Venture studios, also known as startup studios, have steadily gained prominence. These innovative models, exemplified by pioneers like Atomic, Science Inc, and PBC, are revolutionizing the process of startup creation. Unlike traditional methods that often lead to wasted time and money, venture studios offer a solution by providing a ready-made infrastructure for launching and scaling new companies. This article explores the key benefits of venture studios, including access to top talent, infrastructure, and capital, leveraging industry expertise, and follow-up funding opportunities. As the popularity and success of venture studios continue to rise, they are reshaping the global startup landscape and offering an attractive alternative for entrepreneurs looking to transform their visionary ideas into reality.
Venture studios, also known as startup studios, began emerging in the mid-2010s. Pioneers like Atomic, Science Inc, and PBC saw an opportunity to apply a “startup factory” model to build multiple companies simultaneously. By leveraging shared resources and expertise across startups, venture studios could launch companies faster and at a lower cost.
The traditional method of building startups was inefficient. Entrepreneurs would spend months or years developing an idea, creating a product, and trying to raise funding. The vast majority of startups failed in the early stages, resulting in wasted time and money. Venture Studios aimed to provide a solution.
The studio model allowed entrepreneurs to tap into a ready-made infrastructure for launching and scaling new companies. Instead of building everything from scratch, startups could leverage the studio’s funding, workspaces, operational support, and in-house expertise. This “startup assembly line” approach enabled studios to launch many companies in parallel, with the goal of a few achieving breakout success.
Atomic, launched in 2015, was one of the first venture studios. It focused on building e-commerce startups and created brands like Quip, Casper, and Hims. Science Inc, founded in 2011, built and invested in digital media companies like Dollar Shave Club, HelloSociety, and Wander Beauty.
The rise of venture studios reflected broader trends in entrepreneurship and venture capital. There was a growing belief that the traditional startup model needed disruption. Aspiring founders wanted to support in launching companies, not just funding and temporary acceleration. Venture studios provide the infrastructure and expertise for entrepreneurs to build scalable startups from day one. With their rapid growth, studios have revolutionized the process of creating, launching, and scaling new companies.
Venture studios take a “startup factory” approach to building new companies. They assemble teams of entrepreneurs, engineers, designers, and growth experts under one roof to rapidly develop and scale multiple startups at once. The studio provides the infrastructure, funding, and operational support for these startups to get off the ground.
At the core of the studio model is a shared platform of resources and talent that startups can tap into. This includes workspaces, administrative staff, growth marketing capabilities, and more. Startups co-built by studios can leverage these resources to quickly build and launch their products without the time-consuming process of sourcing their own office space, hiring employees, and setting up operational systems.
Studios also supply seed funding and equity investments in their startups, usually around $500K to $2 million per company. In exchange, the studio takes an ownership stake of 10-30% in each startup. With this funding and equity model, startups can focus on growth rather than fundraising for at least the first 12-18 months.
Cross-pollinating knowledge and networks across startups is another key benefit of the studio approach. Entrepreneurs and team members can learn from each other and share connections, partners, and potential customers. For example, a studio may have expertise in e-commerce from building one startup that can be leveraged for another e-commerce startup.
The studio team provides hands-on support and guidance to help startups scale quickly. This includes input on product roadmaps, technology choices, hiring plans, and growth strategies. The team has a vested interest in the success of each startup, so they take an active role in decision-making and operations. However, startups still maintain control over their vision and direction.
Venture studios offer startups an innovative environment and platform to build and launch new companies faster and smarter. By pooling resources, talent, and funding across startups, studios can accelerate the early stages of growth and set their companies up for long-term success. For entrepreneurs looking to bring an idea to market quickly, partnering with a venture studio can be an attractive alternative to more traditional business incubators or accelerators.
For early-stage startups, partnering with a venture studio offers several compelling benefits. These include:
First, studios provide access to top talent that most young startups could not afford on their own. Studios recruit experienced entrepreneurs, engineers, designers, and growth experts who can help build a startup from the ground up. By tapping into the studio’s talent network, startups can scale their teams much faster.
Startups also gain access to infrastructure and capital through studios. Venture studios provide workspaces, administrative support, and seed funding to get new companies off the ground. This support allows startups to focus on product development and growth rather than logistical challenges like finding office space or raising initial funding. Startups can get their ideas into the market quickly without the time-intensive work of setting up operations and closing a seed round.
Another benefit is leveraging the venture studio’s expertise. Studios have experience launching many startups across various industries. They have a proven playbook for designing innovative products, optimizing growth marketing funnels, improving customer experience, and more. Startups co-built by studios can tap into these learnings and best practices to accelerate their own growth. They avoid the trial-and-error that most new companies face.
Studios also open up opportunities for follow-on funding and partnerships. Venture studios have strong networks of angel investors, VCs, and strategic partners interested in their portfolio companies. Startups launched by reputable studios have a higher chance of raising VC funding and securing key partnerships to scale their business. Studios can make warm introductions and vouch for their startups to get deals across the finish line.
For ambitious entrepreneurs looking to build a high-growth tech startup, venture studios offer an appealing path forward. By providing talent, capital, expertise, and networks, studios have become a vehicle for turning visionary ideas into reality at record speeds. While the studio model is still young, it points to a future where venture-backed startups emerge at a faster pace and higher volume than ever before. Startups would be wise to explore how partnering with a venture studio could help turn their dreams into unicorn companies.
Venture studios are able to generate strong financial returns through equity ownership in the startups they build. Launching many companies in parallel gives the studio more opportunities to achieve big wins. They aim for a few of their portfolio startups to experience rapid growth and large exits, whether through acquisitions or IPOs.
Successful venture studios commonly take 20-30% equity in the startups they co-found. When these startups are acquired or go public at a valuation of $50 million or more, the studio can generate sizable returns on their initial investment. For example, if a studio owns 25% of a startup that sells for $100 million, that single exit would yield $25 million for the studio.
With the potential to build dozens of startups yearly, venture studios have many paths to achieve these types of returns at scale. The returns can be substantial even if only a small fraction of their startups experience a major liquidity event. This “spray and pray” approach allows the studio to make many bets without relying on any single startup to succeed.
However, venture studios also face the risk that few or none of their startups will gain real traction. Launching many companies in parallel means most will likely fail or only achieve modest success. The studio model relies on their portfolio’s rare, blockbuster startups to drive the most financial returns. The studio may struggle to raise follow-on funding and support new startup teams without these big wins.
To maximize their chances of success, leading venture studios take an iterative approach to company building. They test many ideas simultaneously, then double down on the most promising startups. The studio also provides hands-on support to help their top companies scale quickly and achieve a liquidity event within 3-5 years. With this active startup acceleration model, venture studios are well-positioned to generate sizable returns, even if many of their companies ultimately do not succeed. By creating the conditions for massive wins, studios can build a financially viable model for rapid startup creation.
Venture studios are poised for rapid growth in the coming years as more entrepreneurs turn to the model as an alternative path to building a startup. Rather than the traditional route of accelerators and angel funding, founders see the benefits of partnering with a venture studio to launch and scale their idea quickly.
Studios themselves are also attracting more interest from top investors. Some of the leading studios have raised funds from renowned VC firms like Andreessen Horowitz, Sequoia, and Founders Fund. As the track records of successful studios grow, they will likely gain more influence over startup creation and venture capital.
A few factors will drive the rise of venture studios:
With all of these factors converging, venture studios are set to become a major force in startup creation worldwide. They represent the future of how new companies are built and funded and a model for innovation that is poised to reshape the global startup landscape.
Some of the most prominent venture studios today are Atomic, PBC, Science Inc, and Obvious Ventures. These studios have built and scaled renowned startups like Dollar Shave Club, Bonobos, and Medium, demonstrating the power of the model.
Atomic, based in San Francisco, is one of the pioneering venture studios. Founded in 2015, Atomic has launched multiple ecommerce and fintech startups, including travel company June and payments platform Terminal. With over $50 million in funding, Atomic provides seed capital and support for its portfolio companies to achieve rapid growth.
PBC, also known as Science Inc, is a Los Angeles-based studio founded in 2011. PBC has co-founded successful startups across industries, including Dollar Shave Club, DogVacay, and FameBit. Their startups have raised over $500 million in funding to date. PBC is known for its expertise in digital marketing and for helping startups achieve viral growth.
Science Inc is a Santa Monica studio investing in early-stage technology and consumer internet companies. Since its launch in 2011, Science Inc has co-founded startups like Dollar Shave Club, DogVacay, FameBit, and others. Their companies have raised over $500 million in funding. Science Inc provides seed funding and operational support to help portfolio companies scale quickly.
Obvious Ventures, founded in 2014, is a venture studio focused on sustainable systems change. Obvious has launched startups like Beyond Meat, which went public in 2019, and Diamond Foundry, an ethical diamond producer. Obvious provides startups with seed funding and helps them achieve rapid growth through partnerships and policy work.
Newer studios like Fuel Ventures and CSAA are also gaining momentum, demonstrating the model can be applied to startups in any industry. Fuel Ventures in London specializes in fintech and insurtech startups, while CSAA in San Francisco focuses on mobility and transportation.
With more studios launching worldwide, venture studios are set to become a driving force in startup creation and innovation. By providing seed funding and support for new companies, studios enable more entrepreneurs to turn their ideas into high-growth startups.
Get the latest news and updates from Aleph One in your inbox.
Apr 4, 2023
When founders or entrepreneurs seek capital to fund their startups, they often go to venture capitalists firms, angel investors, or banks as their primary options. However, more and more founders are looking towards venture studios to supply them with capital and have a more “hands-on” participation in their company. Unlike traditional venture capital firms or…
Nov 11, 2022
Attracting investment is necessary for startups to ensure their success, development and scaling. In addition to financial support, new businesses can also receive additional valuable assistance from investors. Many investors and advisors share their experience and contacts to streamline business processes. Our valuable contribution to your success is helping you to learn how to raise…
May 5, 2023
Are you a startup founder looking for rapid growth and a successful exit? Consider participating in an accelerator or incubator program. Learn more.
We’re looking for the next generation of companies, products, and innovators. If you’re in the process of scaling your business and need funding, get in touch.
Fill out the information and our team will follow up with any additional questions and work to schedule a time to meet. We’re excited to hear more!
