Venture studios co-create with founders and partners to turn problems and ideas into investable opportunities and scalable businesses. Ideas come from one of three sources: prospective founders, the studio’s internal team, or partners. After an idea is validated, the studio supports the company financially and via hands-on, operational services. The purpose of the model is to surround founders with a team of experts and resources they can leverage to build products, penetrate the market, acquire customers, and scale faster than they could on their own.
What is a Venture Studio?
Venture studios are tasked with staying steps ahead of the market and anticipating the needs of companies or consumers. Because of this, they may focus on a certain industry, from fashion to food to artificial intelligence to B2B SaaS technology (like High Alpha).
Venture studios aren’t limited to tech hubs like San Francisco, Boston, or New York either — you’ll find them across the Midwest, in places like Chicago, Indianapolis, and Detroit.
Venture Studio Structure
Venture studios are typically funded by outside investors, which is where they differ from startup studios.
Idealab, founded by Bill Gross in 1996, was one of the first startup studios. Idealab pioneered the startup studio business model and has started more than 75 companies. In 2015, High Alpha evolved the model and pioneered the venture studio by adding a VC fund to a startup studio. Over the last decade, the venture studio category has grown by more than 5,000 percent.
No two venture studios have an identical structure. Some may ask for more equity than others, or some may only serve a small slice of a certain industry. Some will be more hands-on, but as a whole, they are invested in your success, and want to help see the company idea through, from conception to successful company.
Corporate venture studios can sometimes also partner with large, Fortune 500 companies as a source for new business ideas. Sometimes, these venture studios are built within a Fortune 500 company, serving almost as an internal R&D team. This allows companies to build products or services that solve a very specific problem with a white-glove, custom solution. The pros of corporate venture studios include stability, ease of access to resources like legal and finance, less admin focus, and immediate exit opportunities if the startup becomes successful. R/GA Ventures, Verify Venture Studio, and High Alpha are all examples of corporate venture studios or studios that have a corporate venture function (like High Alpha).
Venture production studios, which are also called venture factories, provide funding that allows startups to streamline processes and drive revenue. Speed and scalability are the bread and butter of these studios. They are often very segmented and focus only on a specific type of work, which allows them to be streamlined and to function more like a factory. A drawback of the venture production studio approach is that much of the experience is templated. These studios often also have very strict criteria that companies must meet in order to be accepted.
Generating and Validating New Business Ideas
The first step in the venture studio business model is to make sure that an idea is actually worth pursuing. Within High Alpha, we dive deep into markets, problems, trends, competitors, and new technologies. We also do focused bursts of customer and expert interviews to validate our assumptions.
Once we develop sufficient conviction about an opportunity and founder candidate, we advance them to Sprint Week to design the product, business model, go-to-market strategy, and pitch deck, all of which we validate live with prospective customers. Afterward, we decide whether to back and build the businesses. This process not only helps High Alpha pick best-fit opportunities, it also helps the prospective founders we assist in building conviction around their idea and speed through this otherwise friction-filled, risky, and meandering phase of startup creation.
Venture Studio Services
After a venture studio moves forward with an idea, the team will build an MVP of a product to continue testing and iterating with users, bring on early customers, hire company leadership, and find investors.
Venture studios may provide services like finance, recruiting, marketing and PR, design and branding, go-to-market and product-market fit, engineering, product design, back office support, office space, and more. The services and expertise offered will often vary from studio to studio, depending on their focus and own expertise.
Since venture studios are building several companies each year with the same team, they are able to consolidate resources and reuse some of the same infrastructure, best practices, and playbooks. At any given time, High Alpha is building around five companies.
Venture Studio vs. Incubator vs. Accelerator
When comparing a venture studio vs incubator, a key distinction is that venture studios tend to build companies from the ground up. It acts truly as a “co-founder” in the business. Alternatively, incubators are just a support platform to help new companies develop by providing services such as management training or office space, but they don’t help with day-to-day business operations.
An accelerator is focused on accelerating the growth of an existing early-stage company. They are most helpful to company builders during a business’ first fundraising season, because there are often opportunities to pitch to many investors simultaneously and often culminate in an investor “demo day.” Accelerators can also provide social validation, networking opportunities, and benchmarking data to compare your company against other startups. On the other hand, accelerator membership usually only lasts for a few months. Accelerators only provide light support and guidance, and don’t get their hands dirty building the company alongside you. Additionally, as a member of an accelerator, you are usually part of a much larger cohort and may not get much focused attention.
Usually the ideas being developed inside a venture studio are complex enough to require a year or so to mature and seek external funding. In return, it takes a percentage of ownership in the company that is higher than a usual early-stage investment would be.
The Top Venture Studios
The most successful venture studios are specialized and hands-on. Some of the best of the best include Human Ventures, High Alpha, expa, Pioneer Square Labs, Atomic, Science, Inc., Betaworks, and eFounders.
In 2018, High Alpha founded the Venture Studio Collective. It provides a platform for venture studios to learn from one another, collaborate on ideas and deals, and advocate for venture studios as an asset class. Currently, members of the Venture Studio Collective include Pioneer Square Labs, Idealab, Human Ventures, Polymath, Enhance, Global Startup Studio Network, Union Labs, Atomic.vc, and more.
Finding Jobs at Venture Studios
Want to get hired at a venture studio? They’re hiring across the country, from New York to Chicago to Silicon Valley. If you’re located near a large metropolitan area, chances are that there’s one near you. These jobs aren’t for everyone, but they can be perfect for the creative and determined.
There’s no certain college major or career path that you should take in order to break into one of these jobs. A corporate venture studio may hire former corporate employees who have experience working in a corporate environment or on an innovation team. Other venture studios may hire based on the industry they actively serve — for instance, High Alpha focuses on applicants with past software tech experience. This rings especially true at venture factories, where speed and efficiency are king. The venture studio business model depends on the advice of its employees, so deep knowledge of a certain industry or skill set is very important.
Jobs at venture studios run the gamut from administrative roles to data science to marketing and branding and everything in between. Typical departments include back office, marketing, finance, human resources, recruiting, venture, design and branding, product management, sales and go-to-market, and product development and engineering. Back office and infrastructure roles focus on the administrative, behind-the-scenes work that makes the entire company run smoothly. The marketing team handles things like content marketing, website, branding, social media, events, demand generation, PR, thought leadership, and more. The finance team may help the HR team with payroll, as well as taxes, budgeting, financial modeling, forecasting, and all the incorporation of the businesses themselves. The human resources and recruiting teams ensure that the company and its portfolio are staffed with the right talent. The venture team manages the venture capital fund, investing in both companies launched out of the studio and other companies. The design team may help design products, marketing collateral, websites, visual brand identities, and more. The product development team’s role can vary from venture studio to venture studio, and may include building physical products or software engineering and data science.
Bloggers and Resources to Follow
Some of the best advice for future and current venture studio employees and startup founders comes from the people who do it every day. Venture studio bloggers share their expertise and experiences online so that other entrepreneurs and talent can learn from them. Some of our favorite VC bloggers (not necessarily venture studios) include Fred Wilson’s AVC, Brad Feld’s Feld Thoughts, and Tomasz Tunguz’s blog. Other venture capital blogs that we enjoy reading come from OpenView, First Round Review, Visible, a16z, Hunter Walk, Paul Graham, Sam Altman, and The Barefoot VC. Of course, you should also follow all of our content at High Alpha for great content and insights.
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