Have you noticed how everyone seems to call themselves a startup studio nowadays?
The model has certainly proliferated at a remarkable rate, which naturally has come with some challenges.
In today’s deep-dive on The Gallery, we sat down with Matt Burris, one of the leading thought leaders on LinkedIn in today’s startup studio conversation. Matt shared his opinions and perspectives as to how you should go about evaluating a studio, whether you are an entrepreneur, investor, or operator.
Let’s dive in to distinguish the genuine from the pretentious, and offer tactical advice for stakeholders.
A startup studio isn't simply an accelerator with a fresh coat of paint or an agency sporting a new title.
It’s an organization with a unique business model.
Burris succinctly defines it as an entity that "plays a founder role, injects capital, and offers support over an extended period, often surpassing 18 months."
But here's the catch: many organizations pose as studios without investing substantial capital or adopting core roles, expecting shares in return.
If you’re an entrepreneur considering joining a studio or an investor considering backing out, your first tactical move should be to scrutinize.
Ensure the studio genuinely invests both time and money, matching its claims with actions.
A startup studio must always juggle three roles simultaneously:
This hat requires the studio to unearth opportunities, collaborate with innovators, and tackle arising challenges head-on.
Wearing this hat means assessing opportunities critically, just like a seasoned investor, fully understanding the associated risks and rewards.
In this role, the studio manages multiple teams, supervises workflows, and retains an operational structure similar to consultancies.
From a tactical standpoint, this multifaceted approach demands not just expertise in each domain but also seamless integration between them. One weak link can disrupt the entire chain.
It is not common to find a studio founding team that truly excels in all three roles. It is even more rare to find an individual who does. Be on the lookout.
It's a tall order for any business to satisfy four distinct customer groups.
However, for a studio, the challenge is real and pressing. Their clientele comprises:
These stakeholders expect a solid ROI for their investment. For them, it's all about the numbers.
The lifeline of the studio. Their compensation and share in creations are paramount.
The creators behind each startup. A fair deal is non-negotiable for them.
This includes VCs and subsequent investors that ensure the studio's long-term viability.
Tactically, a studio must develop a holistic strategy, one that harmonizes the interests of each of these stakeholders without favoring one over the other.
Burris presents a compelling analogy to emphasize the disparity between establishing startups and studios.
If you’ve successfully baked the world’s best pie, you might be tempted to start a pie shop, assuming a seamless transition.
However, managing utilities, staff, and regulations presents challenges you wouldn't face when just baking a pie.
Similarly, seasoned, exited entrepreneurs often misjudge the intricacies of startup studios. They are not mere extensions of individual startups but involve overseeing several startups and managing a fund all at once.
The tactical takeaway? If you're transitioning from startups to studios, recalibrate your strategy, emphasizing scalability and multitasking.
Fundraising is often seen as a means to an end. However, for startup studios, it serves as a benchmark of credibility.
According to Burris, any new studio GP who struggles to raise half of their fund within a week might want to reconsider their venture. It's a litmus test of their network's strength, credibility, and capacity to back startups.
From a tactical standpoint, aspiring GPs should prioritize nurturing their networks, ensuring they have a solid base to tap into when required.
Ensure the team boasts a mix of entrepreneurial, investment, and operational talents. This diversity is needed to tackle the multifaceted challenges a studio faces.
Established collaborations are in place (or attainable) with tech providers, educational institutions, and industry experts. These alliances often offer invaluable resources and insights.
The startup (and venture) landscape evolves rapidly. Regular training sessions and industry updates can keep the studio's strategies relevant.
In conclusion, while startup studios present a promising avenue for innovation and entrepreneurship, they come with their unique set of challenges.
By understanding the intricacies of this model and implementing tactical strategies, stakeholders can navigate the waters more confidently, ensuring sustainable success.
