Over the last two years, small business owners have faced countless challenges, including pandemic-related shutdowns, supply chain shortages, mass employee resignations, and—most recently—record-high inflation in the United States. However, despite the obstacles, many established business owners and entrepreneurs alike are starting new ventures.
Expert guidance is critical when creating a successful business, which is partly why the startup studio business model is becoming increasingly popular among experienced and young entrepreneurs. According to Startup Studio Insider, a startup studio is essentially a company composed of industry experts specializing in building other companies, with the primary goal of addressing and providing solutions to consumer pain points. Startup studios provide businesses with key advantages including:
- A team of designers, developers
- Administrative experts
- Marketers
All of these experts work together to help the business throughout its various developmental stages. Since startup studios provide tools, ideas, and funding assistance for the startups they work with, they’ve mastered venture building and mitigate risks associated with startups. When working with a startup studio, your risk of failure diminishes.
Let’s take a look at how startup studios can help set your business up for success when launching in 2023.
Mitigate Risk
It’s no secret that founding a startup is risky. During the first two years of conception, 20% of new businesses fail. The number continues to increase with age, as 45% fail during the first five years and 65% during the first ten years. The good news is that startup studios reduce the risk of startup failures by providing the correct team of experts and resources to navigate the various launch stages.
Research-Backed Decisions
Many first-time founders dive into the creation of their idea without conducting market research or validation, which can lead to failure. Market research determines if there is a market for the product or service offering, while validation refers to the process startup studios use to determine whether a certain idea is of interest to a specific market. Through validation, the target market is discovered, which helps craft the brand formation to peak its audience’s interest. Startup studios leverage this data to make research-backed decisions in the initial stages of the startup, helping reduce its risk of failure.
Helps Secure Funding
Having the correct sources of capital to develop, test, and validate your idea is critical to becoming a successful startup. Locating investors, determining the amount of capital needed, and identifying how long it will take to pay back the investment can be intimidating as a founder. Luckily, startup studios are composed of experts who have established core structures that allow them to finance their startup creations.
Startup studio fundraising methods have a track record of creating strong foundations for emerging startups through various types of funding, including:
- Fund Model: The startup studio is responsible for providing funding that is mostly made of venture capital firms, angel investors or government grants.
- Holding Entity Model: Venture Capital firms invest directly in the startup studio in exchange for equity to the VCs in accordance with how much they invest in the studio.
- Non-Dilutive Model: Any capital a founder receives that doesn’t require them to give up equity or ownership.
If you’re searching for a way to launch your business in 2023, partnering with a startup studio may be your company’s best chance at success. To learn more about the startup studio business model and determine if this model is right for you, check out Startup Studio Insider’s blog.