Roniin takes the studio approach to startup creation
Paul Lee has spent the greater part of his career as a venture capitalist—first at NBC/Peacock Ventures, and then at Lightbank in Chicago—but these days he is on the other side of the table as an entrepreneur. His new company Roniin is debuting today as a new way to create startups and mentor CEOs.
Roniin—which Lee co-founded with Ryan Jeffrey, Arman Ghosh, and Kathryn Saluke—co-founds companies with youngish CEOs, and pairs them with serial entrepreneurs who serve as the chairman.
The incubator is backed with $3 million in funding led by Formation 8, with participation from 500 Startups, Pritzker Group, Launch Capital, and Dom Capital.
As Lee explains, Chicago-based Ronnin will partner with co-founders to fund, test, and commercialize a startup idea. If the idea has legs, then the incubator will match the co-founder with an established CEO, will act as the chairman of the company, and help mentor the entrepreneur to raise money and grow the business.
Lee and his team sees it as the most founder-friendly model of launching companies from an incubator. The founder always has the majority of the equity in a company, and Roniin will pay the founder’s salary until he or she raises venture capital. Chairman generally take between 5 and 15% of a business’ equity, based on their involvement.
In the last 6 months, Roniin has started 5 companies, and publicly unveiled two startups. Attendant provides online end-of-life services to consumers and just raised $700,000 in seed funding, and Officeluv offers on-demand commercial office cleaning services and raised $800,000 in seed funding.
Roniin’s list of “chairmen” who matched with co-founders include Sam Yagan, CEO of The Match Group; Russ Fradin, CEO of Dynamic Signal; and Jai Shekhawat, CEO of Fieldglass (which sold to SAP for $1 billion).
Lee and his team’s approach to company building isn’t necessarily new. Successful entrepreneurs and operators have been creating holding companies for startups and spinning them off for years. For example, Mike Jones and Peter Pham run the LA-based studio Science, which helped create companies like DogVacay and Dollar Shave Club. Max Levchin launched his research and development lab HVF. And Kevin Ryan operates AlleyCorp, which started and spun off Business Insider, Gilt, and MongoDB.
Similar to the movie studio business, the success of these startup studios is determined by how big the hits are and the number of the misses. Lee says that the mentorship of founders by experienced entrepreneurs could be the key to more successes.
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