The rise in the number of startups is a clear indication of the fact that our economy is on the rise and our population consists of motivated and talented people who have limitless ideas for their own startup ventures.
So, today we are going to talk about something related to this, i.e., startup studio.
What is a startup studio?
Also known as a startup factory, a startup foundry, or a venture studio, a startup studio is a studio-like company with the goal to build numerous companies in succession. This type of business building is referred to as ‘parallel entrepreneurship’.
What is the history of startup studios?
In 1996, American business magnate, investor, author, and philanthropist, Bill Gates, founded Idealab. It was the first to introduce the incubator industry to technology startups and has managed to start more than 70 companies.
He started Idealab with the aim to test many ideas at once and turn the best ideas into successful companies, simultaneously being able to attract the financial and human capital necessary to get them running.
Types of startup studios
There are two different types of startup studios:
- Builder studio
- Investor studio
We are going to talk in detail about both of them.
Builder studios are the types of startup studios that focus on handling everything internally. They focus on researching and developing ideas for new products and businesses. Figure out a way to optimize those ideas for mass appeal, provide the business with the right team, resources, and funding, and create a startup that is on the right track to success.
Some examples of builder studios are Rocket Internet, eFounders, Pioneer Square Labs, and Atomic.
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Investor studios are the type of startup studios whose primary offering is funding, they bring in early-stage startups with the aim of helping them grow through funding and expertise. Budding entrepreneurs, that have fresh and high-potential ideas, reach out to investor studios in exchange for money and resources to be able to bring their idea to life and create a successful startup.
One of the most famous examples of investor studios is Expa, which was founded by Garrett Camp, one of the co-founders of Uber.
Let’s talk about how a startup studio works, in detail.
How do startup studios work?
Generally, experienced professionals, entrepreneurs, and industry behemoths establish their startup studios, as they already have the required skill sets to help startups reach the top. Apart from them, large corporations also start these studios that are looking to invest their existing capital, business processes, and expertise into building successful startups that might help them with their current business.
Startup studios usually follow these five steps:
- They select new problems to solve, brainstorm ideas and come up with business ideas that would help them tackle the problem at hand.
- After that, they check the feasibility and scalability of those ideas by conducting thorough market research and running numerous pre-designed tests on them.
- Once they are done with that, they convert the ideas into working businesses. They develop prototypes and make improvements through customer feedback. They also formulate a business plan at this stage.
- Now they are ready to take the business to market.
- Once the business has started, they raise the required funding and ensure the startup starts scaling up.
However, in exchange for the capital, expertise, and resources they provide, they demand equity from the companies.