In a time when many startups are struggling to raise funds, Orbita’s projects have been performing remarkably well. CEO Daniil Kirikov tells us more about the venture studio’s approach and the reasons behind its success.
What is Orbita and how does its “startup studio” approach differ from conventional VCs?
The first key difference lies in our approach to idea selection and generation. The vast majority of the ideas we launch originate internally. At Orbita VC, we have built a complete pipeline for how we discover ideas in various niches, how we assess them based on over a hundred parameters, and then proceed to test them. If we find that an idea doesn’t have a viable business model or doesn’t resonate with the market, we either reject it or put it through a second cycle. Our co-founder usually joins us when we have already decided to start a project or when we are testing it together.
The second key difference is that we are operationally involved in every project we launch. From the initial stages of an idea to the point where it becomes an independent company, we work closely with the co-founder. You could say we are professional co-founders who have assembled all the necessary expertise within our team. For instance, a co-founder who excels at product support doesn’t have to worry about financial modeling at the early stage, or they may lack legal knowledge or understanding of how to build the technical architecture and the team to implement it. We strive to make sure each co-founder maximizes their expertise.
Once a project exits the studio, it has its independent team, an economics unit, and is ready for investment and scaling. At this stage, our operational involvement decreases, and we focus on assisting the project with scaling, networking, etc. Traditional venture capitalists and private investors favor projects that emerge from studios because if a project successfully passes through this funnel, it has overcome the “valley of death” that many startups face and possesses all the necessary components for scaling.
The overall journey from idea to exit in a venture studio is significantly shorter due to our collective R&D efforts in launching projects.
Who does this approach cater to?
Our main co-founders can be divided into two categories:
- Those who have previously launched their own business but were unable to scale it to the desired level or, for some other reason, it failed.
- Those who possess exceptional expertise in a specific niche and believe that their task is to grow it.
In some projects, we are even able to bring together multiple co-founders who initially come to us separately. For example, a strong business visionary with a strong technical director. If we can help these co-founders establish a smooth process and avoid conflict, it’s a win.
“There hasn’t been a decrease in money on the market, but investors have become much more selective.”
Daniil Kirikov, CEO of Orbita VC
What are some of the main requirements an idea or project needs to fulfill to be considered by you?
1. Who is the primary client, and what key metric can we solve for them? (We have a strong affinity for numbers)
2. Does this idea have a market? How much are customers currently willing to pay to solve this problem?
3. What market transactions exist? What are the multiplicative factors?
4. What will the project’s exit strategy be? Who could be a potential consolidator?
5. Which three key marketing channels are planned for scaling? What is considered the market norm, and what scenarios are we counting on?
What are some of the downsides (for co-founders) of launching a project with Orbita?
Working with a venture studio may cause discomfort for those who desire complete autonomy in the project development process, as well as for those who believe their expertise to be exceptional in all aspects.
Our task is to seek out fast-growing projects, and we can easily decline ideas that do not meet the criteria. It is often the case that founders are unwilling to part with their ideas and listen to counterarguments. In such situations, discomfort arises for both parties.
We work at a frantic pace, which often does not suit co-founders who have the image of a “garage startup” with a project that grows independently.
An additional downside is the dilution of ownership. When you do everything on your own and simply attempt to attract funding, you have a larger stake in the project.
In a time where many startups are struggling to raise funds, why should they choose the startup studio approach?
There hasn’t been a decrease in money on the market, but investors have become much more selective. Before, it was possible to attract funding without a track record and focus on long-term development. While it’s still possible now, it has become significantly more challenging.
On the contrary, our projects have thrived in these times. When investors became more discerning, the market improved. It was extremely difficult to compete for rounds with projects that couldn’t justify their future growth but promised hundreds of future multipliers every year. The number of projects that matched the new criteria diminished, and competition for projects among investors significantly intensified.
This year, we had three projects released from our studio. All three attracted funds and closed their rounds in less than two weeks. There are two more projects planned to attract funding before the end of the year, and we already have offers from investors.
This article was first published in the Silicon Luxembourg magazine. Read the full digital version of the magazine on our website, here. You can also choose to receive a hard copy at the office or at home. Subscribe now.
