Understanding Venture Studios: A New Business Model for Startup Creation and Early Growth
The world is changing at an alarming rate and tried and true ways of doing things are just not working anymore. This notion is particularly evident in business. Well before the events of this calendar year, a new business model for startup innovation was emerging called the venture studio. This concept has really taken off in recent years; this model encourages agile business ideas that can innovate and scale quickly. Because this is still a relatively new business model, it is not well understood.
Venture Studio Defined
A venture studio is an organization whose purpose is to explore and develop multiple startup ideas simultaneously with the overarching goal of staying ahead of the market. The venture studio provides the talent and team, determines the strategic direction, and provides the capital for the early stages. The business idea usually stays within the venture studio until it reaches a product-market fit. Typically, the ideas that are explored come from within the venture studio itself.
According to B2B SaaS venture studio High Alpha, “Venture studios may provide services like finance, human resources and recruiting, marketing and PR, design and branding, sales and go-to-market, engineering, product design, back-office support, office space, and more. The services and expertise offered will often vary from studio to studio, depending on their focus and own expertise.”
Venture studios tend to focus on one or a few related industries. They are most commonly associated with the tech industry in places like Silicon Valley or New York City. The reality is they can be found across the country and exist in industries like fashion, fitness, food, and more.
Venture Studios vs. Accelerators vs. Incubators
Sometimes, the best way to understand something is to understand what it is not. Startup accelerators and incubators are more common, established, and better understood. While they both share similarities with venture studios, they are fundamentally different.
Accelerators start with an application process where businesses that are in their early stages are pitched. Incubators may also have an application process but many work only on ideas that come their way through existing and trusted partners. Venture studios do not usually have an application process and are developing their own internal ideas from the ground up.
Involvement in the business or idea development is one place where the venture studio truly stands out and differentiates itself. Accelerators and incubators both offer mentorship and development assistance but are not involved in the day to day operations. Venture studios by nature are involved in every aspect of the business at the start and remain that way until the idea is ready to break off into a free-standing product/service or company.
TechRepublic explains it this way, “If an accelerator is a greenhouse for young plants to get the optimal conditions to grow, an incubator matches quality seeds with the best soil for sprouting and growth.” Following the same analogy, venture studios do all of the above but they also produce the seeds.
The information above is based on generalities and commonalities among these various business growth models. Individual venture studios, incubators, and accelerators may operate slightly differently. The business development industry is constantly evolving in tune with the rest of the world and the needs and demands of entrepreneurs and startups. As a result, hybrid models exist which may incorporate aspects of more than one model. A basic understanding of the core models, including the less common venture studio, will give you a framework and context for understanding and help you make sense of the opportunities that exist for developing an idea or growing an early-stage business.
You can also learn about traditional investor funding here, and stay current on business development options and trends.