From Idea to Company: The Venture Studio Way
This new model for entrepreneurship pairs founders with resources to build businesses from scratch.
Coming up with a business idea is easy. But coming up with a great business idea? That's a challenge. An even bigger challenge is taking that idea and turning it into a viable business opportunity.
With 90% of startups failing, how can you be sure your idea is worth pursuing? Unfortunately, there is no surefire way to tell if a company will be successful.
Before investing in a new business, you need to test its potential. There are lots of ways to evaluate business ideas, and one that is gaining increasing popularity is the venture studio model. Venture studios offer a way for everyone to be an entrepreneur by combining company building with venture funding to compress time, iterate quickly and scale more ambitiously than would otherwise be possible.
Studios create multiple startups at once, rapidly test new startup ideas and either validate or “fail fast.” If an idea is validated, the venture studio supports the company operationally and financially. This support includes everything from software development, finance, and legal to HR, marketing and communications. In return, the venture studio takes a percentage of the company. Highly successful and well-known brands that have launched from startup studios include Dollar Shave Club, Answers.com and Giphy.
Studios recognize that many people with great ideas go unfunded and unsupported because they don’t have access to capital or the operational support needed to turn their creativity into a viable business opportunity. By de-risking startups for entrepreneurs in the early stages, studios can attract a wider and more diverse set of founders.
For example, Nobody Studios, a globally distributed, high-velocity venture studio headquartered in Laguna Beach, Cali., recently tested out Parentipity. The studio, which has committed to creating 100 new companies by 2027, was able to get Parentipity from idea to product launch in just five months, in 14 languages and 20 countries, for a cost of just $78,000.
It’s examples like these that make venture studios such a hot topic in today’s startup world. Studios have a proven track record of success, delivering impressive results. A recent report from the Global Startup Studio Network says, "84% of startups coming out of studios go on to raise a seed round. Of those startups that make it to the seed round, 72% of those ventures make it from seed to Series A, compared to traditional startups in which only 42% of ventures that get to seed make it to Series A.”
As an entrepreneur, I know the tireless work that goes into getting an idea past the point of a spark of creative genius in your head. For veteran and aspiring entrepreneurs alike, venture studios offer a great opportunity to ideate, pressure test and refine ideas to ensure they truly solve a need and, ultimately, can be offered to customers. Studios also provide founders with a long-term partner on the entrepreneurial journey.
I for one plan to keep a closer eye on this model and am excited about the proven, low-risk method venture studios offer aspiring founders to build companies from scratch and bring their ideas to life.
Entrepreneur Leadership Network Contributor