Venture studios are making a significant impact by offering an innovative approach to startup finance. This strategy of funding entrepreneurs and big ideas is evolving and growing. In this article, we’re exploring all the things you should know about a venture studio, including its definition, its history, its types, and how it works and helps startups.

What is a Venture Studio?

A venture studio, also known as a venture builder or startup studio, is a company that helps startups either by generating new ideas for startups or by recruiting founders with ideas. Then they spend significant time and resources on the process of effectively building the startup.

Whether they are their own teams or part of a bigger corporate innovation division, venture studios use internal and external resources to ideate their own startups, pair them with experienced founders, and assist them to a successful launch. 

The Evolution of Venture Studios

The Original Concept

Venture studios have been around for a while, and the business model has evolved significantly since its inception in 1996, when Bill Gross and IdeaLab started. Since then, the category has grown dramatically as a result of talented founders.

The First Wave

With the arrival of the first wave of venture studios in the early 2000s, Idealab’s initial concept was expanded. Studios realized that it would be more beneficial to fund their own startups than to attract and raise external cash.

The Second Wave

With the emergence of web hosting, APIs, and social media marketing, the second generation of venture studios provided a new digital edge to the entrepreneurial support ecosystem beginning in 2009.

The Third Wave

The third wave began to make a breakthrough with its lean startup technique in 2013, prioritizing on-demand mobile services and data as a valuable asset.

The Forth Wave & Beyond

The fourth wave of venture studios formed in 2015, with a long-term ambition of leveraging disruptive technologies to create even more resilient, sustainable, and value-generating enterprises.

Types of Venture Studios

There are 2 main types of venture studios, namely independent venture studios and corporate venture studios.

Independent venture

Independent venture studios provide all the resources required to establish a new firm, such as the team, strategic direction, and funding, from their own balance sheets. They may have obtained outside capital and have LPs (outside investors), but the venture studio’s principal usually takes the final choice on which startups to spin-out and how many resources to spend when these new enterprises develop traction.

Expa, created by Garrett Camp, one of Uber’s co-founders, and Rocket Internet in Europe, are two examples of independent venture studios. Rocket is well-known for launching and spinning out a number of startup “clones” based on popular tech companies founded in the United States or China. A well-known Rocket Internet success is Delivery Hero, a restaurant delivery marketplace similar to GrubHub.

Corporate venture studios

Corporate venture studios collaborate with mid-to large-sized enterprises to deliver a hybrid combination of talent, funding, and strategic direction. Corporate venture will frequently provide seed cash and strategic guidance to a corporate venture studio that brings the people, methodology, and know-how to establish a business.

This concept contrasts with the usual goal of a corporate venturing group, which is to invest in startups.

The corporate venture studio model permits the organization to own the majority of the new startup company. As a result, the risk-reward balance is drastically altered.

Unlike the independent studio model, the corporate venture does not invest in a company that already has some traction and has been evaluated by an institutional venture capitalist. Instead, this approach lets the company take on more risk in exchange for more upside, a larger ownership interest, and more control.

How Do Venture Studios Work?

Venture studios create startups in parallel by developing new concepts and assigning teams to those with commercial potential. After these concepts have been verified and proven, they are supported with resources (money, services, etc.) to develop an MVP. If the feasibility test is successful, the studio will focus on scaling the new enterprise before attempting to exit. This business model loop is continued indefinitely, each time introducing a new endeavor. If an idea fails, it is believed that resources will be reallocated or the business case will be abandoned outright.

Stage 1: Investigate

This process includes gathering ideas, analyzing their viability, and gradually developing them into a tangible business case. This stage focuses on defining the business case’s value proposition. By the end of this stage, the entrepreneur should have a clear plan in place to convince potential clients that the service/product is more valuable than what is already on the market.

Objectives

• A distinct value proposition.
• Analysis of competitors
• Define hypotheses and assumptions for ideas.

Stage 2: Validate

After defining the value proposition and early adopter segments, it’s time to put ideas to the test. This stage focuses on developing early product specifications (PoC), which must be tested and confirmed with supporting data to determine the viability of the company idea.

Objectives

• Customer identification
• User narratives
• Detail Cost estimates and proof-of-concept characteristics

Stage 3: Create

The first product (MVP) is produced to satisfy all the requirements discovered and specified in prior stages, providing “real-world proof” of the more abstract stages preceding it. MVPs are used to assess partners’ and consumers’ understanding of actual usage and to increase market fit.

Objectives

• Create an MVP and iterate based on your findings.
• Create a product roadmap.
• Revise the business plan

Stage 4: Portfolio

The business case is established, once all preceding steps have been successfully completed. The company is joined to the current portfolio, and venture developers are allocated to the business case in order to design the new venture’s growth strategy.

Objectives

• Establish a business.
• Portfolio addition

Stage 5: Scale

During this stage, the venture’s activities focuses on scaling up, finding new market opportunities, developing management systems and middle management layers, and producing new products. This is the last stage before a successful exit, which is typically an acquisition or an IPO.

What Does a Venture Studio Bring to a Startup?

The key value proposition of venture studios is that they shorten the time it takes to build out enterprises, greatly lowering entrepreneurs’ risk profile, while simultaneously attracting more talent to ideate and invent new business cases.

In contrast to startup accelerators and incubators, which primarily provide money and guidance, venture studios serve as both builders and co-founders. Venture studios are well-known for having a large pool of human capital, which includes venture developers, in-residence entrepreneurs, C-level executives, and in-house support employees.

In general, venture studios provide a wide range of in-house and outsourced resources, including:

While the founders focus on developing their product, the studio assists them in various ways. The studio’s professional operators handle day-to-day operations, which include marketers, designers, finance specialists, recruiters, and others.

Venture-backed startups scale faster and give better returns to investors. These startups have an average internal rate of return of 53%. (IRR). In comparison, the average for non-studio companies is 21%.

Take Satom Venture Studio as a typical example. Satom Venture Studio efficiently assists new-born businesses with an A-Z plan and provides them with numerous benefits, including:

• Weekly Product and Design Sessions: We will assist entrepreneurs with the product plan, as well as its growth and monetization. Satom will also assist you with developing your brand, designing landing pages, and creating user flows.
• Satom will act as a bridge between founders and major web3 ecosystem partners and strategic LPs.
• Team Building: Satom will assist founders in assembling their initial team.

• Mentors: Satom Venture Studio’s founders will have access to a wide collection of advisors from the web3 scene.

• Office Space for Your Team: Your team can work at the Satom Office in Hanoi or Ho Chi Minh City.
• Batch Trip: Your team will have the opportunity to meet and learn from other teams. And more

Final words on Venture Studio:

By significantly raising the prospects of startup success, venture studios challenge the idea that failure is the default.

With the emergence of more venture studios, ecosystem rivalry in terms of how these firms acquire ideas, attract personnel, differentiate themselves, and develop their worldwide network is increasing. There are already 582 million entrepreneurs worldwide, making the venture ecosystem ideal for venture studios looking for findable founders.

While looking for a venture studio to partner with, you can try to submit your ideas to Satom Venture Studio. Satom Incubator will provide you with capital and effort to make your idea become true.

As the venture studio model matures, more creative approaches to establishing, expanding, and investing in interesting new firms will emerge. By providing aspiring creators with comprehensive development toolkits, coaching, money, and the innovation quality stamp, venture studios are empowering a more prosperous, sustainable, and democratic society.