Startup Studio Basics: 19 Startup Studio Terms You Should Know In 2022
“Startup Studio” is becoming a more commonly used term in the context of entrepreneurship. Here is a handy list of some top startup studio terms to add to your vocabulary.
Startup studios are proliferating at a fast rate. Today, there are roughly 700 startup studios developing thousands of business ideas around the world and offering all the resources needed to guide entrepreneurs along the path to success.
While startup studios have been around for quite a while, it’s only been in recent years that we’ve started hearing more about their innovation and what they are capable of accomplishing. By putting in the effort and time to solve business problems and offering a support system through HR, operations, marketing, and legal capabilities, startup studios are transforming the future of the startup ecosystem for the best.
Startup Studios Are A New Business Model Of Its Own
Compared to other funding business models like venture capital and angel investors, startup studios take a slightly different approach when preparing for a project and setting it up for success. Out of all the investment platforms, studios take the strongest hands-on approach and provide all the necessary resources for launch — and even post-launch.
The extended support and abundant resources that startup studios put behind each project have turned into a trend of proven success for founders and entrepreneurs.
If all of this information has you convinced that startup studios sound like a great option for your new business idea, you should probably start learning some basic terminology to get you up-to-speed and speaking the startup studio lingo…let’s take a look at common startup studio terms below:
19 Startup Studio Terms You Need to Know
- Acquisition: The purchase of one corporation by another, through either the purchase of its shares or the purchase of its assets. When a target company is acquired by another company, the target company ceases to exist in a legal sense and becomes part of the purchasing company — not to be confused with a merger, where the purchaser and the target company are both discontinued to build a new, combined company.
- Capital: Capital refers to the financial resources that businesses can use to fund their operations like cash, machinery, equipment, and other resources. Capital differs from regular cash in that it is more durable and is used to produce something and build wealth.
- Co-Founder: A co-founder is a person who is involved with helping in the creation of a startup business along with another founder. They work together in making all business decisions and executing duties.
- Deal Flow: Investors often use the term “deal flow” to refer to the funnel of investment opportunities to which they have access. Most startup studios take a unique approach when selecting companies they invest in. After looking at thousands of concepts and businesses that come through their deal flow, they ultimately only select a few companies to work with.
- Due Diligence: This is the process startup studios use to research and plan for companies they are planning to launch. In this phase, all relevant information is collected from the business being investigated, including business documents, financial statements, personal interviews, and more.
- Entrepreneur in Residence (EIR): An EIR acts as a “partner” who helps startup studios and venture capitals evaluate ideas and build companies. Often the EIR has past founder experience and comes with expertise in a particular industry.
- Equity: Equity is commonly referred to as the company assets that are the property of the owner and its investors. In the case of startups, equity refers to the shares owned by the co-founder or investors.
- Exit Strategy: An exit strategy is how an investor plans to get out of an investment. Exit strategies are commonly focused on entrepreneurs selling the company that they founded. Entrepreneurs will typically develop an exit plan before going into business because the choice of exit plan has a significant influence on business development choices.
- Founder: A founder is a person who comes up with an idea and then transforms it into a business or startup. Founders can set up a business on their own, or they can do it with others (co-founders).
- Non-dilutive funding: Non-dilutive funding refers to any capital a business owner receives that doesn’t require them to give up equity or ownership.
- Pitch Deck: A pitch deck is a presentation deck that is used to pitch a business idea or company to any number of audiences, generally investors.
- Portfolio Company: A company started within a startup studio. Startup studios have a portfolio of multiple companies, often in different areas and industries.
- Playbook: A business playbook is a collection of the company’s processes, policies, and standard operating procedures for when it comes to getting new hires up to speed, teaching new skills, delegating things off your plate, and making sure everything gets done consistently.
- Scale-Up: A scale-up business is defined as a company that has seen impressive high-growth and is ready to take the next step to scale in different departments and markets.
- Seed Funding: The term seed funding refers to the type of financing used in the formation of a startup. Obtaining seed funding is generally one of the first steps that investors, like startup studios, offer to get startups on their feet before they become fully operational.
- Shared Resources: Shared resources are durable assets that can be used by many people. Startup studios help create and grow multiple companies using shared coworking spaces, resources, and access to other founders and operational expertise.
- Thesis: An investment thesis is an argument that supports or rejects a particular investment strategy, backed up by market research and in-depth analysis. Investors and startup studios base investment decisions on their thesis.
- Unicorn: Unicorn is the term used in the venture capital industry to describe a startup company with a value of over $1 billion. Some popular unicorns include Airbnb, Uber, SpaceX, Robinhood, and SoFi.
- Validation: This is the process in which startup studios determine whether a certain idea is of interest to a given market. Validation involves real-world data research and insights done in the very early stages of the startup development process.