A startup studio is a type of company that helps entrepreneurs turn their ideas into successful businesses. Unlike an incubator, which provides resources and space for startups to grow, or a venture-backed startup, which relies on outside investors to fund its operations, a startup studio finances, builds and launches new companies from scratch.
While each studio differs in terms of size, focus, and approach, all share a common goal: to create successful startups by providing the necessary resources and expertise. Not just once, but several times in succession, with many studios working on multiple projects at the same time.
In many cases, studios will invest seed money in their portfolio companies and help them find additional funding from angel investors or venture capitalists. Not being reliant on VC funding alone makes this model of business one that allows founders to retain a larger ownership equity percentage in their venture.
Startup studios are also different from venture-backed startups because venture capitalists typically invest in already established companies, while startup studios help entrepreneurs create new businesses from scratch. In many ways, the deal between founders and the studio or agency is a partnership where the idea is that everyone can win.
The goal of a startup studio is to create products repetitively. They have an in-house team of designers, developers, and marketers who work on multiple projects at the same time. This allows them to launch new products quickly and efficiently.
But not all startup studios are the same. Let’s take a closer look at the different types of startup studios and what they offer as business models:
Understanding The Success of Startup Studios
A software agency can be the foundation of a startup studio. Since the agency is already building products for clients it is a natural transition to know how to build startups from concept to growth - in fact, they are typically experts in this. So the idea is this: take this replicable model of success and use internally generated funds to bootstrap your own studio-launched venture.
Just like a supply chain that manufactures widgets, a startup studio can produce startups repeatedly that is robust and efficient. After building many products for clients, the agency team will have battle-tested knowledge of how products should be built. This allows the software agency team to become experts in building startups for entrepreneurs and technology brands alike.
The agency can also take on more risk because they are not reliant on any one project. So, if a startup fails, the studio still has other projects to work on. This is opposed to a traditional VC-backed venture where if the product fails, the startup is out of business.
This is beneficial for the team members that want to build fast-paced products without burning out on the challenges of a startup. The team is constantly solving problems and learning industries that can aid them when launching future ventures.
Names of Successful Startup Studios
A few examples of successful startup studios over the years are Atomic, Betaworks, Builders, Colab, Coplex, eFounders, Expa, High Alpha, Human Ventures, Wiburlabs, and NineTwoThree. These are all companies that have a portfolio of successful startups, with some even having launched globally-known companies and unicorns.
Why 2022 Is the Year of the Startup Studio?
Startup studios are the new way to build and invest in startups. By having a team of experts work on multiple projects, they are able to launch new products quickly and efficiently. If you're an entrepreneur looking for help launching your startup, consider working with a startup studio.
The major benefits of this model are that they are risk-averse, something that is highly incentivizing to founders today looking to gain a foothold in the industry despite fluctuations in the global economy.
This means that in 2022 alone, startup studios will become even more popular as more entrepreneurs realize the benefits of working with them. So if you're thinking about launching a startup, now is the time to do it - the space is growing, excitement is being generated by this business model and it can help budding entrepreneurs manage risk.
What are your thoughts on startup studios? Have you worked with one before? Let us know!