Why Startup Studios Are Minimizing Risk Through Diversification

Why Startup Studios Are Minimizing Risk Through Diversification

Startup studio models are proving to be more risk-averse. The question is how and whether you can replicate it in your own business - we explain it here.

When it comes to launching digital ventures, startup studios are an up and coming model for founders to make use of.

The best way to explain it is this: startup studios are one part funding, one part founding.

They both work on external projects and launch their own digital ventures.

By combining the best of both worlds they are able to get the funds they need while working on the projects they want to pursue.

How Startup Studios Work

You can think of a startup studio as a general grocer - they are offering more than a niche store, so people go to them because they know they can provide more than a smaller shop can.

They have more variety on the shelves, their staff is bigger and they are always open.

Whereas a typical startup can be thought of as a niche store selling only one thing - they do still get clients but there is lower foot traffic overall.

This is also where startup studios are securing their futures.

Companies and consumers alike will be needing more products as time goes on, meaning these startup studio 'assembly lines' will become more prominent.

Take a social media platform for example. A single platform can require dozens of other supporting applications like schedulers, analytics capturing and more.

Any time a new important application hits the market, there is space for startup studios to enact their prior experience by launching related ventures.

The Repeated Success Of The Digital Venture Studio Model

Startup studios are environments where talented hires are paired with the needed capital and resources to deliver quality applications time and time again.

Having the ability to work with experienced talent from around the globe means your studio's output can be remarkable.

That's why it's important to be aware of the benefits of startup studios early on. Startup studios are set to be relevant for a long-time to come.

We can expect this model to be on the same level as accelerators and venture funds, except while allowing founders to retain a higher ownership percentage.

But what about risk? How does a startup studio offer higher chances of survival than a normal startup?

The answer is diversification. Just like with regular investing, it's important not to put all your eggs in one basket.

The Startup Studio Answer To Risk

Startup studios are all about repeated delivery.

Having brought out multiple products and #software offerings, they have already grown to understand what works in the market and what doesn't.

Versus working with a team dealing with their first delivery in an industry they have less experience in.

Straying away from a single niche also means your studio gets endless opportunities in new technologies - AI, machine learning and much more.

Having the opportunity to work with new tech means your team is more likely to be ahead of the curve when solving problems.

They also have the advantage of having both internally launched ventures as well as client-funded projects to fall back on.

This makes it easier to ensure continuous operation. Should one decrease, you simply put more effort into the other and go where the money is.

We talk more about risk management in startup studios in this playbook.

TL:DR: startup studios are a new way to diversify and avoid risk as a founder.

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