for the region.

Having more than 500 collaborators across the group is also a great competitive advantage, giving us the diverse background necessary to address complex problems from different perspectives and areas of expertise.

Our culture and way of working allows structured learnings and encourages know-how transfer within the group and with external investors, not to count our alumni network, which is all around the globe and working across industries, normally maintaining contact with us.

3. Proven track record

It’s not the same to invest in first-time or even experienced entrepreneurs as it is to do it in a group of people that systematically create companies for a living.

Up until now, we have 3 operating ventures that have reached Product-Market-Fit and 2 more on their way there. Creating a portfolio that has risen USD 45M from external investors.

Building for emerging markets requires a completely different approach to company building and scaling. What we have achieved up until now is only the beginning of our learning journey.

4. Partnership with great entrepreneurs

A Venture Studio is meant to be a perfect co-founder to proven and successful entrepreneurs. This is one of the main differences we encounter when comparing our business model with accelerators or VCs.

We are looking for the TOP entrepreneurial talent who are enthusiastic to transform the middle-class in Latin America.

This is a matter of both purpose and skills, something that’s not easy to find, but it’s a formula that has proven to be a huge success for Venture Studios (and Polymath).

All this provides an unmatched learning (and life) experience both for them, us and the people we are impacting.

5. Strong leadership and advisory

Our founders, Weny Cai and Carlos Fernandez de la Pradilla both come from strong business experience and are deeply committed to the purpose of transforming the region of LATAM.

Over the years we have also created and strengthened a top advisory board composed of friends, investors, and business leaders internationally renowned.

Combining that with the context of opportunity the region is going through right now and the methodological approach to business we have developed, we feel more confident to do the work and continue to grow our expertise as well as our connections to be more impactful and successful within our portfolio.

Wenyi Cai and Carlos F. de la Pradilla  
Wenyi Cai and Carlos F. de la Pradilla  

6. Higher success rate.

In general, the Venture Studio Model achieves better success rates than other similar approaches to entrepreneurship.

For example Studios around the world are getting a 34% exit rate VS 21% for Accelerators and 19% for the average venture industry.

But it doesn’t all come down to exit, we are giving higher investor returns too. The average in the venture industry is 21%, but when we look at studios it goes all up to 55%.

Today, taking into account our seed investment we are offering up to 32% IRR over our portfolio in which 32 investors have already believed in, including international funds like Bullpen, Cendana, FJ Labs, and more.

To summarize

  • Entrepreneurship is about risk.
  • The Venture Studio model aims to reduce that risk and maximize the learnings.
  • Studios make sense within the venture ecosystem. This model is even more relevant in emerging markets where uncertainty is higher and a deep understanding of context and people is necessary.
  • Polymath Ventures builds companies to address the problems of an emerging middle-class with huge opportunities for growth and innovation.