New Pittsburgh startup studio seeks to turn good but unproven ideas into companies
Local tech entrepreneurs now have a new option for pursuing their business ideas. A new fund, called Better Work Ventures, has launched a startup studio in Pittsburgh, with plans to invest in companies at the earliest stages in their development.
Better Work co-founder and managing director Lynsie Campbell said her group wants to work with entrepreneurs who have yet to test their ideas – or still must generate ideas for addressing a specific problem – partly because the youngest companies often struggle to attract investment.
With Better Work’s support, Campbell said, those businesses could gain the traction they need to reassure wary investors.
“So we actually don't want them to have anything built yet. And part of that is because what we do is help them validate their idea,” said Campbell, who recently left her role as startup czar for the Pittsburgh Regional Alliance to commit full-time to Better Work. She previously founded the online event ticketing firm ShowClix and a cyclist route-making app, called LaneSpotter.
She noted that many startups fail because they don't spend enough time gauging how viable their ideas really are.
“Sometimes founders go ahead and just start building without actually doing a lot of the research to understand whether or not their idea is something that customers want and customers are willing to pay for. Is the market big enough? What's the competition look like?” she said.
“So by doing a lot of that work really early, the goal is to de-risk the investment that we would be making later on as we decide whether or not we want to build the company with them.”
Better Work will provide $25,000 to $50,000 in venture capital to each of its startup founders in exchange for equity, according to Campbell. She said studio staff will then spend 12 weeks guiding participants through market research, competitive analysis, and product testing.
Better Work hopes to support about 10 startups over the next year and will review pitches from prospective participants on a rolling basis. Campbell said entrepreneurs from Pittsburgh and across the Midwest are welcome to apply.
The studio will focus on cultivating consumer tech products with the potential to create large followings online. Campbell said her now-defunct LaneSpotter app would fit this description because it used crowd-sourced data to design safe bike routes.
Even cookware maker Instant Pot has taken a similar approach to promoting its product, Campbell noted. With hundreds of thousands of people in its Facebook group “sharing recipes and kind of pushing the product forward and sharing it with friends,” she said, it’s “having this kind of viral network effect where the more people who are using the product the more valuable [Instant Pot] becomes.”
Depending on the results of its initial 12-week validation period with individual startups, Better Work’s investment committee could then contribute between $250,000 and $300,000 in additional funding to those companies. Campbell predicted that two or three of the first 10 participants will advance to that second round of investment, meaning they will spend another year or so at Better Work, building their products and finding customers before spinning out from the studio as standalone entities.
Better Work recently selected its first founder-in-residence but has yet to disclose who it is. The group is still raising money for the $10 million venture fund it plans to establish alongside the studio, Campbell said. She noted that, while the organization has operated virtually so far, it has spoken with administrators at local universities about opening a physical, on-campus location.