A trio of German entrepreneurs and investors have teamed up to launch a new venture studio in Berlin dubbed MVP Founders, which plans to build two to three companies annually across a range of industries.
Behind the studio are Tobias Schüle, the cofounder of nutrition startup Foodspring, which was acquired by Mars in 2019 and shut down last week, Tim Tepass, the founder of recruitment startup hytch and an angel investor and Fabian Wittleben, a venture builder who has built five companies as a founding investor including Pactos.ai, an AI-powered operating system for companies to manage temporary workers, and massage chain new:soul.
The idea is that the studio works with founders to hone their ideas, and build out the business plan and fundraising strategy.
The studio’s founders give each venture up to €1m in initial funding, which will often include tickets from angels and family offices. These investors will also offer operational support to the startups. Angels on board include Flink cofounder Oliver Merkel, Foodspring cofounder Philipp Schrempp and Smava founder Alexander Artope. Family offices include Luxembourg-based DLF Venture.
Combined, the studio and external investors will take an average of 30% equity in the company at the first investment.
Venture studios typically take higher equity stakes than VCs (sometimes up to 80%, according to Harvard Business Review) due to their active role in building the company.
Scaling up
Once the founders and the studio have a viable business idea, the trio works with the founders to help them with the nuts and bolts of company building such as hiring, go-to market and fundraising. MVP Founders has kept its team small because it wants to be “hands on” with founders, Wittleben tells Sifted.
“We consciously decided against building the next incubator or company builder that creates companies on an industrial scale. We want to be selective,” says Wittleben.
MVP Founders is not necessarily looking for the next “moonshot or unicorn” that can raise significant venture capital and scale fast. It rather wants to support businesses that “can sustain strong revenue and good unit economics,” adds Wittleben.
That might mean that the businesses choose not to raise VC capital initially, or at any point.
“We’ve seen from our own portfolio that very often founders think VC is the only route, but the business model doesn’t support a VC case. And that often leads to a situation where companies have to raise tonnes of money and founders end up heavily diluted,” says Wittleben.
While the studio is open to building companies with a variety of business models, it’s keen to build ventures that may not fit into “the typical VC case” — for example, brick-and-mortar businesses like hotel chains where it’s possible to “create revenue fast and win customers in the early days to prove traction,” says Wittleben.
The studio is currently building two companies: Mitte, a boutique club for padel (a mix between squash and tennis), and an “under the radar” company in e-commerce and gaming.
Read the orginal article: https://sifted.eu/articles/foodspring-founder-berlin-venture-studio/
