Favcy’s approach to Venture Building
by Pranav Chaturvedi, Founding Partner, Favcy
As a Venture Partner at a Venture Building firm, I get to interact with some super founders and many astute investors. Our first call typically lasts about 80 minutes because though the VB space is very exciting, it is very nascent. I took it upon myself to make it open and share the secret sauce that is working for Favcy; as we Venture Build.
Please feel free to replicate the model and I do hope your venture builder meets with equal success.
But first — Why Venture Building ?
The earliest investors in an idea are generally the founders and the proverbial friends, family and fools.
The stage is very risky for any institutional investor or even an organised Venture Capitalist to come in and the only institution that has tried to organise this stage is the Government through its grants programs that it runs with select incubators.
Success of incubators has been limited and very few incubators have been able to scale up due to business model issues.
Venture Builders are rapidly looking to organise the above market through a differentiated strategy.
I sometimes joke — earliest investors were the the 4Fs — Founders, Family, Friends and Fools. Add me there. Make it the 5Fs — Founders, Family, Friends, Fools and Favcy.
And — What is Venture Building?
There is no one answer to the ‘what’ of Venture Building but a Venture Builder will use frameworks to select its portfolio and will usually take equity in return for the organised services that it offers. Typically, a VB will get a part of its equity underwritten from a group of angels to provide for these expensive but organised services.
For future rounds, it will syndicate as lead by selling at discount portfolio’s equity to a group of angels but would like to remain in control to mitigate risks to it’s group of backers. Venture Builders will eventually cede control as soon as the first organised VC takes over but till then will keep mitigating risk.
The below table highlights the key differences between Venture Builder, Venture Capital and Private Equity players.
For a detailed analysis of the three; feel free to drop in at another piece that I wrote on Medium — Mirror Mirror on the wall, who is the coolest of them all?
Now that we have some understanding of the space, let’s talk about Favcy’s approach to Venture Building.
Favcy provides a standardised venture building assembly line to non tech founders who are looking to build tech first ventures.
Benefits to Founders
- Speed — From Idea to launch to investments in 90 days instead of regular 15–20 months
- Product Market Fitment Guarantees — Majority of Founders fail due to lack of Product market fitment. With Favcy that is guaranteed.
- Less wastage — Structured approach to venture building reduces massive wastage that is true in the initial days of a startup. Ability to control this wastage results in better traction with frugal capital.
I am highlighting values that we provide through our proprietary tools. If you are a Venture Builder, your maximum time will go in building these tools.
As a Venture Builder, you will most likely be dealing with Angels, therefore the discussion will be incomplete without mentioning the benefits that we as VB provide to Angels
- Diversification with VC style investments with low capital — Angels can take small positions in multiple ventures and then can double down on the one’s which according to them are most likely to scale.
- Transparency — With a senior partner in Venture Builder, Angel gets complete transparency and can make decisions based on the thesis and frameworks that are available only with larger VC firms.
- Risk Mitigation — Portfolio management service team of the VB, provides risk mitigation and month on month updates on the performance of the startup. Useful for increasing stakes in the startups that the angel believes is doing well.
- Senior Partner to lead exits — Exits is a difficult ball game for Angels. Exit negotiations (for future with promoters or with second stage VCs) are best handled by the Senior Partners of the Venture Builder
If you have more questions, feel free to reach out to me. Happy to add value to your Venture Builder.
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