Deep Dive: Understanding the Venture Studio Model

Max Fleitmann
Founder of VC Stack
Deep Dive: Understanding the Venture Studio Model
Uma Patel
VC Content Creator

This deep dive was initially published in our VC Stack newsletter. Make sure to subscribe here to not miss any future episodes.

Venture Studio vs. Startup Studio

Before we begin, let’s clarify some terminology. The report we’ve sourced interchangeably uses the terms ‘startup studio’ and ‘venture studio’ to refer to the following definition:

An organization that routinely creates startups, typically from the ground up. It generates and tests ideas, invests money, allocates resources and the studio team among various projects, and attracts co-founder entrepreneurs to create startups. The studio usually retains a 20-40% stake in each company, sometimes more, rarely less.

Although they share many similarities (e.g. creating and building their own companies in parallel) some will distinguish the two based on funding sources. While venture studios raise external funds to invest and support startups, startup studios do not raise a fund and typically rely on founders’ or partners' own capital to get started.

Incubators, on the other hand, engage startups at earlier stages and assist with refining the idea, building a team, and launching. Accelerators take on startups with a prototype or MVP and sometimes the first revenue – they boost them within 3-6 months and help attract investments. Finally, the model we know the best, the venture fund invests in startups that have already exhibited traction and hold the potential for high growth.

Criticism Around the Startup Studio Model

  • Attracting competent co-founders. Convincing founders who have previously secured VC funding to hand over 40% of their equity to a startup studio is not easy. Even if these studios offer founders a base salary to build their idea, the deal is not the most appealing.
  • Raising capital for a studio. To establish a startup studio, you need at least $1-2M or, better, $5-10M+. As per the GSSN Data Report 2022, the median annual budget for a startup studio is $1.36M, the average – $2.49M
  • Convincing investors. Raising money for the first batch or the studio's initial fund is often challenging without an established reputation - mostly due to the lack of understanding around startup studios among investors.
  • Chaos of parallel startups. Building a startup is a universally challenging endeavor, so when multiple ideas are being fleshed out in a studio without solid structure - chaos is a given.
  • Limited data on the effectiveness. Startup studios are still a relatively new asset class, hence, there’s limited data on their effectiveness. Also, the data that is available has tons of nuance since even terminology such as venture studio, venture builder, and startup studio continue to be intertwined.

3 Main Structures of a Startup Studio

1. Holding company

This structure is simple: a studio that creates and funds startups, taking a stake in them. Initially, the studio attracts investments by offering a stake to LPs in the holding company.

2. Fund as a startup studio

There is the opportunity to receive a management fee and earn a carry – a portion of the investment profits after returning the initial amount to investors. All funds, including the founders' money and capital acquired from investors, are contained within the fund. All shares of the companies also belong directly to the fund.

3. Dual-entity model: holding company + fund

The holding and dual-entity models are the most common for forming startup studios. It might be easier to start with a holding company and, after proving the studio-market fit, shift to the dual-entity model.

Reasons to Consider Investing in a Studio

Did you know? Startups created in venture studios achieve seed funding twice as fast and exit 33% faster than conventional startups.

Startup studios may feel like foreign territory for some investors but there are definitely advantages that might convince you to write a check. For one, startup studios develop speed as they essentially build an assembly line for companies. They create frameworks for generating and validating ideas, creating an MVP, and launching the product to the markets. Not to mention having the initial pre-seed and seed funding also accelerates traction.

Second, based on 182 studio startup acquisitions and 22 IPOs, research indicated that it takes 5 years for studio startups to be acquired, 33% faster than non-studio startups, and 7.5 years to IPO, 31% less time. Third, startups can share data and learnings which facilitates faster development of each other. As a startup studio acts as a hands-on co-founder, such data exchange is more manageable than among VC fund portfolio startups.

Fourth, startups have access to agency-level support without using a significant amount of their funds on specialists. Fifth, there’s a much higher investment efficiency – higher IRR due to cheaper equity at the start, less dilution at exits, and more frequent exits. Sixth, there’s less risk as startup studios will test hundreds of ideas and discard the ones that don’t work before committing to the most promising ones.

Why might a startup studio fail to attract its initial investors?

  • Fail to define a niche. Studios that choose to pursue multiple industries and models early in operations make it difficult to attract investments. When there is no clear value-add for a founder to build within a studio it becomes difficult for investors to see the value.
  • Non-lean approach. Offering high salaries to founders may attract less passionate professionals and handling funding without a lean approach could make it difficult to build out 5-8 companies.
  • Large equity stake. Studios that are offering accelerator-level support with a large equity stake can ultimately hurt future funding rounds and a founder's motivation to build.

Venture Studios

Wizard Ventures

Our very own startup studio in which we buy, build and operate online businesses like VCStack, Startup&VC, Magic Design, tona and BaseTemplates.

Nobody Studios

At Nobody Studios, we are startup artisans and serial entrepreneurs who curate the best ideas, expedite company creation, and craft successful ventures in succession.


Atomic is the venture studio that pioneered the model of starting companies by pairing founders with the best ideas, teams, and resources.

High Alpha

High Alpha Studio partners with exceptional leaders to transform opportunities into breakout companies. We lock arms with co-founders for the long haul, providing; expertise, empathy, capital, and resources.


Betaworks invests, accelerates, and builds companies and projects from scratch — our focus right now is on AI and Augmentation, LLM's, NLP, web3 rails and applied machine learning.


Colab, is an innovative Venture Studio based in Los Angeles that partners with a select portfolio of strategic companies to design, launch, and grow early-stage businesses.

Founders Factory

Founders Factory’s Venture Studio co-founds businesses from inception, developing new ideas, technologies and business models into high growth companies.

Additional Readings

Interested in learning more about startups and venture studios? Check out these additional readings!