From Deal Structure to Portfolio Strategy
Most venture studios fail because they try to develop the wrong companies at the wrong time, or they try to shoehorn themselves into someone elses idea of what a "Venture Studio" is.
They launch as "startup factories," attempting what I defined as "Internal Origination" projects without the capital, credibility, or capabilities to sustain them. They burn through initial funding on high-risk ventures, produce mediocre outcomes, and disappear—adding to the graveyard of venture capital constituents that confused ambition with strategy.
The Portfolio Allocation Matrix reveals a different path: sustainable studios aren't built through aggressive risk-taking but through strategic risk progression. They start with low-risk Structured Support engagement models that generate cash flow and build expertise. They graduate to Strategic Partnership transactions that share risk and resources. Only after accumulating sufficient capital and capabilities do they attempt Internal Origination as genuine company creators at scale.
The matrix is now available for Venture Capital 2.0 subscribers. It's a risk management tool derived from analyzing hundreds of studio failures (including my own!) and the few dozen sustainable successes. It is also the matrix that I developed to launch and scale Next Wave Partners' venture building and investment practice (aka "Studio"). Hopefully, this helps contribute to a standardized way to visualize portfolio mix, model resource allocation, and communicate strategy to investors who are tired of funding expensive experiments.