A venture studio, also known as a venture builder, startup studio or startup factory, is an organization that systematically generates, develops, and scales multiple startup companies. Unlike traditional venture capital or incubator models, venture studios are actively involved in the operational aspects of the business. They provide not only capital but also shared resources, expertise, and a network to help startups grow and succeed.
How are venture studios structured?
Venture studios create distinct legal entities for the parent company and the portfolio companies. It is common for venture studios to have an attached venture fund to finance portfolio companies after launch. When there is a fund, the recommended structure is to have a dedicated management company above the venture studio entity and above the GP and LP entities of the fund (see diagram). The fund provides either the entire banking layer to the whole structure, including the venture studio, or the fund just finances portfolio companies and acts independently.
How do you start a venture studio?
The common process of picking, developing, and funding a portfolio company starts with ideation and thorough market research. Once a promising idea is identified, the venture studio assembles a dedicated team to build the minimum viable product (MVP) and validate the concept. Upon validation, the venture studio provides the necessary resources, expertise, and initial funding to scale the business. This may involve connecting the startup with potential clients, partners, or additional investors to accelerate its growth.
What are the different venture studio models?
There are different types of venture studio models, each with its own unique approach. One model is the in-house venture studio, which focuses on creating and scaling startups within a specific industry or domain. These venture studios leverage their deep domain expertise and network to develop innovative solutions for particular market needs. Another model is the external partnership venture studio, which collaborates with external entrepreneurs and partners to co-create and scale startups. This model often involves providing the startups with access to the venture studio’s resources and expertise, while the entrepreneurs contribute their domain knowledge and execution capabilities.
Hybrid venture studios combine the best of both worlds by utilizing both in-house and external partnership approaches. They focus on creating their own startups while also partnering with external entrepreneurs to co-create and scale additional companies. This model enables venture studios to diversify their portfolio, mitigate risks, and maximize their overall impact on the ecosystem. Additionally, some venture studios may choose to specialize in specific stages of startup development or concentrate on particular business models, such as B2B, B2C, or social impact ventures.
What are some tips to run a venture studio?
- Assemble an interdisciplinary and skilled team to foster a culture of innovation and learning.
- Focus on innovation, execution, and collaboration as core values among the team and partners.
- Foster a supportive ecosystem that encourages knowledge sharing and collaboration among portfolio companies.
- Maintain a lean and agile approach to validate ideas quickly and pivot when necessary.
- Stay connected with the startup and investor communities to stay informed about emerging trends and opportunities.
The world needs more startups tackling our grand challenges. Start a venture studio with an attached fund and launch companies to change the world.