Startup Studios vs. Incubators
Startup studios and incubators are designed to help guide entrepreneurs and their businesses to success. So, what are the commonalities and differences between both of them?
Startup Studio Insider back again with the inside scoop on all startup studio things. One common question we see in the community time and time again is: “What is the difference between a startup studio and an incubator?” It’s a great question, and it’s simple enough to answer once you understand a bit more about each model.
While these models have some similarities, they have many distinctions that you should consider before working with one or the other. We have taken a deep dive into the startup studio model. If you missed it, start there for an in-depth look at the characteristics of the startup studio model, why it works so well, the pros and cons and everything you need to consider if you’re interested in working with a startup studio.
We have also covered a comparison of startup studios versus accelerators and discussed the key differences between the two models. Spoiler alert: there are 7. In this post, we are going to take a look at the differences between startup studios and incubators. Let’s begin …
Startup Studio Recap
We have already discussed the startup studio in-depth, but to recap, we will skim over the main points. A startup studio is, in its simplest terms, a company that builds companies from the ground up. Everything from ideation to staffing, operationalizing and strategy to launch — the entire development lifecycle falls under the responsibility of the startup studio. Startup studios’ relationships with the companies they launch are long-term, and in return for a larger percentage of equity in their startups, their portfolio companies receive ample funding, operational support, a network of resources and hands-on guidance.
The relationship between the startup studio and its companies is more like a partnership, where both parties are accessible to one another, and resources are shared to help drive success. When it comes to evaluating the success of a startup studio, it is helpful to look at their top-performing portfolio companies. A few of the top studios within the startup studio ecosystem include Atomic, Wilbur Labs, Science and Pioneer Square Labs. For more details on each of these and more, take a look at our list of top startup studios in 2021.
So, what is an incubator?
Now that we have painted a picture of how the startup studio model works, let’s take a look at startup incubators. While startup studios often source their business ideas internally, incubators are a resource for entrepreneurs who have already established their business idea and plan. Think of an incubator as a toolkit, equipping entrepreneurs with many of the resources they need to get started — picture shared workspaces, mentorship and access to a network of other incubator participants for further partnership and collaboration. In this way, incubators and startup studios are similar: they make entrepreneurship a far less lonely and more collaborative experience. The differences come in the depth and breadth of support provided.
The incubator sets the stage for a show that’s already been written and rehearsed. Entrepreneurs pay for access to the incubator, either through membership payment or, though less frequently, through a small portion of revenues. The responsibility of success or failure of the startup lies solely on the entrepreneur and their team. The stakes are relatively low for the incubator itself. Incubators are usually fueled by corporations or government funding in exchange for exclusive access to the businesses participating in the incubator. The time spent as part of an incubator varies from business to business — this is determined by the scale of the project and the ability to achieve independence, at which point the incubated startups hatch and become autonomous. In summation, incubators don’t build companies at all. As the name suggests, they serve to provide the ideal conditions for entrepreneurs to hatch their startups. A few key players in the incubator space include CodeBase, UF Innovate, Matter and WorcLab.
A side-by-side comparison
Let’s boil all this information down to illustrate the commonalities and differences between startup studios and incubators.
We hope you found this comparison helpful in your entrepreneurial journey! The world of startups can be tricky, and we are happy to help you navigate it. Share any questions you have in the comments section below! Any other comparisons you would like to see? Follow us on LinkedIn and Twitter and let us know what you’d like us to cover next!
