July 9, 2025
In this Highline Beta podcast episode, Sarah Anderson argues that venture studios must solve for liquidity or the category won't survive, advocating for predetermined exit strategies and standardized ownership structures around 25% equity.
Sarah Anderson identifies venture studios as a superior business model within the existing venture asset class rather than a new asset class entirely, emphasizing their value in process efficiency and talent matching from zero to one. She warns that without solving liquidity challenges through predetermined secondaries, exit committees, and structured milestone planning, the venture studio category faces an existential threat as LPs lose confidence in the model. Anderson's data shows the best studios now target 25% ownership, down from the historical 80-90%, because excessive ownership correlates with weaker founders and harder downstream fundraising.
Sarah Anderson's team has tracked ownership trends and found that the best studios now settle around 25% ownership, significantly down from the 80-90% equity stakes that were common when they started investing. Anderson explains that higher ownership often correlates with worse outcomes, including weaker founders, more difficult downstream fundraising, and less attractive cap tables for future investors.
Sarah Anderson recommends several specific exit strategies including predetermined secondaries where studios sell 20% at Series B, establishing built-in exit committees, and securing early partial liquidity in oversubscribed rounds. She emphasizes that having any plan is better than the default "hold for 15 years" approach, and Vault Fund now requires side letters from every studio outlining their liquidity strategy as part of their diligence process.
According to Sarah Anderson, venture studio structures remain fragmented with no standard model, creating confusion and misaligned incentives. She notes that while fund structures are familiar to LPs, they often hide critical misalignments such as using 2% management fees to fund discovery work while only including post-launch equity in the fund. Holdco structures offer more transparency and pari passu economics but intimidate traditional LPs, making capital scaling difficult.
Sarah Anderson clarifies that venture studios represent a better business model within the existing venture asset class rather than constituting an entirely new asset class. This distinction reframes studios as a repeatable, scalable approach to early-stage company creation with tighter control from zero to one, positioning them as pre-pre-seed specialists focused on process efficiency and talent matching rather than just company picking.
We’ve long believed that venture studios can outperform traditional VC. But talking to Sarah Anderson reminded us that belief isn’t enough. The category needs to evolve. Quickly.
Sarah is the founder of Vault Fund, one of the first fund of funds of funds dedicated to backing venture studios. She’s also one of the clearest thinkers in the space, with hard-won data, a nuanced perspective, and zero tolerance for fuzzy logic.
This conversation covered everything from ownership benchmarks to fund structures to the future of exits, and left us with five takeaways that every builder, investor, and LP should pay attention to.
Sarah made it crystal clear: venture studios aren’t a new asset class. They’re a better business model within the existing venture asset class. That distinction matters. It reframes studios not as some exotic alternative but as a repeatable, scalable approach to early-stage company creation, just with tighter ball control from zero to one.
The studios she backs are pre-pre-seed specialists. Their value lies in process, efficiency, and talent matching, not just in picking.
Sarah’s team has tracked ownership banding closely. When they started investing, tech studios were holding 80–90% equity. That’s no longer viable.
Today, the best studios are settling in around 25% ownership. Why? Because higher ownership often correlates with worse outcomes: weaker founders, harder downstream fundraising, and less attractive cap tables. Studios need enough skin in the game to align incentives—but not so much that they choke the startup’s future.
This was the headline. Sarah didn’t mince words: If company builders don’t solve for liquidity, the category won’t survive.
Studios love the build. But most avoid planning for harvest. The result? Strong companies that go nowhere, and LPs who stop backing the model.
We talked about simple exit strategies:
None are perfect. But what matters is having a plan. Because “just hold for 15 years” is not a strategy.
There’s no standard studio structure yet, and that’s a problem.
Sarah’s team has invested in both fund and holdco models. She shared that while funds are familiar and palatable to LPs, they often hide critical misalignments. For instance, studios using 2% management fees to fund discovery and build work, but only including post-launch equity in the fund, that’s a huge mismatch.
Holdcos offer more transparency and pari passu economics. But they scare off traditional LPs. The result is a fragmented market with confused incentives. Until studios align structure with strategy (and explain it better), scaling capital will stay hard.
Vault Fund now requires side letters from every studio outlining their liquidity approach. That could mean secondaries, exits, or structured milestones, but no more “we’ll figure it out later.”
This is a maturity milestone for the category. Studios that want institutional capital need institutional discipline. And that starts with recognizing: we’re not in the venture building business, we’re in the venture exiting business.
We loved this conversation because it forced us to look in the mirror. As company builders ourselves, it’s easy to romanticize the 0-to-1 phase. But Sarah reminded us that rigor, discipline, and design matter just as much as vision.
If this category wants to thrive, we have to build studios that are not only great at launching companies—but at landing them too.
—Ben & Marcus
We always enjoy conversations about innovation and startup building so please get in touch.
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