What are Startup and Venture Studios?
While accelerators and incubators have been in existence for quite some time and today number in the many hundreds, venture or startup studios began to appear and gain traction in 2008. Today, there are over 65 venture studios across the world, of which 17 have been built since 2013. So, what is a venture studio? First, what they are not.
Venture Studios vs Accelerator and Incubators
Accelerators and incubators encourage many startups to apply for entrance and then, based upon varying criteria, select those for admittance. Once admitted, these organizations run competitive programs like pitch fests, boot camps and introduce these startups to potential funding sources such as angels and venture capital firms. Most also offer some type of structured programming based upon the Business Model Canvas that helps the startup identify their potential market, potential customers and their first MVP (Minimally Viable Product).
What you must realize is that these organizations do not invest their own money in these startups and the duration of "involvement" with the startup is limited. Here, startups typically, upon admission, join a cohort of similar startups and cycle through a prescriptive program – think Army boot camp. Once this cycle is completed, a new cohort is selected and cycled through the same process.
Angel Investors and Venture Capital
Angel investors and early-stage VC firms focus more on financial capital - they provide funds to help their portfolio startups develop, sometimes along with some guidance and strategic help. However, angels, angel associations and VC firms rarely invest in pre-revenue companies. By insisting upon startups achieving revenue prior to considering an investment, they are, in effect, de-risking their investments. Put another way, the startup must prove they have a product, a market and paying customers. Long gone are the days when a VC firm would invest in just an idea.
Venture Studios take a different approach.
Venture Studios are Co-founders
Venture studios generally don't accept applications concerning their portfolio of companies, but instead pull business ideas from within their own network of resources and assign internal teams to develop them. Something akin to "don’t call them, they’ll call you".
These studios bring in early-stage external startups and help them grow by providing them both funds and expertise via a dedicated team. Here, the main goal of the studio is to build a startup from the ground up. This involves an important involvement of time, dedication and resources to working operationally on the project for a period of time.
While startup accelerator programs focus on providing advice and some operational guidance to the startups they select, in the end, they are mostly providing human capital. Venture studios provide a much more intense level of human capital, valuable intellectual property, and financial capital. They dedicate a team to the development of the startup and and inject funds early on.
For venture studios, a primary focus is the rapid development and prototyping of new products. They work on multiple startups and projects simultaneously instead of building one project at a time. Startup studios own an infrastructure made of pooled resources, technical tools, management processes and a multi-disciplinary team. By building several projects a year with the same team, these studios can re-use this infrastructure, software and best practices across many different startups.
The goal of a venture studio is to build companyies, collectively with co-founders and entrepreneurs from startups into a growing companies.
Types of Venture Studios
Are all venture studios the same?
As it turns out, clearly not. There a several types of venture studios which we will review prior to identifying the major studios within each category.