Key Takeaways

• Venture studios provide companies with the capital, the initial team, strategic direction, guidance in finding the product-market fit, and assistance in scaling efficiently.
• The venture studio makes a profit by taking a percentage of the startup. The venture studio's profit comes from equity.
• Nobody Studios is a high-velocity venture studio based in Laguna Beach, California. This studio commits to creating "100 new companies by 2027."

Introduction

I. The Venture Studio Business Model

What It Is

• A venture studio business model is a type of business model that seeks to build multiple companies in rapid succession. This business model is also called a startup studio business model. In the academic setting, this business-building model is called parallel entrepreneurship.
• Venture studios assist in developing "the idea behind a company while simultaneously investing capital." This video from Applico also explains that venture studios provide the initial team needed by the startup.
• Venture studios create or manufacture multiple startups. Venture studios provide companies with the capital, the initial team, strategic direction, guidance in finding the product-market fit, and assistance in scaling efficiently.
• The venture studio business model is "the most efficient vehicle for new business creation." 
• A venture studio has the necessary infrastructure to be an efficient company-building machine.
• Venture studios do not focus on startups "that have already launched." Instead, their investment is directed only in startups whose product the venture studio has defined and consumer demand the studio has validated.
• Some well-known brands that venture studios have launched include Giphy, Dollar Shave Club, and Answers.com.

How It Is Structured

• There are different venture studio structures. There's a structure for corporate venture studios and another structure for venture production studios.
• Corporate venture studios sometimes partner with Fortune 500 companies, though there are also venture studios created within Fortune 500 companies.
• On the other hand, venture production studios or venture factories are segmented and operate without partnering with Fortune 500 companies. Venture production studios offer "very strict criteria that companies must meet in order to be accepted."
• The image below shows the structure of the two types of venture studios, the independent venture studio and the corporate venture studio. Independent venture studios provide all the resources needed to launch a startup. In contrast, corporate venture studios partner with mid to large-size companies to provide all the needed resources for a startup launch.

 

Source

How It Is Financed

• Outside investors normally finance venture studios. Venture studios typically "raise funds for the studio," but they "also have a traditional venture capital fund" bolted on the side.
• Recently launched venture studios also go through funding rounds to raise the needed capital to fund startups.

Where the Profit Comes From

• Once the venture studio validates the startup's business idea, the studio commits to support the startup financially and operationally. The support involves everything the business needs, including software development, legal, HR, finance, communications, and marketing.
• In return for all the given support, the venture studio makes a profit by taking a percentage of the startup. The venture studio's profit comes from equity.
• If the venture studio is a 1st Co-founder, the studio receives 50%-80% equity. If the venture studio is a 2nd Co-founder, it receives 35%-65% equity. If it is a 3rd Co-founder, it receives 10% to 25% equity.
• Compared to traditional venture capital firms, venture studios normally "take a higher percentage of ownership in the companies they build."

II. Examples of Venture Studios

High Alpha

•  High Alpha, an Indianapolis-based corporate venture studio, builds tech startups or new B2B SaaS companies. 
• High Alpha's venture studio services cover branding, engineering, design, sales, marketing, HR and recruiting, finance, and data science. High Alpha provides the expertise needed to launch a startup into a world-class company.

Nobody Studios

• Nobody Studios is a high-velocity venture studio based in Laguna Beach, California. This studio commits to creating "100 new companies by 2027."
• Nobody Studios has been successful in getting startup "Parentipity from idea to product launch in just five months, in 14 languages and 20 countries," while spending only $78,000. 

Next Studios

•  Next Studios is one of the top Indiana-based venture studios. This is Indiana's first Benefits (B) Corporation venture studio.
• Next Studios help entrepreneurs shape, craft, and execute their ideas. Next Studios also return the generated profits "from corporate engagements to new entrepreneurs." 

The Core Venture Studio

•  The Core Venture Studio is a venture studio based in Atlanta, Georgia. The company was founded in 2014 and has been "advocating, mentoring, housing, and investing in entrepreneurs" since then.
• The Core Venture Studio has seasoned entrepreneurs, including corporate intrapreneurs, that provide mentorship, investment, and support to Atlanta's growing startup community.

25madison

•  25madison is a venture studio based in New York. In April 2021, 25madison announced the closure of its latest funding round. It has received investments from various investment managers.
• The venture studio specifically partnered with investment manager Apollo and Endeavor to help build and launch businesses across industries.

Polymath Ventures

•  Polymath Ventures is a Latin America-based venture studio. The company was founded in 2012 by Wenyi Cai and Carlos Fernandez de la Pradilla. 
• Polymath Ventures creates digital platforms that serve the middle class of Latin America. Polymath focused on "ideating, validating, and scaling companies" in the past nine years.

Highline Beta

•  Highline Beta is a Canada-based venture studio that helps business founders build a startup with an idea or problem space that aligns with the vision of Highline Beta's corporate partners.
• Highline Beta has a partnership with Fortune 1000 companies. The venture studio offers an expert venture studio team to help launch the startup, including access to corporate partners and initial capital.

Softeq

•  Softeq is a US-based venture studio with client delivery centers in Germany, Lithuania, and Belarus.
• Softeq has a quarterly application process for new business founders. Once selected, the startup will spend three months with Softeq to "develop a technology roadmap" and identify strategic areas that can be accelerated. Softeq also provides an investment of up to $125,000 for each startup.

Founders Factory

•  Founders Factory is a London-based venture studio and startup accelerator founded by Henry Lane Fox and Brent Hoberman.
• This venture studio partners "with the world's best founders and corporates to build, fund, and scale ambitious startups worldwide."

Rainmaking Venture Studio

•  Rainmaking Venture Studio is a venture studio based in London, England, that is committed to creating "new high-growth companies." 
• In February 2021, Rainmaking Venture Studio launched Motion Ventures with Wilhelmsen as one of the anchor investors. This launch is intended to boost maritime industry innovation.
• The image below shows Rainmaking co-founder Michael Pomerleau (left), Rainmaking director Shaun Hon (center), and Wilhelmsen vice-president of open innovation Nakul Malhotra (right).

 

Source

Research Strategy