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Choosing a narrowly defined vertical is the fastest way to compound learning, reduce risk, and accelerate startup creation inside a venture studio. By locking in industry/space, customer type, and business model/go-to-market—then layering on targeted tech and geography—we strip out unknowns, recycle playbooks, and earn leverage with every new company we launch. The result: quicker problem validation, cheaper customer acquisition, and a team whose expertise deepens with every rinse-and-repeat cycle.
We’ve seen repeatedly that vertical focus multiplies our odds of success. When we commit to a vertical, for example Ethereum, we immediately gain three advantages. First, problem validation accelerates: constant customer discovery with one ICP yields a growing library of insights we tap for every new concept. Second, customer acquisition costs drop: executives we nurtured as design partners for company A become early adopters and referral champions for company B. Third, capital raises simplify: investors tracking the vertical understand our thesis, shortening diligence and increasing cheque size.
There are also two expansion levers we also use: firstly, technology acts as a horizontal booster; for example adding AI deepens moats but only after the core vertical is locked. Secondly, geography tightens compliance and regulatory expertise, critical in fintech or health. By layering tech and geography on the original trio of filters, we further reduce uncertainty across Desirability, Viability, and Feasibility.
Worried about going too narrow? We aren’t. If five high-potential, non-overlapping startups can grow in the sandbox, that’s plenty for a three-to-five-year studio roadmap. Focus first, dominate the lane, then decide whether adjacent lanes merit expansion. Concentration, not diversification, is the engine that compounds studio learning, founder quality, and investor confidence.
Q: How specific should our vertical be?
A: Pick one industry sub-segment, one primary customer type, and one business model. If any startup you imagine falls outside those bounds, tighten the scope.
Q: What extra filters matter after the core three?
A: Technology stack and geography. Both amplify leverage but only once the initial vertical definition is solid.
Q: Could the lane be too small?
A: Unlikely. If you can map five distinct, non-competitive startups there’s ample room. For example, FemTech + B2C + North America is a narrow space with plenty of opportunity. Expand later, not sooner.
Check out our existing Vertical Venture Studios.
Read the full article on Focused Chaos
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