Venture Studios: The Tech-Fueled Future Of Funding With Chris Howard Of Softeq Ventures

Venture Studios are shaking up the startup landscape, and Chris Howard of Softeq is leading the charge. This isn’t your typical VC chat. Forget the image of investors just throwing cash and hoping for the best. Chris, a tech builder with a track record of transforming giants like Disney and major sports leagues, brings a hands-on, “let’s get in the trenches” mentality to venture funding. In this episode, we explore the power of the Venture Studio model – a dynamic blend of investment, active mentorship, and serious engineering support. It’s a formula designed to de-risk investments, ignite growth, and give startups the technical firepower they need to win. Get ready for a conversation that’s as disruptive as the model itself.

—

Watch the episode here

Listen to the Podcast here

Venture Studios: The Tech-Fueled Future Of Funding With Chris Howard Of Softeq Ventures

Scott, you’ve got someone in the heart of Texas, Softeq Venture fund, Chris Howard.

He is a great guy with an amazing track record and a unique approach to how he not only invests, but uses venture studio to build these technology companies.

I heard some about this venture studio model, but I hadn’t heard it in the way that he describes it and uses it. It’s very unique. Most importantly, it’s good for the LPs and other investment partners. That’s the most valuable thing that he’s going to say and tell us about, but that’s the key.

The adventure studio concept is not new but Chris has a unique take on it. He has basically helped some of the largest brands and companies in the world on their technology from Disney to major other studio, major sports league and teams. He knows how to build tech and he spent his career doing that.

He just mentioned that they celebrate their 28th anniversary. He got an adult size business. The great thing is he decided to take his technical know-how then invest along the way. You are not just getting a passive investor saying, “Contact this technology development firm.” You’re getting, “I have a technology development firm. Let us build your tech, too.”

Let’s hear from Chris Howard, Softeq Venture fund of Houston Texas.

I’m excited to introduce an undiscovered but very important person in the venture capital ecosystem. Chris Howard of the Softeq Venture Fund and Venture Studio. Welcome, Chris.

Thanks, Scott. It’s great to be here.

Chris, you’ve been doing what you’re doing for a long time but before you started the fund, share a bit about your professional experience and how that led you to starting the fund.

Softeq’s Venture Studio Model

Softeq development is 28 years old, which only apparently 5% to 10% of the companies get to 28 sore, but it’s a full stack hardware and software engineering company where we do hardware, firmware, mobile, web backed and AI data analytics on one roof, so IoT connected devices that do a lot of work for the Fortune 500 and doing product development for innovative entrepreneurs at companies like AMD or Epson or Disney.

We had a steady stream of innovative entrepreneurs coming in that needed product built. If they had the money, we would do the work and build their product. If they didn’t have the money, we’d have to send them away down and tell them, “Go get some investors. Talk to somebody like you. Get some money come back and we’ll build it.” or I do an angel investment or something like that. Sometimes, there’s cash or services.

That was working out pretty well. I thought maybe start to formalize it and raise a venture fund and pick from the top 3% of companies coming in our pipeline and give them some funding. We decided to put them through a studio where I say we give them the mentorship. It’s combining that funding with some mentorship then pair them with their 400 engineers to help them get their POC build or their MVP build or get their hardware and software more enterprise like we’ve been doing for the Fortune 500. It came out of my engineering side organically where we had this deal flow coming in and startups that needed not just money, but help build.

That’s a great concept. The venture studio model has been around for a little bit. Maybe share how your venture studio and how you differ from all the folks out there? There are 3,200 venture capital funds. A lot of them just invest money and maybe do a quarterly call. Maybe share how you are more actively involved, and not just making the investment but making sure these companies have a high probability of success.

Good question. A lot of venture funds write the check, throw the money over the wall and cross their fingers and try to be smart money where they’re like, “Maybe I’ve got someone in my network or investors.” We try to be the ultimate smart money by helping them build and mentor. There’s a lot of different, say, people running under us that’s so-called Studio Model. There’s some that basically come up with the idea, a higher team incubated, then put it out in the world.

Our model is more like a Y combinator accelerator with an engineering arm. A lot of accelerators will help us start a founder with their legal, cap tables, and go-to market. They’re pitching, how to put a pitch deck together, and how to do an elevator pitch. All that stuff’s needed but what we do in addition of that is, how do you structure it in your mobile app? Do you know where your source code is? Do you know who owns your firmware?

It used to be 9 out of 10 founders at a technical co-founder but 9 out 10 don’t. The Millennials and Gen Zs are all very comfortable with technology. They had the ideas around it, but they don’t know how to program it. We come in as that trusted CTO and this derisks the investment for the LPs because bolting on a small team that may have never shipped a product before with a much larger organization that’s been shipping products for three decades. It can help them avoid all the mistakes that they typically make and take a look at how they do their source control, how they do their versioning, and how to do their cyber security. What I call it is the ultimate smart money because we understand software and hardware.

It’s a good point because I talked to hundreds of entrepreneurs a year who have a great idea and they have little else. Maybe they put together a pitch deck but they wouldn’t know how to build a technology. I try with that. When you’re looking at companies to invest, what things do you look at from the entrepreneur standpoint?

Key Investment Criteria And Portfolio Successes

I have a good friend, Ben Narasin from Tenacity. He says he looks for five things and I agree with him. Five things are founder, founder, founder, a great idea, and a huge market. You do look at the founding team and that’s another thing that happens when we get to work with the founders for four months in the studio. You get to know them, versus just trying to vet them out with a few phone calls before the studio then you know whether to do follow on investments with the founders.

Founder is a huge piece of that. Are they coachable? We try to get that out in the call. Do they take our feedback? How to set up devices? Are they to that? You can tell fairly quickly, whether this guy or gal is listening. We’ve invested in a lot of diverse founders. For us, can we help this company? Are they building hardware and software? If you’re a CPG company, you’ve got to liquidate or whatever.

Unless you need the back-end or some mobile app to go along with that, we’re not going to be able to help you. I don’t know anything about CPG. Maybe it’s a SAP plug-in. We’re not big on SAP, but if it’s technology, hardware, software, or tech and we can help them. Also, connect them with our network of Fortune 500 companies because we know what they’re looking for. That’s what we’re looking for more picking that founder and whether we can provide value to them, both from the building and from the network.

That’s an interesting point because not only are you providing them capital helping to build their technology. You’re able to rely on this network of these Fortune 500 and Fortune 100 companies that you could probably look at a company and say, the previous Fortune 500 company would be a great partner or be a great purchase of their technology.

That happened even in the very first cohort. We tested the model with 5 or 6 companies in cohort number one. One of those companies was building a medical application for surgeons in the operating room. More targeted toward transplant surgeries, because you need to have a representative in the room from the transplant to make sure the doctor doesn’t put it in upside down.

They were using the Epson Moverio headset. Epson is a client of ours. We also have a build application for that Moverio augmented headset then we can facilitate a meeting between them and Epson saying, “Here’s a technology or startup using your product in a way maybe you didn’t even contemplate. This might be of interest to you.”

I’m glad you touched on that because you’ve had some great track record with these Fortune 500 companies. You’ve had some good luck and some good success. It’s not called luck. It’s called success with some of the portfolio companies. Why don’t you share some of your success stories. I know a couple but share some of the highlights.

The poster child for our fun is an angel investment I made into a company called Halo Collar. They’re a connected dog collar. We talked about founders, so these were brothers. One is the CTO and the CEO, but they had already created an asset tracking company taking that company public on the New York Stock Exchange.

I like the founding team. They’ve already been through the process and gone through the school hard knocks. They are like, “We want to create a thousand dollars dog collar with a monthly subscription.” You think, “That’s a little bit crazy.” The founders check the box in hardware and software technology. That’s something we know about. Let me make an angel investment in this company. I put $250,000 in that $15 million evaluation and we went oof to the races.

This particular technology, the ROI, when I’m thinking about it, it’s like, explain to me why someone would pay a thousand dollars for a dog collar? A fence cost $5,000 or $10,000 or more to put in your yard. Invisible fence also cost $5,000 or more to put in your yard. The dog can still go over, under, and through that fence, then you still don’t know where your dog is. Those products neither one of them are portable.

Fast forward, they’re going to do $100 million in revenue. They’re a Senigor. They’re probably valued at $500,000. That model what we’re looking at, if we had the studio at the point in time when I came across them year ago, they would have gone in. That investment alone would have paid back the venture fund. We typically get about 6% to 9% of a startup that goes through the studio.

We give both the studio mentorship then we give each startup $125,000 convertible note. Usually split $50,000 in cash and $75,000 in services to help them get that product build and everything. That’s one of them. Halo Collar is a Senigor. We’ve got another but I can’t announce publicly yet. I just got an external investment from a venture capital firm that they lead around of $3.5 million. They put in $2 million of their own money.

About half of our companies have gone through this studio, have gone on to raise additional money. Which to me, means that we’re picking the right companies because they are getting funded. Also, in this climate the last few years, there’s been very little on the way of funding. We are getting traction. A few others like Mallard Bay, which is like the Airbnb of outdoor sports. If you want to go duck hunting or fishing or something, you can go on their platform and find that reputable guide, facilities, and placed to hunt.

What’s been interesting is we’ve attracted startups. They would mostly be in Texas because we’re in the texagon of Houston, Dallas, Austin, and San Antonio, but we’ve attracted them across the United States and across the world. We’ve had startups come through from Israel, Bahrain, Canada, Mexico, and Kenya. The world is flat with the internet.

You touched on what’s happened over the last couple years. Why don’t you share with us your analysis of venture over the last couple of years and what you see it going? Liquidity has been a big issue for a while. Why don’t you go to share what you think the industry is going from that standpoint?

Venture Capital Trends And The Role Of Emerging Managers

It’s been true. Speaking of emerging VCs, it’s the worst time to raise a venture fund in ten years, but there’s a lot of opportunity out there. This vintage like in 2008 when we had the downturn. That’s when the Airbnb’s of the world. There is a great company out there at reasonable evaluations that you can invest in where you’re not overpaying for equity. There’s a lot of interest around AI and a gold rush around that.

LPs are a little bit beat up because they’re having been markups and exits. Even experienced venture firms are saying, “We’re pushing off raising fund 4 or 5 because of the climate.” You’re like, “If you can’t raise fund five, and you’ve got these four funds full of LPs, then it would be a challenge for us to do that.” The statistics are the emerging managers outperform other venture firms. You’ve got A16Z and these others. They’re sucking up a lot of the capital, but as you can imagine, how do you 100X a $5 billion funder or whatever the heck they are raising?

For LPs, looking an emerging VC that knows their space and has unique deal flow and can make you vested evaluated bets on these startups. As you can imagine, can outperform a larger fund. Also, because of our model, we’re acquiring equity for a lower cost because of the studio because the startups understand the value that we’re providing by partnering with us. That also allows for more outsized returns. I’m starting to see in 2025 more interest.

We had the one big investment with the startup and then the second one just told me that they’re getting acquired or got an acquisition offer on the table. It’s more of an equity. Basically, we’ll have equity in the acquiring company but still positive outcome for that. I’m seeing more deal flow there. Things are opening up and hopefully, we’ll get some liquidity from the other LPs that invested in other venture.

If I can touch on LPs a lot, even in family offices don’t understand venture. They’re like private equity and P guys. They understand that it’s a 10 to 12-years horizon. That the first half of the of the fund life you’re typically negative and your multiple because what’s happening is companies are going out of business and you’re surviving and thriving but the big returns coming in later. Probably, we need to add another year or two on the life cycle because of what’s happened in the economy. People needs to understand the power law venture. You’re looking for those few companies that are going to turn your front 100X and return the fund.

I’m glad you mentioned that because the reason why we have this show and we talked about this before we started, is that there are 3,200 venture capital funds, 1,800 fund ones and the reality is, the vast majority of the capital goes into these huge monolithic funds. You already mentioned that the returns, the output is far better managing a real fast boat versus a massive tanker. I’m glad you mentioned that. Maybe share a little bit about the profile of your current LPs. What LPs would you be targeting young in the spot?

The challenge with an emerging fund and fund manager is that often the institutional investors won’t invest in emerging VCs because despite the statistics, they still view it as more of a risk. They also mark you as an emerging VC. Many of them will say you’re emerging if you’re fund 1, 2, and 3. You talk to them and they’re like, “Come back to us in ten years,” basically is what you’re saying. You do it 2 or 3 you raise and deploy then you fund 2 and 3.

Is that what you’re going to invest in fund 4? Not all of them, but many of them do like, “Come back in fund two.” Some of them are, “We can’t be more than X percent of the fund and you’ve got a $5 million or $10 million or $20 million fund.” In our case, our fund is a $40 million fund but still even $40 million, you’re like, our check size is such that we can’t write a $10 million check into your fund because we’re overweight in your funds.

This is why in the cycle, you end up raising larger and larger funds because you’re trying to get access to those larger institutional checks. For us, most traction has been, we have about 30 LPs in the fund so family offices. I know what individuals. Maybe entrepreneurs that have exited their businesses and now want to not just give back because it’s not philanthropy. I view this almost like philanthropy with an upside, like, “How do I help other startups get off the ground?”

Some of them want to be involved in the studio and giving back from their experience, mentorship, and perspective. That’s been our model. Our largest family office committed $10 million as long as they’re not more than 25% of the fund. We’ve had checks sizes ranging from $100,000 to $250,000 with individuals or more level. Others are $255 million. That’s one thing emerging managers need to focus on, find your persona and who’s interested in the type of fund you have.

For me, it’s more like, we’re a technology software hardware company, so this high-net-worth individuals that were in the technology space would have liquidity that want to get more exposure to venture. The second thing for emerging managers is, if you’re a family office, you’re not going to pick Halo Collar and some of these others directly because you don’t know how to evaluate them. If you want exposure to like the tech space outside maybe your real estate portfolio but you’re not going to vent these companies individually.

Make an individual bets and relapse be like straight up on the number or whatever. You should invest in emerging manager that knows that space and can make more of an informed choice, and has the deal flow and invest in the fun and get a wider swath. In our case, we’re going to have 60 to100 more starters in the portfolio so that power will happen. That’s what we’ve been targeting.

Attracting LPs: Focus On Specialization And Deal Flow

I’m touching the subject a minute, but you mentioned deal flow. It looks from your results, you’re getting some great deal flow. How were you get back to the deal flow?

We have a little bit of an unfair matt advantage compared to someone who decides they want to be an emerging manager because of Softeq, being a worldwide business and being around for many years and companies googling for technology software and hardware development. They’re coming to us through that channel. We get $100 a month from that. Many of them from a services standpoint, we would disqualify because we’re not going to do a project for less than $100,000, especially for a company that doesn’t have any credit history or might not be around.

From a strict services standpoint, we wouldn’t have normally engaged with those but with the venture fund, we have a model to whatever to be like, since you don’t have funding or you need additional help you, if you’re a good fit why don’t you go ahead and apply to the studio?” If you make the cut of being the top 3% then we’ll do a cohort of 10 to 20 companies and then we’ll engage Softeq services. Working for them when we normally wouldn’t have to help them grow and scale into potentially for Softeq so services business is happy.

We had the deal from the startup perspective then things like podcasts and other things where they get to see like what we’re doing and getting more known in the space. They’re Googling for studios and where they can get additional funding. As you said, we had surprising things and we’ve had companies apply from all over the world of finding us even though we weren’t necessarily doing that. That’s partly because Softeq’s of global footprint. Partly because in google, you can find anybody.

It’s interesting that many years of building companies makes you uniquely qualified to make informed strategic investments. You mentioned, family offices. Let’s talk about high-net-worth individuals. I work with a lot of registered investment advisors. They’re looking for alternatives and other opportunities to increase their overall return for their clients. They can attempt to beat the S&P or the averages. Maybe look at some individual private equity allocations if they can get them. Talk to RIA or adviser who is going to be recommending alternative investments for their clients. Why a venture fund and more specifically, why your venture fund as a recommended opportunity?

The Value Of Technical Due Diligence In Venture Investing

As a portfolio, it makes a lot of sense to have some exposure to venture in tech. What I’ve been surprised about in a lot of family offices that they do want to stick to like, “We know real estate.” That’s great. No one’s saying to bet the farm on venture and technology, but you’ve seen the types of returns you can get on the West Coast. You know a lot of VC firms and startups are focused there, but there’s been a lot of great outcomes of that.

I saw a statistic that if you asked a question about, what do you think some of these institutions invest as a percentage of their portfolio and to venture? Most people will say 2% or less because venture is risky. The surprising number is, it’s more like 40%. These are pension funds. These are those types of institutional investors. Family offices don’t have anywhere near that exposure to venture. If you want to get more that exposure with, as you said, not having to like set up a team to evaluate whether a particular procedure or startup is investment worthy or not.

It makes a lot of sense to partner with the venture fund that has that deal flow, looking at a lot of companies, deals and knows how to evaluate them and can then help them grow and scale, versus just throwing money into a venture fund. There’s an X Morgan Stanley guy that’s trying to decide whether he puts money in. There’s this debate about whether VCs should be more coming from wealth management or from owner operators.

Being an owner operator, my bias is that gives us an advantage. For most people technology is like Asimov. It’s in this distinguishable from magic. Do they have any there there? That’s where the studio helps us get under the hood because sometimes, they’re like, “That sounds crazy. If what you’re doing works, that’s huge. Let’s get you into the studio.” You sound like, “We’ll take a percentage of our twenty companies and do what we call a moonshot. Let’s get you in and evaluate it.”

Sometimes we get in there and it’s like, “Yes.” That’s not how it works. You don’t have anything, but how does someone like at a family office, evaluate a software stack or a piece of hardware and understand whether it’s bogus or not? Everyone’s heard like the Thernos. Thernos had a huge investors number of investors in there that had no clue about technology. That’s why they’re able to snowed by Elizabeth Holmes because she could talk a good talk and it all sounded cool.

If she had a partner or if Softeq had gotten in there to take a look at it, we would have quickly said, “No, it just doesn’t work.” This one drop of blood, there’s no way he can run this many tests.” That’s where you protect the LPs. That’s the value that we offer. We’re stamping the Softeq name as like certifying. This is a company that can be invested and because of the studio, it’s almost like paid due diligence. We’ll make this soft cuts. We’ll say, “These 3% we’ll put on the studio.”

After four months, we know the founders in their tech and we can say, “Now this is the top 2 or 3 that we want to do a bridge round or do lead an A, or something or seed round. This is where we should double down on the money.” We might be wrong on the rest of the portfolio, but we’ve got stock. Our anti-portfolio on the cohort still have upside. “We didn’t think they were going to be very good.” It turns out, they were and we still have 6% to 9% of the company.

Advice For Investors And Finding Softeq

Anything else you want to share with our readers?

If you are a high-net-worth individual or family office and you’re not exposed to any venture. You do want to find some emerging managers like ourselves. Maybe it doesn’t have to be the tech space. Maybe some other thesis. Every emerging VC has a thesis of what they’re investing in. Allocate some percentage of what you’re putting money into. You’re going to keep your majority of your portfolio to your core of what you know.

Maybe you don’t understand tech, but you want to get a partner that knows tech or partner knows med tech or sports tech or whatever it is that you’re investing and AI. You’re going to evaluate AI. If you want to you want to get into AI, you need to bring in an emerging VCs looking at AI deals and know how to value AI because that’s stuff does look like magic. Part of it is amazing but I would say, don’t be afraid of emerging VCs because they’re raising money into plan because I do know what they’re bout in the space that they’re deploying capital to. You and can get outside returns by partnering with an emerging VC like that.

Chris, where can people learn more about Softeq and yourself? You’re prolific in terms of content yourself. Share where people can learn more.

Go to Softeq.com. You can also see our venture studio there. I have a show myself call Forging the Future, where I have guests on that investors, our founders, and innovators that large companies and small. Go to that primarily and we’re on all the social channels. I’m a big believer in give first. If I can help somebody out the tech question or have a question about venture, investing, or a founder. Please reach out to me on LinkedIn.

Chris, thanks for being on the show. I appreciate it.

Thank you, Scott. I appreciate the opportunity.

Alright, take care.

—

I thought that it was interesting that he still so positive and interested. He said, “This is the worst time for adventure fund in ten years.” I love that. He’s like, “I don’t care. I’m good.”

He’s a builder and a creator. He loves building things. What he does, “When we do interviews, we even did this interview.” Look at his background, he’s got R2D2 and video games and other things in the background. He’s passionate about tech, and he’s passionate about building it. He’s had a good track record doing.

Many exits but I thought what it was so interesting is like he looks at this is an opportunity for a reset. It’s positive for the market. It’s going to reset those overpriced investment models that haven’t been working that aren’t delivering. I love how you put it, “There’s no there, there.” That’s so true. It’s going to help eliminate a lot of that because if there’s no there, there, then you don’t want to be investing if your dollars are limited.

The good thing is, it gives LPs comfort that he’s making smart investment. First of all, he can be asked as the technology ahead of time then he can be as proof the technology after he makes the investment. That improves the odds of success. The entrepreneurs don’t have to deal with the technical hurdle and the LPs realized that they have legitimate tech and they have someone building it.

The Importance Of Solid Foundations And Tech Development

What do you think of this idea that there’s going to be a longer holding of funds? There’s going to be like a longer fund in general. Do you think that’s positive for the market in general?

We’re going through an interesting time. The additional model was to do a few rounds of funding then go to an IPO. That is changing dramatically. You’ve got a whole network of secondary markets and opportunities for funds to get funds and entrepreneurs to get liquidity. I was just watching an interview with Stripe. Stripe is going to be a multi-hundred billion dollars private company.

In the interview he mentioned, “We have even taught yet about going IPO.” There’s other means of liquidity. The great thing about what Chris is doing, you think about this. He’s built technology for some of these Fortune 100 companies. Now, he’s building technology for these smaller companies that he in turn introduced to the Fortune 100 company clients for either partnerships or even acquisition down the line. It’s easy approach.

It’s solid in that. If you think about holding your fund for longer, it gives that opportunity to remove out this flash in the pan models where then the company tanks right after exit or tanks right after the next stage because they don’t have enough there, there. They don’t have enough solid foundation. Thinking about the tech built, your dollars that you’re investing in. That’s one of the biggest sucks. It’s just like, it sucks money to build all that tech. There’s economy of that but there’s also, “I know I’m building something that’s a value. I know I’m building a good foundation.”

It’s obviously not just the cap relay. It’s a time start for an entrepreneur. If you don’t have a real good development team and someone who’s managing the process. That’s on you. A lot of entrepreneurs are great technical entrepreneur. Some of those just simply aren’t. Having a conversation with the development team when you don’t know what you’re talking about, put your other extreme disadvantage. Chris is solving that problem.

I hope that it expands into some of the AI because many of the AI funds in the investment groups I’ve been talking to, they would be like, “Here’s this handful of like AI partners.” I’m talking to them and they don’t know what they’re talking about. You’re going to have a lot of bad bills out there and a lot of money and time loss. I hope they expand because the Softeq model is just so great.

Chris was working in AI before AI was cool. I don’t necessarily see that being an issue going forward.

I agree. That’s what I also think that’s unique. He’s like, “It’s just software. It’s a little different level of software but it’s all just software.” What else do we have coming up? Chris Howard of Softeq Venture Fund has been so great. What else do you got coming up? Who else is coming in with different models?

We’ve got some interesting show. We will have a show with celebrity LPs marketing celebrity brands and investments. We have that coming up. We’ll have better capital who’s a niche specifically to gaming and gambling, which is an interesting niche. We’re going to have some interesting funds from outside the US. There’s a real opportunity. There’s great growth and great investment opportunities throughout the world. We’re going to have a healthy mix of great managers that you haven’t heard of it.

I feel like we’re just like the next great top model or whatever. We got the next best emerging fun manager. love it. Chris Howard of Softeq Venture fund has been fabulous guest. I learned so much. I’m so excited for what’s coming up on the show.

Important Links

• Chris Howard on LinkedIn
• Softeq
• Tenacity Venture Capital
• Halo Collar
• Mallard Bay
• Forging the Future