Thorbjørn Rønje
Co-Founder, Investor

The Bifrost Studios Manifesto

Background on the Bifrost
Studios model

Being longtime participants in the Venture Capital modus operandi, both as investors and as entrepreneurs, it has become clear to us that the VC model is not fully aligned with the interest of the investors nor the founders, leaving investors with mediocre returns and founders often having great businesses stifled by the inadvertent non-optimal game theory as a consequence of the belief that driving only a few mega winners is the only viable alpha-maximising strategy.

At Bifrost we believe that founders deserve better than often sacrificing 10+ of their most precious years to end up, if successful, with stacks of liquidation preferences and small amounts of equity in their own company, which often came about due to the necessity of growth at all cost. It is our belief that we have come to the end of a cycle where huge TAM and growth over profitability will be substituted by a much stricter focus on creating smaller more efficient teams and businesses which are fundamentally more economically sound. This does by no means mean that nothing has been learned from the Silicon Valley model or that we have anything against VCs.

We actually believe there has been tremendous learnings from all of the playbooks that came from 1000s of VC backed startups, which has all added to the multitude of smart ways to put out the fires of the burning platform it often is to be a startup and in fact we intend to take extreme use of these playbooks to not only build our own startup studio, but even more so to build a platform from which we can help our brethren founders to truly leverage the wisdom of literally thousands of businesses that went before them in a manner that is capital efficient, has a much higher survival rate and allows the founders and employees to enjoy profitability, dividends and exits much earlier than the VC model allows for. We believe the single best approach which can solve for these problems relies on the startup studio model. Here specifically the Bifrost Studios model will allow our co-founders maximum autonomy and vertical focus while still harnessing the awesome powers related to playbooks, processes and the many other things we offer through the Bifrost Studios partnership model.

Towards better built startups

With Bifrost Studios we hope to build a platform from which we can attract brilliant studio founders who also believes that there must be a better way to build successful and profitable startups. We think that administering strict meritocracy, reasoning from first principle, having a relentless focus on speed-to-profitability, working hard and being capital efficienct and scrappy is the way to get there. Our dream is to pave the way for a superior approach within company creation that radically increases the odds of success for all stakeholders involved.

Thorbjørn Rønje
Co-Founder, Investor

In Essence

What the startup studio in its essence makes widely available to all within its organization is a way to take tried and true learnings and codify them into processes and stages which allows for a much more flexible, fast and capital efficient way of testing out ideas, which can then grow into fully fledged businesses if they pass certain criteria.

If you ever wondered why VCs are hungry for exited founders, here is a way to think about it:  Each of these exited founders are in a way an individualised startup studio in the sense that they all have “a practice” for all areas of startup work, since getting to the coveted exit stage, has, with a very high probability, meant, that they needed to build knowhow and processes within everything from sales, product, hiring, culture, fundraising, brand building and the list goes on.

At Bifrost Studios we believe we have identified a couple of further layers needed in order to solve for both some weak points as well as unnecessary complexity the standard startup studio model suffers from. This list typically includes how you stay focused and choose the right projects, how you find talent for your projects, how you fix startup studio cap table “issues”, raising money for individual projects and generally scaling successes as well as how you keep momentum and generally just don’t go broke at the studio level. In the Bifrost Studios model these layers are inherently added in the architecture of how we operate and partner with co-founders.

The Evergreen Equity Model
The Evergreen Equity Model
The Evergreen Equity Model

The Evergreen Model

The TLDR of the model is that by creating an “evergreen” equity model that makes it equally attractive for the startup studio founder to succeed as it is for Bifrost itself and by partnering with startup studio co-founders that have extremely strong domain expertise while simultaneously “bulwarking” too demanding ideas from being pursued by focusing on what we define as purple ocean businesses as well as adding in a (free) service and platform component we can solve for the above mentioned challenges by the following:

Startup Studio 
Challenge

bifrost solve

Focus and choosing the right projects
Partnering with domain expert founders + Proven frameworks within ideation and validation + “Purple ocean” focus  
Finding talent
Purple Ocean and cashflow focus model allowing for a “CEO over Founder” + Bifrost Studios acting as a professional headhunter
Startup Studio Cap Table Problem
Focus on profitability removes this problem since it’s a VC thing. In non-standard cases where a true VC opportunity arises Bifrost and simply agree to a substantial dilution in favor of key stakeholders in the project.  
Gain and leverage unfair advantage
Domain expertise + Bifrost commercial offering
Not going broke
Domain expert founders + Purple ocean + proven frameworks + Micro acquisition approach
Scaling
Focus on profitability + Bifrost commercial offering + Bifrost capital partners (VC + PE + M&A for exit)  

1 This manifesto is made as a living document to reflect what Bifrost as a company believe in, who we are, what we do and why we set out to do it.
‍
2 As funds have grown to mega sizes, startups has to be pushed to 100M$+ revenues within 5 years if they have to meaningfully be able to absorb mega AUM sizes in search for a home, leaving many potentially healthy business in the dirt. Essentially much, if not all, of Series A and beyond VC has little to do with "Venture" (coming from "Adventure capital" originally), but is a form of fancy early-ish stage PE where there is honestly no real "Adventure" risk left for them post series A: "Multiple markets" check, "Min. 10M$ ARR" check, "NRR 120%" check, "Finished V.10.0 of Software" check, "100-200% Growth" check. Nothing wrong with PE or late stage VC thou', this might still be the best way for some companies, but honestly maybe it's actually not for most.  

3 We believe that the advent of AI and confluence of the exponential age will allow for much less capital needed to reach Series A (or similar size) companies. We already see the first examples of 100M$+ ARR companies with only a handful of employees. We believe this requires a highly deliberate structure thou.  

4 There has been huge efficiency gains by developing brilliant playbooking in so many aspects such as Go-To-Market, Growth, ICP's, Talent Acquisition models, Expansion models, Product sprints, Customer succes, sharp pitching, branding tactics and many other ways-of-working that has accelerated companies to product market fit much faster than they would otherwise have been able to.

‍5 Not necessarily the “Best practice”, but at least “a practice”.

‍6 50/50 partnerships are very aligning, as “whatever is good for you, is also good for me”. Founder wants dividends? That’s fine we want get half the dividends. Founder wants to exit a company? Fine we get half the profits, etc etc.  

‍7 Insert description of purple ocean idea: What they are and what they are not.

‍8 We have extensive experience on our core team both within hiring having hired 200+ people, but also actual recruiter/headhunter talent on our team we leverage to help our studios.

‍9 Startup studios who rely on venture capital often suffer from the challenge that they need to take more equity than a typical VC would to make their own “fund economics” work, but are (by the VCs) considered “dead equity” although startup studios themselves would argue that they are an extremely “alive” partner with the amount of active help they deliver compared to VCs who very rarely do anything.

‍10 Through Bifrost founders and high-level commercial hires in Bifrost top management team, the partner studios will have access to multi million online reach as well as sophisticated sales setups.

‍11 As described here(hyperlink to acquisition model) Bifrost also operates within the “micro PE” space to buy profitable smaller companies we believe could be scaled by acquiring them for our startup studios which can leverage their domain expertise and structured approach much better than the previous owner could ultimately capturing market share or improving unit economics dramatically.  

community@bifroststudios.com

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