What is a Venture Studio?
Understanding the unique role of a Venture Studio in the funding ecosystem, distinct from incubators, accelerators, and investors, can be a complex task.
A Venture Studio is much more than just a funding source. It is a comprehensive support system that takes a project from its inception to its completion. This includes identifying a promising idea, creating startups, assembling a talented team, providing ongoing management support, and accelerating growth using its own resources. This holistic approach instills a sense of security and trust, as the studio is fully committed to transforming a concept from 0 to 1. resources. This holistic approach instills a sense of security and trust, as the studio is fully committed to transforming a concept from 0 to 1.
The Venture Studio Model
In essence, a Venture Studio is a pre-seed and seed-stage organization that builds, finances, and accelerates the growth of startups within its own platform.
With a diverse venture studio landscape, each studio often possesses its distinct characteristics and processes. However, most of them do share certain specificities that make out the very essence of what a Studio is.
Typically, studios follow a four-stage operational framework that cycles through ideation, validation, commercialization, and growth:
1. Ideation
The studio identifies friction points and needs, evaluates different opportunities, and develops a concept (a value proposition) around them. Studios often operate on an “Idea-First” model, meaning an idea is generated internally or through the studio’s channels: partners, co-investors, etc.
2. Validation
During this stage, the concept is refined by defining product specifications (Proof of Concept or PoC) and testing it to ensure it addresses a real problem. The financial model and profitability of the product are also assessed. The term “go/no-go” is often used to describe this stage.
3. Recruitment and Commercialization
This is the stage where founders come into play, and the startup is constituted as its own entity. Studios recruit the future founders of the startup, which is a major differentiator from other concepts in the ecosystem. Once founders are recruited, the new team builds on the concept to make it a Minimum Viable Product (MVP), which is tested in the market to strengthen product-market fit.
4. Growth
During this stage, the startup focuses on growing its market share, exploring new market opportunities, implementing management systems, and developing new products. This is the final stage before an exit, which typically results in an acquisition or, occasionally, an initial public offering (IPO).
How it differs from other models
An organization solely dedicated to accelerating or creating startups without providing funding is not a studio but rather an accelerator or an incubator. Venture studios source business ideas from their own network and assign in-house teams to develop these ideas into startups, involving a diverse range of experts like engineers, advisors, business developers, and sales managers. The relationship between a venture studio and its startups is long-term; they are deeply involved with the startups they develop until their exits.
An investor is an organization that provides funding but does not create startups. Some venture capital funds have expanded their support over the years by allowing founding teams to access support platforms, which may include key experts (entrepreneurs in residence) or administrative resources (back-office). However, despite the development of these support platforms, the primary responsibility for execution for startups funded by traditional venture capital funds largely falls on the shoulders of the startup founders. In contrast, studios share a substantial portion of that responsibility along with the associated risks. .
Studios are, in a way, “startup factories”: they consolidate all stages of development within a single platform, conceive and refine concepts, create the team, shape the growth strategies, actively participate in operations, and finally, provide the capital needed to expedite the startup’s expansion.
Business Model Overview
Differences between venture studios and other models
In summary, the elements that distinguish a Venture Studio from other structures in the investment ecosystem include:
The original idea for the future startup comes from the studio.
Studios create startups from scratch and provide funding to them.
Studios recruit founders themselves to lead the startups (Founder flow).
Studios do not usually have a fixed timeline for accelerating their creations, while accelerators generally operate on a cohort-based system that lasts an average of six to twelve weeks.
Studios assume a significant portion of the responsibilities and risks associated with the ideation, validation, and launch phases of their startups.
Studios continuously involve themselves in the operations of their startups, improving them gradually through co-innovation.
Studios are usually niche-focused in a specific sector (B2B, B2C, etc.) or a specific vertical (DeepTech, FinTech, CleanTech, etc.).
According to Enhance Venture, 36% of venture studios focus on a single sector, and another 36% focus on 2 sectors. However, studios specialising in a single sector represent 67% of all investments made in venture studios at the international level.
So, what’s before’s model ?
Before is a venture studio focused on building. This means we generate our ideas, with the help of experts, validate them, and create startups with the help of founders in residence. Having control over the end-to-end process enables us to be sure that we create companies that are in line with the initial problems we initially wanted to solve. We have all the advantages of incubators and accelerators while reducing entrepreneurial risks. If you’re eager to learn more about us or discover how to launch your company with us, send us a message through the contact form.
