The tech startup network is no doubt booming! However, the stark reality of the startup world is that most startups don’t succeed and only 40% are able to become profitable*. The reasons for their failure are largely down to poor ideas, unplanned execution and a lack of knowledge of how the business will scale up in the future.
As a result, we are seeing many tech entrepreneurs using startup studios, startup incubators and startup accelerators to help develop ideas and launch and grow their new businesses.
But what do they all do, who are they for and what are their individual benefits? Keep on reading for an overview of each and some examples of the world’s best programs.
What is a Startup Studio?
“An intriguing way to look at it is to consider a startup that creates startups – where brilliant ideas “hang out”.”
Symalite Blog
Startup studios (also known as startup factories, startup foundries and venture studios) are companies that build and incubate startups from scratch, providing them with the necessary resources, mentorship, and funding to develop and grow their ideas into successful businesses.
Startup studios typically have a team of experienced entrepreneurs, designers, and developers who work together to create new business ideas and launch them as startups.
It is worth noting that rather than working on a cohort basis, startup studios partner with you as an investing cofounder would. This means they work in a hands-on style and expect equity in return. However, you might not be the only founder it is working with. The startup studio might be developing several ideas and businesses simultaneously, a style of building businesses called parallel entrepreneurship. Your business and others are known as subsidiaries of the studio, which itself is known as a holding company. Similar to other stakeholders, the startup studio generally exits from your business when it is acquired or when you go public.
The primary benefit of a startup studio is that it provides entrepreneurs with a supportive and collaborative environment where they can focus on building their businesses, without worrying about the operational and administrative tasks associated with starting a company.
Examples:
eFounders – SaaS startup studio (hexa.cc) (Belgium and France)
Startup Studio taking your Idea to Scale – Venturenox (USA and Pakistan)
Startup Accelerator and Venture Studio – Founders Factory (UK, France, South Africa, USA)
What is a Startup Incubator?
Startup incubators, are organisations that provide resources, mentorship, and support to early-stage startups to help them grow and succeed.
Whether you’re still in the initial idea stage of your business and want help developing a minimum viable product (MVP), or you already have an MVP and need guidance to build your sales and marketing strategies, an incubator might be just what you need to start moving your company in the right direction.
Startup incubators offer a range of services, including office space, mentorship, networking opportunities, access to funding, and educational programs.
The main objective of a startup incubator is to help startups survive the critical early stages of their development and become viable businesses. Note that unlike a startup accelerator, incubators don’t typically position themselves as a source of capital and as a member of an incubator program you usually have to pay a small monthly fee.
The primary benefit of a startup incubator is that it provides startups with access to valuable resources and support that can help them overcome the challenges of starting a new business.
Examples
Capital Factory – The Center Of Gravity For Entrepreneurs In Texas (USA)
The DMZ (torontomu.ca) (Canada)
CodeBase – The UK’s largest Technology Incubator, based in Edinburgh (thisiscodebase.com) (UK)
What is a Startup Accelerator?
Startup accelerators are programs that provide startups with mentorship, resources, and funding to rapidly scale and grow within a set timeframe.
As a result, they offer a more structured and intensive program, designed to accelerate a startup’s growth and success. They are designed to condense years of learning into a few months, and can really set the momentum for future growth. Tech giants such as Airbnb, Coinbase, Dropbox and Stripe are all born out of accelerator programs.
Startups accelerators start with an application process and are usually very selective and competitive. Y Combinator accepts about 2% of the applications it receives and Techstars usually has to fill its 10 spots from around 1,000 applications.
Early-stage startups are normally given a small seed investment and access to a large mentorship network, in exchange for a small amount of equity. The primary benefit of a startup accelerator is the access to a mentor networking comprised of startup executives, venture capitalists, industry experts and other investors.
Examples
Y Combinator (USA)
Techstars London Accelerator (UK)
Startup Accelerator and Venture Studio – Founders Factory (UK, France, South Africa, USA)
In summary, whilst startup studios, incubators, and accelerators are all different in terms of their structure, purpose and benefits, they share a common goal of helping entrepreneurs and their businesses succeed.
* Startup Statistics (2023): 35 Important Facts and Trends (firstsiteguide.com)
