Can a Startup Studio Help You Find Your Next Big Idea?
Startup studio Human Ventures is finalizing a $50 million investment fund, which it plans to use to invest in new health, media and finance companies. The studio, which sits on our board, is another example of a group of smart, talented individuals adopting the startup studio model and bringing along investors who believe in the model’s success.
According to our research at GSSN, a curated community of startup studios around the world, there has been a 5,000 percent growth in startup studios in the past decade. In the past five years alone, the number of studios in existence has increased from 80 to more than 200. In addition to funding, the studio model is gaining credibility, due in part to a number of successes and venture capital firms that continue to seek fundable founders.
But what exactly are startup studios, how do they work and how can entrepreneurs get engaged with them?
Broadly, studios recruit entrepreneurs and match them with a business idea. Once executive talent and strong teams come around those business ideas, the entrepreneurs are able to validate concepts, spin out solutions and scale up quickly. Thirty-six percent of company failures come as a result of issues with teams, so studios strategically bringing together dynamic founders to validate studio ideas is no small task.
Why choose a startup studio?
Startup studios offer advantages that other options may not.
By their very design, studios are made for early-stage experiments and prototyping, which are critical parts of founding any startup. These “stage gates,” or obstacles that founders must overcome to determine whether a startup idea can move on successfully after passing certain stages, dictate that entrepreneurs can’t continue a project until they’ve tested, observed and proved their unfair advantage in the market.
If the project fails a certain stage, studios know when to keep pushing or when to reallocate resources and move in the most efficient direction for their investors and founders. As projects pass these obstacles, they gain traction and funding. As you might guess, investing in a company out of a studio means investing in a project that has proven its chops, making companies rock-solid as they leave their founding studios.
Studios are also great for founders who don’t have their next best ideas. Most studio founders thrive in and excel at scaling great business ideas. They can’t help it: It’s what they love and are great at. So if you’re an entrepreneur — especially one who has created a successful company — but you don’t have your next great idea waiting in the wings, you can receive one by pairing up with a studio. The studio’s role is to find the idea, and it’ll be yours to see through.
Finally, studios don’t just build great teams. They provide a lot of the backend support these nascent companies need for growth. In many cases, studios provide design, development, HR and legal support — all housed internally. These operational teams end up supporting all of the companies the studio develops, allowing each new company access to resources they never could have dreamed of obtaining alone and either greatly reducing or eliminating many of the administrative costs and time-sucking tasks associated with getting a company off the ground.
How founders can get in on the studio model
If you think joining a studio is the right direction for you, try these three ways to stand out as top entrepreneurial talent:
1. Visit the studios in your ecosystem
Approach working for a studio as you would a marriage. Both parties want to make sure they’re a good fit because they’re getting ready to spend lots of time together — time that will include a lot of tough conversations.
To get to know a studio, get to know the people who work there. Many studios host happy hours, ideation luncheons and other networking events to help you do just that. Take for example Pioneer Square Labs, a GSSN studio that regularly organizes gatherings to network with potential founders and investors. Events such as these are great ways to determine whether a relationship feels right and is a potential fit.
2. Showcase prior entrepreneurial experience
Many studios want to see that previous business owners have been in the trenches, which means they’ll ask about your prior experience. Make sure you’re ready to answer these questions, in addition to what you’re good at, what you’re curious about and what you love and hate doing. Answering these questions will go a long way to helping studio staff know where to support you and where you might best fit at a company. High Alpha founder Scott Dorsey says venture leads arrive at his studio with ideas or opportunities but need help finding backing, which creates the opportunity to partner and build on that idea.
Christophe Pasquier, founder of Slite, a portfolio company of the GSSN studio eFounders, recommends that founders bring to these discussions a mix of assertiveness and leadership and management skills. If you and a studio make a good match, the company you take on will be yours, so you and the studio should make decisions together. You can set that precedent from the start and show the studio your abilities at the same time.
3. Offer to help
Once you’ve connected with a studio in person and showcased your track record, you can use other tactics to find your way in the door. Offer to mentor one of the companies going through the studio’s program, ask whether you can provide some sort of design or product assistance or introduce the studio to people in your network who could help someone else in the portfolio.
Studios like Atomic, which launched more than 10 companies in five years, provide startups with their own internal teams that handle tasks like finance, human resources or public relations. If you have skills that could lend operational support to a studio’s portfolio companies, studio staff will not only appreciate it, but they’ll also realize how valuable you are, which will set you up for a sought-after spot as one of the next CEOs the studio will support.
With all the options available to startups today, studios — a relatively new but clearly growing model — make a lot of sense for founders. Studios are designed to scale pre-vetted ideas and surround those ideas with high-quality teams, operational support and capital, so they remove a great deal of risk from launching a startup. If you’re a proven founder looking to build your next great company or an investor looking to build your portfolio with validated companies, studios present you with an incredible choice.