Startup studio, also known as a startup factory, or a startup foundry, or a venture builder, is a studio-like company that aims at building several companies in succession. This style of business building is referred to as "parallel entrepreneurship".
Idealab, founded by Bill Gross in 1996, was one of the first to introduce the 'incubator industry', and has started over 75 companies. Idealab was founded to test many ideas at once and turn the best of them into companies while also attracting the human and financial capital necessary to bring them to the market.
The startup studio trend had really begun to gain momentum around 2008. Betaworks is one of the pioneers of this model. Today, there are over 65 startup studios across the world, of which 17 have been built since 2013.
There are several types of startup studio models.
A builder startup studio focuses on creating and developing a company, mostly from internal ideas. Examples of this model are Rocket Internet, eFounders,The Combine, TechnoFounders and Makeshift in Europe, Interplay Ventures and Giant Pixel in the US, Stanley Park Ventures in Canada, and RE.A.PRA in Southeast Asia. This is the true startup studio model, offering balance between investing funds and resources to turn ideas into companies.
Unlike business incubators and accelerators, venture builders generally don't accept applications concerning their portfolio of companies, and the companies instead "pull business ideas from within their own network of resources and assign internal teams to develop them."
According to VentureBeat, Nova Spivack was "part of the early technologists who pioneered the venture production studio model. He wrote about the model in 2011 at a time when most of its production elements were still in gestation. Nova actually invented the Venture Production Studio term, calling it a 'new approach to building startups.'" The article also opined that the Samwer brothers at Rocket Internet were the "undisputed kings" in executing the venture builder model on a global level as of 2015.
Investor startup studios bring in early-stage external startups and help them grow by providing them both funds and expertise. US-based studios Expa, Betaworks and Science, Inc. fall in this category.
At the very end of the spectrum, some VC firms are growing closer to the startup studio model by intervening very operationally in the startup they invest; for instance Andreessen Horowitz and Google Ventures. However, this participation is usually limited to some areas, such as recruitment, fund raising, or PR relations.
Incubator startup studios are accelerators that get equity against a little of money and lot of operational resources. Spook studio and Founder.org are two startup studios based on this model.
- Startup studios focus their business on creating startups
Unlike startup incubators or VCs, the main goal of a startup studio is to build a startup from the ground up. This implies an important involvement of time, dedication and resources to working operationally on the project for a period of time.
- Startup studios build several startups following a repetitive process
One focus of a startup studio 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 build an infrastructure that enables an efficient venture building process
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, startups studios can re-use this infrastructure, software and best practices across products.
Features in early stage venturesEdit
- Startup studios in the early-stage entrepreneurship environment
- Incubators and accelerators focus on providing advice and some operational guidance to the startups they select. They are mostly providing ‘Human Capital’.
- Startup studios provide a high level of ‘Human Capital’ along with some ‘Financial Capital’. They dedicate a team to the development of their startups and inject limited funds early stage in their startups.
- Angel investors and early-stage VC focus more on ‘Financial Capital’: they provide funds to help their portfolio startups develop, sometimes along with some guidance and strategic help.
- Lapowsky, Issie (November 25, 2014). "The next big thing you missed: tech superstars build 'startup factories'". Wired (magazine).
- Farmer, Ryan (2004). Idealab: First Mover, Last Survivor. California Institute of Technology.
- "Bill Gross: A Devotion to New Ideas | Stanford eCorner". ecorner.stanford.edu. Retrieved 2016-08-29.
- Chernova, Yuliya (March 11, 2015). "Human Ventures Names CEO as Startup Studios Proliferate". Venture Capital Dispatch via The Wall Street Journal.
- Diallo, Ali (January 18, 2015). "How 'venture builders' are changing the startup model". VentureBeat. Retrieved 2016-05-09.
- O'Dell, Jolie (August 13, 2013). "In a valley of VC clones, Google Ventures does more than just write checks". Venture Beat.
- Elziere, Thibaud (September 16, 2014). "Startup Studio: the 3rd Co-founder Model". Medium.
- Rao, Leena (February 16, 2013). "The Rise Of Company Builders". TechCrunch.com.
- Elziere, Thibaud (April 22, 2015). "Startup Studios: The Rise of Human Capital". Medium.
- Idealab timeline
- "Build Together"
- Mike Jones and Peter Pham Talk About the Science of Tech Studios (Video)
- Can the studio model build a billion dollar company? Santa Monica’s Zuma Ventures is the latest to try
- Betaworks Uses Creative Methods to Find and Fund the Next Big Idea
- Garrett Camp’s Expa Raises $50M To Build New Startups