Should Digital Venture Studios Focus on Verticals or Breadth?

When forming a digital venture studio, deciding whether to focus on one specific industry vertical remains an important question that quickly needs to be answered. The other option involves working with startups and other companies across the full spectrum of the business world. Of course, the experiences of the entrepreneurs that run the digital agency ultimately inform the final answer to this question.

However, both approaches boast their own set of positives and negatives. For example, working in multiple business sectors likely provides more ideas for new startup concepts. The potential for fast growth is a real possibility. At the same time, it might also make it more difficult to deliver successful results while also diluting marketing efforts. Still, experience in technology relevant to any startup, like mobile app development or machine learning, remains applicable across all business sectors. 

So let’s dive into the details on this critical question for any emerging digital venture studio. Analyzing the pros and cons of either approach in addition to the current skills and experience of your team helps find that answer. In the end, whatever path your agency decides on requires a full effort to successfully incubate new startups while leading the studio to higher levels of success. 

The Pros and Cons of Focusing on a Single Vertical 

Focusing on one vertical allows a digital studio to leverage the experience of its founders or senior-level talent. They fully understand a specific domain and bring this market research to the fore when brainstorming compelling business ideas or understanding the true pain points of their industry. This deep expertise is also able to be leveraged on multiple projects. 

Additionally, professional connections within the domain provide a useful resource for sourcing additional startup opportunities. This specialization also helps focus the marketing efforts of the digital agency, potentially leading to a higher return on investments in this area. In the end, the studio’s professional network and capital investments typically stay aligned. 

However significant disadvantages add risk when a digital studio focuses on a single vertical. For example, an economic downturn that affects a specific business sector more than the economy as a whole likely reduces the number of opportunities as well as earnings from existing startups. This is a critical issue that must be considered before deciding to support only one vertical. It might lead to a roller coaster of earnings and subsequently profitability.  

Advantages and Disadvantages of The Broad Approach 

Again, supporting multiple business sectors also comes with its own set of pros and cons. Simply stated, one obvious bonus is a wider range of business problems to be solved. This leads to a myriad of potential startup opportunities allowing a digital studio to choose the ones with a higher possibility of success and revenue generation. 

If the agency lacks specific domain expertise, simply source the necessary professional talent with experience in the business sector to be targeted. Ultimately, this approach helps foster an opportunistic and nimble agency with the flexibility to strike where the action is hot. As noted earlier, relevant expertise in the latest technology innovations remains applicable across multiple sectors, especially with mobile technology, the cloud, and machine learning. 

One challenge of targeting multiple business sectors for a startup studio using the agency builder method includes a potential for higher costs when forming new startups. These include acquiring the relevant domain experience as noted earlier. Additionally, the lack of expertise might require more time determining the criteria for testing and measuring success when following an iterative software development methodology. 

Serving Multiple Business Sectors With a Specialized Technology Approach

As a digital agency builder, NineTwoThree follows the broad approach targeting multiple business sectors for startup opportunities. We leverage our expertise in state of the art technology, like mobile app development, interactive website design and construction, as well as AI and machine learning. We found that this technical experience remains applicable across the business domains we serve.

When considering the current digital transformation revolutionizing how business gets done, companies across all industry domains want to take advantage of machine learning, enterprise mobile apps, and more. Boasting relevant experience with multiple successful project outcomes definitely helps us when meeting with potential partners. It also helps to share a similar entrepreneurial spirit as many of the people with intriguing ideas to solve certain industry pain points. 

In short, we have significant experience solving a variety of critical business problems. Over time, it’s become a knowledge base we draw upon time and time again as we form startups and successfully innovate on projects for our agency clients. Ultimately, focusing on breadth helped us become a successful digital agency builder. 

If you have a great idea for solving a business pain point for an existing company or a startup, connect with our team. Our unique mix of technical know-how and business acumen remains the right choice to transform your idea into a mobile app or other digital platform. Contact us to discuss the benefits of a potential partnership.

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