Studio math: how venture building returns work
Founder-level equity, portfolio cadence, and what it means for LPs.
The case for a venture studio is arithmetic, not ideology. A seed fund buys 10–20% of a company at a price set by a competitive round. A studio holds 30–40% of a company it created, at a price it set itself. That difference in entry ownership is the entire model, and everything else is a question of whether you can defend it.
Three levers, one equation
Studio returns come down to three things: how much of each venture you own at spin-out, how much of that survives dilution to exit, and how many ventures you can produce per year without the quality falling off a cliff.
- Entry ownership — founder-level, typically 30–40% post-incorporation.
- Retained ownership — what is left after pre-seed through Series B, usually 12–18% if the studio keeps following on.
- Cadence — three to four ventures a year is the point where our bench is fully used but not stretched.
"A studio is not a fund with a product team attached. It is a manufacturing business whose output happens to be equity."
Where the model breaks
It breaks when cadence is treated as a target rather than a consequence. A studio that must produce four companies a year will produce four companies a year — including the two that should have been killed in validation. The discipline that protects the arithmetic is the willingness to have a thin year.
It also breaks on dilution. Founder-level entry ownership is worthless if the studio cannot fund its pro-rata through Series A. This is why our second fund reserves roughly half its capital for follow-on rather than new ventures.
What this means for an LP
A commitment to the studio is exposure to every company we create, at prices no fund can access, with the validation process doing the de-risking before capital goes in at scale. The trade is illiquidity and concentration: fewer names than a fund, held longer, at much lower cost basis.