Valerian Fauvel is the co-founder of Jumanji Studio, a Singapore-based startup studio building solutions to accelerate the world’s transition towards a sustainable future.
In this episode, we will talk about the company’s philosophy, the challenges of the sustainability industry, the best business models around sustainability and how to grow a startup studio.
Website URL: https://www.jumanji.studio/
Valerian’s Linkedin: https://sg.linkedin.com/in/valerianfauvel
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Andries De Vos: When you started Jumanji Studio, what is it you understood that others didn't? What is the assumption behind Jumanji Studio that makes it work?
Valerian Fauvel: We understood that there was a real opportunity for a group of entrepreneurs to scale our skills and ability to build things across not one but across several startups. If I take my own example, I was at a VC fund before starting Jumanji, and my background is more in finance, fundraising, strategy for markets. If I was going to do that in one single startup, I would realistically spend 10-20% of my time on it. Plus, I would have to learn a lot of other things. But if we got into a set-up where we could spend 70-80% of our time on what we're really good at, we'd still have the learning but we'd be a lot more efficient with our time at building more startups. When your objective - like here in Jumanji - is to have as much impact as possible, it makes sense to start looking at how we can scale this together.
Secondly, there was a bit of a defense mechanism in setting up ourselves as a studio in the impact space, because the ecosystem is weak, there aren’t many investors, incubators, accelerators or entrepreneurs. By building the studio, we're replacing an ecosystem that was missing. That's why we're able to bring capital so that we don't need the basic "love money" that some entrepreneurs need. We're able to look at different themes in sustainability, circular economy, climate change, etc. We were able to surround ourselves with a community - a group of 60 industry experts, investors and entrepreneurs who like what we do and contribute in different ways. We were able to build stronger gravity around our purpose that we couldn't have gotten if we were pursuing a single startup.
Andries De Vos: Let's talk about economics. From beginning to end, how much money do investors successfully initiate and validate for a startup idea until the point where you bring the CEO onboard?
Valerian Fauvel: We've put the cap at $200,000. We have money in our reach to double that amount, but we are not going to do it until there is a very thorough assessment of why we're doing it, and we ask for our investors' approval. Ideally, we raise funds for the startup and reach financial independence for it, at which point the studio doesn't need further investment in the company. We keep these unallocated resources more tactically as a shareholder. If there is a crisis, we ask ourselves if there is a reason why we would want to defend our ownership. This pool of funding is there really for tactical allocation. For me, it's very important to make sure that we are not going to put all our resources in one or two startups.
For now, the most we've invested in one startup is $90,000. We've been super careful with our funds for a few reasons. One is that we didn't have that much, we raised around $500,000 the first time around. We know we're in a space with not as much funding; we aren't in deep tech, we don't have so much access to that type of investors and grant funding. I would say there are few steps in the validation. One is whether we like the idea enough and have the first clients for this potential company that we would like to incorporate? Incorporating in Singapore can cost a few hundred dollars, but it’s a huge milestone - we inject money not from the studio directly, we just invest money from the studio in the startup and then run the startup.
I think we invest up to maybe $20,000 when we build a company we like, we get the first clients, the product/MVP is okay, and we're not shy to pitch this company even if it's not completely ready. In what we do, $20,000 is feasible. We talk to investors, and then we decide whether to invest more in the startup and we go to $100K or $200K. It might not be a heavy investment, but it's a lot of money for us, and it's a commitment of the studio to one company.
Andries De Vos: You and I had a brief conversation about the possibility of creating subsidiary labs. Tell us about that model.
Valerian Fauvel: It is for scaling our team operationally, to be able to do several things. One is to have a bigger impact on our startups, more directly from the studio.
We want to scale our team so that we can operate across more startups. Labs themselves would have a certain degree of independence, so they would have the potential to become their own startup. The same way you build a studio in a circular economy, you can build a growth team or a growth company, a product with good credentials and track record in some circular economy or climate change, etc.
It's quite exciting, and this is our plan to scale our team once we raise the funding this way. We really want to test it. We're convinced about it and we can find the right people as well, that have the right mix of industry expertise and the willingness to start their own thing but also come forward with a less scalable type of startup - a more consulting type of startup.
Andries De Vos: As the startup becomes bigger, is it easier or harder to run for you? Do you feel like you're starting to push the business downhill and you’re getting momentum, or is it the opposite - you feel like you need to push more uphill?
Valerian Fauvel: For me, it's more of a value thing. Now we're uphill because we're 6-8 months after our first fundraising round so we have a bit less money, we've built more startups. Resources are needs are starting to be a little tense. It's uphill, but really stressful. We hope to be a little alleviated when we raise our second round. Downhill was after the first round when we were established and had visibility for 12 to 24 months. We've built 3 new startups. We know what we want to do and we're super excited about it. Now we think it's time to get the resources we need to continue the second chapter of the book.
Andries De Vos: What do you look for in your CEOs and founders? How do you measure, quantify the traits you are looking for? Do you have any rules?
Valerian Fauvel: For me, energy was what came first. I need to feel that the person has the energy to carry a business and lead a team for a fairly long time. In our case, an important trait is a very strong alignment in values. All our entrepreneurs have demonstrated huge engagement in building something that has a different purpose which is building a business and making money. We also look for a strong willingness to work, understanding that it's not going to be easy, having a strong drive.
We test this in the beginning. We never start a relationship with a CEO without telling to change something and then come back to us. We see if they are able to start the machine on their own and get back to us and challenge us.
Obviously, the ability to grow is important, but I would say we are ready to take some risk there. We accept that we're not hiring Steve Jobs all the time. We compensate this with the larger equity share for us at the beginning, so that we can have the munitions to bring other people down the road.
We don't ask our co-founders to invest in the business. In our case, they tend to be first-time entrepreneurs. Their experience needs to be somewhat relevant to their business, ideally complementary to the skills we bring in the studio, as a good match for the team. How do we assess it? At this point, it's spending as much time as possible throwing them into the pool and seeing whether they swim. We put a huge emphasis on someone challenging and pushing us. It's the best sign that we got CEO material for that business.
Andries De Vos: What models of startup studios do you find interesting out there and why?
Valerian Fauvel: I've always been fascinated by the idea of Rocket Internet - one model we can replicate million times, each time better. I think there is beauty in pure execution. We're not taking that route, we're more literal in what we do, and maybe later down the road, when we all have our experience and we've learned enough, we can work this way. When your goal is to have a tangible impact, the idea that you can scale a billion-fold is exciting.
In underdeveloped ecosystems, the idea of startup studios is an excellent way to innovate. It's an ideal model for creating startups that are resilient and strong, avoiding common pitfalls and failures. I’d really like to see more of them.
Andries De Vos: Paint me a picture: what will business building and venture building look like in, say, 15 years from now?
Valerian Fauvel: Venture building for me is startup studios doing their own thing, and then there is a service aspect to it, which is working with corporates. We initially tried the corporate model and decided not to do it. When we started, we looked at the existing models and at how we could build our own. Basically, we decided we would do less startups, but better ones.
The way we see now our first 4-5 years is to build a portfolio of 5-7 startups out of 20-25, and we need to find a way to reject quickly the wrong ideas. Among these 5-7 startups, there are going to be those that are more advanced and those that come in later.
The first year we had two startups. Now one of them is financially independent, it has its own team and investors and it doesn't require capital from the studio. Another one is going to get there soon. To build these two, we rejected about five to seven other ideas. For the second year, we built three more startups that are younger. We have CEOs and early clients for two of them, and things go well, so we do not need to invest more in them. We have room to add a few more startups.
From here, the ideal vision for us is to have 4-5 successes out of this and get 1-2 to exit quickly so we recycle this capital. For fun, I tell our investors that our plan is to invest in one company, repay you, then exit and never speak to investors again. This would be ideal, because we can have both the ability to build new businesses on a regular basis and the thrill of invention and creation but also time to go deep into a business.
There are two other possible scenarios: one of these companies can become a hugely successful company and we become a holding company with the shares of that very valuable company- we don't want this, but it could happen. The other scenario is doing a lot more startups.
Andries De Vos: If you could have a massive billboard with some advice for anyone trying to build the next Jumanji Studio, what would it say?
Valerian Fauvel: The first big decision, if you're in the impact space, is whether you will do it with investor money or grant money. The kind of impact themes you can address depending on the type of capital you're going to raise is quite different. I was in the social impact space before, in poverty alleviation, and I could not do a studio building early-stage social enterprises with investor money. The only way to do it is through grants, I hope it won't be the case one day, but today it is. So, the first big question is what kind of impact you want to have.
There is some complexity in a studio that you don't have in a startup. It’s important to work on your governance tools, decision-making and set the principle for what happens if someone leaves because that completely changes the team dynamic. It's important to treat your governance very seriously, see the studio more as a fund than a startup.
For each founding team I execute, I do more and better than I have done in the past and I build value from this. The learning aspect is in how far I would go out of my comfort zone to discover and build a new type of value that I was unaware existed.
It's interesting to decide what camp you are in, because if you only do discovery, it is very dangerous, and if you only execute, you might get bored. For me, it's important to choose your investors super wisely.
Of course, money gets people excited and you feel like a genius when people give you money, but the fact is that the work is on your shoulders only, no one - especially private equities - will bother with it, so it's okay to say no to money. Be prepared to do it or at least seek investors who you really like and work with them.