What is a Startup Studio?

kimheras
kimheras
Oct 28, 2019 · 3 min read

25Fifteen is a Startup Studio. From many of the discussions we’ve had with people both inside and outside of the startup ecosystem, it appears there’s not a good understanding of what that actually means. This post will be the first in a series of posts that will help to address that.

Below is a Startup Studio 101 to make sure everyone’s on the same page with the basics before we start digging into the meaty stuff in future posts. There are also some links to additional reading at the bottom for those keen to read ahead. For now though, onto the basics…

WHAT IS A STARTUP STUDIO?

For those unfamiliar with the model

a startup studio deploys its expertise, resources and infrastructure under a platform approach to generate and validate startup ideas, then build and launch them into the market. — The Origin and Evolution of the Startup Studio

It’s not a new model.

Idealab, founded in 1996 by the legendary Bill Gross, has been involved in 35 IPO’s or acquisitions and is widely regarded as the first Studio. As such, the Studio model pre-dates the seed accelerator model, as developed by Y Combinator, by about 10 years.

There are variations on the model.

Part of the confusion around Startup Studios is that there’s not one single operating model for a Studio.

eFounders recently posted a neat way of segmenting the Studio ecosystem on a graph with 2 axes; internal vs external ideation and deep vs light operational involvement (represented as integrated vs independent below):

At 25fifteen, the vast majority of ideas are developed internally and we stay deeply operationally involved for large parts of the startups lifecycle — so we’d sit in the “Platform Builders” quadrant.

It’s been a successful model.

Exit rates of elite studio-born portfolio companies are between 30–50% compared to the ~10% exit rate of the 4 top accelerator programs. Accelerators work with larger numbers of startups than Studios so the absolute number of accelerator exits is higher than those of Studios but Studios tend to hold more equity in their portfolio companies evening out the equation.

The model is growing in popularity.

There are now over 200 Studios worldwide up from around 40, 5 years ago.

Studios are good for everyone.

Research shows that the Studio model provides value to founders, investors and startup ecosystems more generally — something that matters to both Luke and I as we continue to iterate on our processes.

WHAT’S NEXT?

Over the next few months we plan to write more about the Studio model and to share interesting posts about Studios on the 25fifteen Twitter account (NB: if you haven’t already, pop over to twitter and follow us…go ahead…I’ll wait) as we think the model deserves more attention as a viable option for helping to create more successful Australian startups.

In the meantime, below is some additional reading for those keen to better understand the model:

FINALLY…

If you’d like to chat with us about how to get involved in any of our Studio projects as a founder, employee or investor, feel free to reach out to us at hello@25fifteen.com.

For those considering the above here’s a recent post from Entrepreneur that might be of value — https://www.entrepreneur.com/article/340379

Kim + The 25Fifteen team.

25Fifteen

Startup Studio. Words.

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