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September 19, 2023

Delta Studio Thesis Part 2: A Proven Path To Studio Scale

Explore Delta Studio's multi-partner model and the strategic evolution to DSF1, as written by Delta Studio's VP, Ryan Shub.
September 19, 2023
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VP of Delta Studio

Recap: The Venture Studio Scale Paradox

As unpacked in Part 1, the venture studio world faces a paradox: as studios grow, the personal touch and engagement of seasoned entrepreneurs - the core magnetism of the model - erodes. Limited Partners (LPs), the fuel of our world, crave both the unique, hands-on approach of skilled entrepreneurs and the diversification that scale brings. Yet, these two elements have traditionally been at odds.

We’ve dedicated thousands of venture-building hours to address this disparity. Our refined Multi-Partner Studio model, honed through meticulous effort, now stands as a validated operating framework, forming the foundation of our first studio fund.

Embracing Horizontal Scaling

We found our answer in rethinking the organisational structure. Instead of expanding vertically, introducing layers of hierarchy and red tape, we decided to grow horizontally. In this model, the Studio is comprised almost entirely of experienced entrepreneur Partners, each directly co-founding multiple ventures. This structure addresses the common problem where the space between ventures and Partners widens as studios grow, leading to a depersonalised and bureaucratic model of operation. By focusing on seasoned Partners who co-found multiple ventures, we maintain the integrity of intimate involvement while accommodating growth, ensuring that the personalised touch isn’t lost in layers of management.

Studio as a Platform, Not an Employer

We’ve transitioned the role of the Studio from being an employer to serving as a facilitative platform. In this model, Studio Partners are not employees but collaborators. Our growing network of Independent Studio Partners bring their proprietary resources to the table, and we supplement this with our established structure. We offer a space where Partners can focus and be free from the operational hassles typical of large organisations. Partners leverage Delta Studio as the most efficient platform to build and invest in ventures, combining their capital, time and resources with ours. We enable Partners to be operative across all of their Studio ventures, contributing as highly experienced co-founders, rather than just capital allocators.

Solving The The Serial Entrepreneur Dilemma As A Byproduct

Our model emerges as a compelling alternative for serial entrepreneurs who seek to broaden their impact and investment portfolio, maximising on their finite resources. It offers these entrepreneurs the latitude to be deeply involved in multiple ventures, blending the depth of personal involvement with the breadth of a diversified portfolio enabled by their peers. 

Each Independent Studio Partner contributes a distinct investment thesis, specialised support model and unique edge to the ventures they co-found. We combine their specialised capabilities with our generalist platform to ensure that each venture is holistically supported with no functional blindspots. Proprietary resources and learnings are cross-pollinated between Partners, including the use of personal network to source tier-1 founders.

Partners benefit from direct investments and a share in portfolio performance fees. This incentivisation allows them to concentrate on their core venture domain while enjoying exposure to a diverse portfolio. It also fosters accountability, as Partners are motivated to ensure peer performance and commitment to the collective portfolio.

Independent Studio Partners with a demonstrated history and strong ties with the Studio may be eligible for additional incentives, including participation in topco share swaps. This opportunity widens their exposure to the full spectrum of the Delta Group portfolio and pillar business models.

Our model mitigates the venture building risk of over-concentration and the enormous cost of angel portfolio diversification. It’s a balance that has been elusive but is now attainable through our approach. While most serial entrepreneurs are intricately involved in their own core business, our model offers them the platform to be operative in multiple ventures, facilitated by a support model that’s holistic and tailored. They focus on high-value touchpoints with founders, while the Studio handles the operational load. This is how serial entrepreneurs can effectively become parallel entrepreneurs.

Advantages to the Operating Model

The operational efficiency of this model is significant. We can diversify and expand as a Studio without a corresponding escalation in operational complexity. With each new Partner we build capacity, broaden our thesis and specialise in new markets, yet the core operational integrity of the Studio remains unimpacted. It’s a model that scales without diluting the intimate, personalised engagement that defines venture studios.

A Proven, Not Conceptual, Model

This isn’t theoretical - it’s proven. With a portfolio worth EUR 4.5bn (6.8x MoIC) and zero write-offs, the efficacy of the Multi-Partner model is empirically established. We’ve navigated the real-world complexities, adapting and refining the model to ensure that it’s not just viable, but robust and resilient.

The Strategic Evolution to DSF1

Our next chapter marks the introduction of a studio fund, a strategic evolution and symbol of our confidence. Our first fund is tailored to exclusively co-invest with Partners in the formation round of ventures incubated within Delta Studio. It’s not a departure but an amplification of our Multi-Partner Studio model, enhancing our investment flexibility and competitiveness. We’re aiming to achieve VC-scale diversification while sustainably equipping each portfolio company with the advantage of an elite co-founder, de-risking ventures from day zero.  

In Closing 

The Multi-Partner model is a thoughtful response to the venture studio scale paradox. It’s an intricate dance between maintaining the intimate, personalised touch of seasoned entrepreneurs and the imperatives of scale. It’s an operational model that’s adaptable, a platform that’s facilitative, and a value proposition that’s compelling for Independent Studio Partners. Our model isn’t a compromise; it’s a harmonious blend where scale and the artisanal crafting of ventures coexist, offering LPs a landscape where their investments are not just diversified but intricately and personally nurtured to fruition. 

As we step into the future with DSF1, we aim to not only usher in the evolution of the venture studio asset class but also cement its enduring presence. 

This article was written by Ryan Shub, VP of Delta Studio. To learn more about Delta Studio, click here.

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