Innovations are, by definition, unique. As are the multi-variable inputs that make up the start-up companies formed to commercialize them, including the teams that come together to launch them, as well as their ability to access the critical resources they need to grow, such as necessary supplies, strategic support, and capital.
Similarly, there are a variety of ways start-ups have been supported by communities across the United States, many of which are established with the lofty goal of replicating the successes of Silicon Valley. Today, the most common of these “support systems” are variously described as incubators, accelerators, and innovation hubs.
While different in some respects, these platforms all typically seek to provide some mentoring for a short period of time along with small amounts of seed funding to a large number of companies in their portfolios in exchange for a predetermined amount of each company’s equity. The hope is that, when the program’s support comes to an end, at least a few of the portfolio companies will be able to access additional capital from venture capital funds and other sources, allowing them to grow, create new jobs for local economies, and, upon liquidity events, provide new influx of cash to fund ongoing operations for the platforms.
The goals of these community platforms are laudable and understandable – but challenging as well. Even their staunchest supporters understand that most of the portfolio companies within a platform will fail. Perhaps most problematic, with a platform’s support being spread out among many companies, their fewer, most promising, companies often don’t get the fuller and more focused support they need to succeed or grow.
Adding to the historic challenges these start-up ecosystems have faced is the economic damage created by the coronavirus pandemic, as investors flock to “safe investments” and other capital preservation strategies.
Edmund Burke, a well-known 18th-century philosopher, observed that “In history, a great volume is unrolled for our instruction, drawing the materials of future wisdom…” At Varia Ventures, we believe that the start-up economy can benefit from such historical instruction. In a recent book, Harvard Professor Steven Pinker observed:
Among the brainchildren of the Enlightenment is the realization that wealth…is created primarily by knowledge and cooperation: networks of people arrange matter into improbably but useful configurations and combine the fruits of their ingenuity and labor. The corollary, just as radical, is that we can figure out how to make more of it.1
In building Varia Ventures, one of our original goals was, in part, to help address the historical challenges faced by start-ups summarized above by establishing just such a network: a network built around private companies, industry experts, and investors. This network model sometimes currently referred to as a “venture studio,” promises to be even more helpful in today’s current environment.
As a venture studio, Varia Ventures seeks to identify and work with only the most promising companies and support them with robust and long term support, including by helping identify and adding key team members when needed, accessing strategic support from industry, offering advice and guidance from subject matter experts, as well as helping secure necessary capital. We believe that this focused approach to helping start-ups will help them succeed, including, as may be necessary, by preparing them to seek larger rounds of financing from outside investors.
There has never been “one best way” to succeed as a start-up – or for communities to support them. The many and ever-changing dynamics of our global economy will ensure that there will always be more than one path to success. Our goal at Varia Ventures is to be a new path for start-ups to consider – a path that will help bring the promise of “Silicon Valley like” success to the communities we operate in.
By Scott Friedman and Andrea Vossler
