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The Beginners Guide To

Startup Studio Success
Dianna Lesage
6 articles Follow
Operations Manager & Community Builder

March 26, 2023

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There is no right way to build a startup- but Startup Studios

are on a mission to try. Given that 99% of new ventures fail,
this is an intriguing proposition. The success and explosion
of Studios around the world surely indicates that they’re
making progress on this lofty goal.

In this article, we’ll explore the evolution of Startup Studios,

the nuances of the model, what resources Studios provide
to the startups they build, and how these processes
produce startup success in a repeatable way at scale.

The Basics: What Is A Startup Studio?

A Startup Studio, also known as a Venture Studio, is a

company that creates new startups. Think of a Studio as an
umbrella corporation that holds many startups within its
portfolio.

The Studio model involves a team of experienced

entrepreneurs, investors, and domain experts who work
together to develop ideas, build teams, and launch new
companies. Messaging
Unlike traditional startup accelerators or incubators, Startup
Studios take a more hands-on approach- providing
resources, manpower, and support throughout the entire
startup development process. This includes everything from
ideation and validation to product development and
fundraising.

The chart below is a helpful reference for comparison

between Startup Studios and accelerators, incubators, and
VC models.

Source: The World We Explore

The goal of a startup studio is to create a portfolio of

successful, sustainable startups that will eventually spin off
into independent companies. When these startups exit,
through sale or acquisition, the Studio receives funds in
proportion to the equity it holds in the startup.

The History Of The Startup Studio Model

Studios have a relatively short but impactful history.

The concept originated in the early 2000s, with the

formation of Idealab, founded by Bill Gross in 1996, and
eCompanies, co-founded by Sky Dayton and Jake
Winebaum in 1999. These companies focused on
developing and launching internet-based startups, with
Idealab being one of the first to pioneer the Venture Studio
model.

In recent years, the popularity of Venture Studios has

exploded.

“Startup studios have raised 21 billion dollars in

funding, but the distribution is highly
concentrated: the top 5 funded studios half of
 all studios’ funding and the top 20 have raised
the 80%. This trend is starting to change, with
more and more venture studios getting funded,
thanks to more recognition of the model. Ten
years ago around 130 startup studios were
active in the world. Today, more than 720.” —
StudioHub, State of The Venture Studio
Ecosystem, 2022

The Studio sphere has grown in waves.

Some of the most prominent Studios emerged in 2011.

Science Inc. has launched several successful companies,
including Dollar Shave Club and DogVacay, while Atomic is
responsible for launching Hims and Bungalow. High Alpha
has created a number of successful B2B software
companies, including Lessonly and Zylo.

Source: The Origin and Evolution of the Startup Studio

Today, the Venture Studio model continues to evolve, with

new Studios emerging and established Studios expanding
into new industries, geographies, technologies, and sectors.
As the ecosystem becomes more saturated, Studios have
gotten more focused on specific niches.

The Nuances of The Studio Model

A startup studio applies a platform-based approach to

generate and validate startup ideas, build them, and launch
them into the market.
Typically, a seasoned founder is appointed to steer the
company towards independence, while the Studio retains a
significant equity stake ranging between 20–50%. By
providing a wealth of expertise and a focused pool of
resources, Startup Studios can significantly improve the
survival and success rates of their portfolio companies,
surpassing that of traditional startups by as much as 50%.

Disrupting the Venture Landscape, GSSN, 2020

Through this approach, Startup Studios offer a unique

model for developing and launching new businesses
successfully.

Studios offer an abundance of essential resources to

support their portfolio companies, enabling entrepreneurs
to concentrate on validation, product development, sales,
and driving growth.

Common resources provided by Studios

Innovation playbooks based on tested GTM processes

Legal and accounting support

Design, branding, and marketing help

Access to advisors and industry partners

Human capital to supplement the small founding team

Development talent with domain expertise

Assistance with fundraising including making intros to

VCs

In addition to the above resources, many Studios leverage

their niche expertise to go above and beyond the baseline.

Not every Studio has an in-house marketing or

development team, but their access to agency partners
helps close these gaps, speed the process along, and
significantly reduce costs.

The Secret of The Studio Model

The secret to the success of Startup Studios lies in the

unique model each Studio crafts and refines with each new
startup launched. This model makes it faster, cheaper, and
easier to build each successive startup.

Startup Studios build companies in parallel

leveraging shared resources and repeatable
processes to create economies of scale.

Though founders often overlook the value of innovation

playbooks, these are one of the most valuable resources a
Studio has to offer.

Rather than starting from scratch and fumbling through the

dark to figure out what works, Startup Studios have tried
and tested ideation, validation, creation, go-to-market,
traction, fundraising, and launch playbooks based on many
repetitions.

These playbooks are invaluable when speed and cost

efficiency are top priorities — as they always are in new
venture creation.

Below is a great visual of the Venture Studio model for

taking new startups to market. As you can see, there are
specific phases with dedicated stage gates that ensure the
startup is set for success. When the success criteria is met,
the startup progresses to the next phase.

Organisational Best Practices of Startup Studios, 2018

Over time, the Venture Studio team phases out and early
employees are brought in to take over those roles. When
ready, the startup raises a seed round and spins out of the
Studio — after which it operates the same as a startup in
the wild.

The Pros and Cons of The Studio Model

Though Startup Studios are a revolutionary way to

methodically launch successful startups — they aren’t for
everyone.

Investors often don’t understand the model or how the

funding flows making it hard for Studios to raise the
necessary funds to create value.

Founders often criticize Studios for the amount of equity

they take — oftentimes 30–50%.

Many people think of Startup Studios as agencies posing as

something different.

And while these issues are not to be overlooked if you

understand the goal of a Venture Studio and the value they
provide most of these objections are negated.

For one, traditional VCs aren’t a good fit for investing in

Studios. They’re better suited to create follow on funding
relationships with Studios in order to get early access to
new, highly validated, and de-risked ventures.

Family offices, funds of funds, and angel investors are a

better fit for funding Studios directly. Additionally, many
Studios have partnerships with universities and City
ecosystems to empower local innovation.

Secondly, the Studio is an investing co-founder in every

new venture they incubate. Whether it was a founder’s idea
taken into the Studio for accelerator action or the idea
started within the Studio and an EIR was brought in to lead
— the Studio provides human capital, innovation
playbooks, connections to ecosystem players, access to
discounted providers, legal and accounting services, and
hands-on help in the very early stages of venture creation.

Without a Studio, a founder would have to do everything

from scratch on their own. It takes significantly longer, costs
more, and is mentally exhausting. With a Studio, you get a
built-in support team in addition to tangible resources.
That’s worth the equity take.

Lastly, many Studios do have an agency arm that empowers

them to provide specific services to the startups they
incubate. But, agencies don’t build their own ventures —
they only do contract work for clients in exchange for
funds. These are two different models.

The Studio model has proven successful.

From creating startups faster than average to significantly

increasing the odds of success — Studios offer an
alternative to going it alone, joining a short accelerator
program, or giving up equity to VCs who aren’t going to be
hands-on with help. I believe in the power of Studios to
create world-changing innovation at scale and am excited
every day to work in this fast-moving industry.

If you’re interested in learning more about the Venture

Studio space, I encourage you to subscribe to the Startup
Studio newsletter I publish weekly. Additionally, I am
always happy to talk Studio shop — connect on LinkedIn
and shoot me a line!

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Dianna Lesage
Operations Manager & Community Builder 6 articles Follow
Published • 7mo

Curious about Venture Studios? Here's everything you need to know.

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Yi Ming K. • 2nd 7mo

Powering Venture Growth in Southeast Asia through Innovation, Culture and
Organizational Excellence

Great article! I wrote a similar piece here just recently. Happy to exchange
notes on this topic.

https://www.linkedin.com/pulse/rise-venture-studios-what-why-
becoming-more-popular-yi-ming-kau

Like · 2 Reply · 1 Reply

Dianna Lesage • 2nd 7mo

Operations Manager & Community Builder

Oh awesome, thank you for sharing! I love the detailed section on

what Studios offer for founders. Can I share your article in this week's
Startup Studio newsletter?

https://studiostack.substack.com/

Like Reply

Ryan Booher • 3rd+ 7mo

I establish financial foundations that build confidence and drive growth
(individuals & businesses) | Finance Professional

Dianna - I’m really loving your content and the clarity with which you
educate me and others about Venture Studios. Thanks.

Like · 1 Reply · 1 Reply

Dianna Lesage • 2nd 7mo

Operations Manager & Community Builder

Wow thank you that's such a nice thing to say! I'm happy to help!

Like · 1 Reply

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Dianna Lesage
Operations Manager & Community Builder

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