BB to New Niche Investment / Venture Studio in a tier 2 city

Venture studios have become all the rage over the past few years. As capital has become a commodity, especially in the VC space which is even more competitive than PE given the capital requirements, the new spin for incubators is that you can foster talent/companies internally and that it's more advantageous to take a few expert business builders, have them mentor and advise entrepreneurs, and that you can get a better/more consistent/higher returning VC type of portfolio. The idea is still in its infancy though and I can't think of any big incubated business wins off the top of my head (nor do I think there are any yet). I'm sure there are some success stories, but none/few of a company being started in an incubator and becoming a $500M+ business.

What it means for you and how I'd think about it if I were you:

People: Who are the principals at the firm? I would want a mix of investors/operators with a very good track record. Whether that means they're actually good or not is another thing, but you at a minimum need the optics to raise money and bring in entrepreneurs to incubate businesses. 

Exit Ops: I think the likely exit ops are lower tier VC, starting your own business, or going into a company is a mid-tier Biz Ops type of operator. Incubator types of firms don't have the brand to place you into a top VC firm and if you're in a Tier 2 city, even less of a chance. I do think you'd get some decent insight into how VC funding works and get to research and touch a number of early early stage businesses, which could be appealing based on your goals.

MBA: Also related to people, but did the partners at this new firm get their MBAs? From where? If you have a semi target background, went to a BB/EB, and then do this for a couple of years, I'd imagine you're still a pretty good shot at an M7 school. Are you a lock for H/S? Probably not and it probably weakens your chances versus going to a top tier PE/VC/Buyside fund of some sort. With that said, unless you're gunning for top PE/VC anyways (which it sounds like you aren't) then H/S matter a little less. So I think you preserve decent optionality for B-School as a backup plan.

General: My take in incubators is that they're good for some, but not for all. I think your idea of the role being a risk adjusted way to learn more about entrepreneurship isn't a bad one. You'll get a taste of what those folks go through, without having to really risk anything on your own. You'll either get to a point where you can look past some of the risk and decide you want to try out building your own business or you'll realize that despite the hassles, banking/PE/VC, etc are pretty cushy and you can use B-School to pivot back into those roles. With that said, it's not a traditional role and I wouldn't expect the firm to become crazy successful in short order. It probably puts you on a more unique, somewhat lifestyle type of path where the firm could perform well, you move up a bit, get paid pretty well to live in a Nashville type of city, and I think the work would be interesting and relatively low stress. Your day to day is probably a mix of a little VC style investing, so very light diligence, coaching the founders a bit, helping out with some misc firm and portco ops, probably kind of a grab bag of stuff, which is both good/bad. I don't think it locks you into any set path and if entrepreneurship is really the route you want to explore, this gives you a way to get a taste of it. At the same time, it does take you a little off the path of the more traditional high flying careers, not that you wouldn't be able to get back into those, but similar to entrepreneurship, you're doing something a little different. Also, to me it would be a big benefit if you have ties to the city you're moving to. For example, if you went to Vandy and are moving back to Nashville, or you're from Charlotte, etc. If it's just a random place, that's not a huge negative, but the network efforts in non tier one cities are a little weaker, so something to be aware of.

Last thing I'll leave you with, It's hard to find a good risk adjusted entrepreneurship type of role. This will give you a taste of what it might take to be an entrepreneur, but at the end of the day, if you're trying to risk adjust, you're probably not going to be a good entrepreneur. At some point, you have to get beyond the point of no return on hedging and just go for it and be all in, at least for a certain period of time. This comes from someone who left PE to do a form of risk adjusted entrepreneurship, had it not work out, have returned to PE, and am contemplating the right way to get back to doing my own thing. In my experience, half measures don't work that well for too long, just something to keep in mind based on your long term goals.