There are a lot of blogs out there that will give you general advice on how to be successful in venture capital. Cut the fat. Build your MVP. Buy low, sell high.
Yes, these are all critical steps to a successful investment, but they’re easier said than done. HOW exactly do you keep things lean? Invest in the right outlets and secure a profit? That’s the kicker.
Since K8’s inception in 2016, we’ve developed a process to vet and evolve an idea from concept to commercialization. We’re pretty certain that we’ve unlocked the answers to these questions through our six-step Venture Builder Studio model of operation. From ideation to profit, our process not only encompasses what to do, but also how to do it.
We’re NOT not calling it a game changer…
K8 board members vet company concepts. Our board, which I’ve blogged about before, is comprised of world class experts from a wide range of backgrounds, bringing insights and opinions that both complement and challenge one another. If an idea can pass the scrutiny of marketers, engineers, business people and lawyers alike, then an internal team is created around that idea. Internally known as the “Commercialization Team,” this group’s responsibility is to support the entrepreneur-in-residence and build the product. At this stage, the company is just an idea on paper. K8 owns 100% of the equity, or founding equity, which investors, old and new, uniquely capitalize on.
With the Commercialization Team assembled, the next step towards bringing the concept to life is crystalizing its unique value proposition. Where does the concept fit? How big is the market? What are potential economic moats, and what are the dynamics for realizing them? With these details nailed down, K8’s first investment is made and the company gains monetary value. Many hopeful concepts don’t make it past this stage.
It should be noted that K8 operates with a budget based on the company’s technology underpinnings. Digital, IoT and industrial, all have different capital allocations, which are then modified based on any premium expertise needed, such as blockchain, AR/VR, engineering, etc. This capital is set aside over the company’s life through the six stages and is made at each stage-gate, or “go/no-go.”
A prototype of the concept is developed. This stage is critical to generating market interest, fund-raising and testing the idea for inevitable flaws or certain room for improvement. This is a stage of trial-and-error where funds are frequently reallocated or cut, as changes to design or implementation are made and new resources, in the form of team members or outside partners are brought on. While there is no universal way through which a concept’s success can be determined, making the time to validate assumptions, finding the voice of the customer and understanding why anyone should pay anything for your product, are key to supporting a successful launch.
In this stage, K8 is focused on securing market demand. Before pouring additional time, money and resources into a product, it’s critical to ensure that revenue will be generated starting day one of the product launch. Distribution is king. Too many entrepreneurs build something that is unique, beautiful, and perhaps amazing in its utility, but don’t make the time to understand how to get it in their customers’ hands. In this case we’re looking at not only the “who” of getting a product into the market, but pricing, warehousing, licensing, all of course, as appropriate to the company. Preemptive commercialization is a key success factor to subsequent stage success, as well as how K8 creates capital efficiency and effectiveness.
The company that K8 developed now has initial customers and is post revenue. The Minimal Viable Product (MVP) is out! While K8’s ownership in the company has been partially diluted by outside partners, as the company’s creators, financial and practical control still remain in K8’s hands. This frees the team to make critical funding decisions before the concept hits the market in earnest (or more earnestly). MVP is a time of testing, refining, and refocusing, because this is the first real intersection between “what we think is valuable”, and the “what the market thinks is valuable.” In other words… are people buying it? Philosophically, the MVP is really the beginning of a whole new cycle.
Depending on growth metrics, learnings, and an understanding of how to fine-tune the MVP for continued growth, as well as how within reach said growth is (from a time and capital perspective), the Stage Six company will be ready for an additional Seed round, or a Series A. It is up to the K8 team to determine issues around next steps like: “Is the Stage Six self-sustaining?” And: “Are there strategic partners or acquirers interested in the company while it is in Stage Six?”
As you can imagine, given K8’s 100% ownership at the start, we end up with significant founder equity, which is highly differentiated and of course excellent for investors.
The Venture Studio Builder model is a place where few ‘early stage’ investors dare to go and K8 is arguably defining this asset class. Our effectiveness will continue to improve as we further refine our commercialization methodology, and we’re already seeing improvements in how long it takes us to go from concept to MVP and revenue.
We’ve devised a model to develop new businesses with precision and increased control, resulting in more security and payout for investors. It’s a new approach to the industry we love; one that provides transparency, control and exciting opportunities for investors and entrepreneurs alike.