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Startup Studio 101: How to Launch One, Examples, Best Practices, & More

Setting up a startup studio can feel rewarding.

Although the process may be challenging, developing startups’ and entrepreneurs’ innovative ideas can give you a sense of empowerment.

This article will get into everything about a startup studio. 

We’ll tackle how it works, how much you must invest, and the pros and cons of setting up one.

We’ll also look at the best resources and best practices to help if you’re genuinely interested in undertaking a startup studio as a business venture.

Let’s get started!

How Does a Startup Studio Work?

A startup studio is where startups, entrepreneurs, and everyone in the startup world meet.

Sometimes, people refer to it as a startup factory, venture studio, and startup foundry.

It works by bringing innovative and bold ideas to life.

Like other startup business models (i.e., startup incubators and accelerators), its goal is also to help startups make the most of human capital.

But, unlike other business models, startup studios help startups from the ground up.

Meanwhile, the other startup business models are about helping already established startups.

Here are some brief points that highlight a startup studio’s unique qualities:

  • Startup studios have no fixed timeframe, while startup accelerators do.
  • Startup studios can be challenging for startups to enter. On the other hand, startup incubators and accelerators are less stringent with startup applications.
  • Startup studios enable access to pooled resources. Meanwhile, startup incubators and accelerators provide financial capital or expect equity exchanges.

Below is an overview of a startup studio’s business processes.


It’s the initial process.

At this early stage, startups brainstorm new business ideas.

Then, they decide on an idea they can turn into a business.


Once a startup has an idea, the studio helps determine if it’s feasible and scalable.

Here, they explore weak opportunities, recognize potential problems, and identify if their idea is feasible.

They also perform market research, conduct tests, create product specifications, and gather supporting evidence.


Here, the startup studio will encourage the startup to create a Minimum Viable Product (MVP).

In doing so, they want to achieve two goals: 

  1.  They want to elaborate on the idea. 
  2. They want to strengthen Product-Market Fit (PMF).


With an MVP and a strong PMF, the startup studio will help the startup establish a business case.

They inch away from administrative operations and grant the startup 100% autonomy.


It marks the final stage where startups “graduate” from startup studios.

Because the startup is now on its own, the studio team also moves up.

The startup studio provides networking opportunities, creates marketing campaigns, and streamlines repetitive processes to prepare the startup for the next phase.

How Much Does it Cost to Start a Studio?

Setting up a startup studio requires more than just financial capital.

While it’s true that securing unlimited funding can result in fewer concerns, the financial aspect of it all is just one part of the big picture.

Below are cost-related variables to consider.

The Manpower

It’s essential to invest in the right people.

This means working with people who can help you achieve your ultimate goal and live up to your core values.

Put your money on a team that can handle at least these fundamental aspects:

  • Strategy
  • Product management
  • Designers
  • Developers
  • Growth marketers

Operating Expenses

Be mindful of the costs for your day-to-day operations.

These costs include:

  • General
  • Selling
  • Administrative
  • Taxes
  • Utilities
  • Travel
  • Employee expenses

Sunk and Relevant Costs

They refer to two things:

  • Funds already irrecoverable
  • Future costs for making specific decisions

Sunk and relevant costs matter because they keep your startup studio afloat.

If you spend too much money on what may seem integral (like strengthening PMF), you can incur an overwhelming amount of sunk and relevant costs. And unfortunately, it becomes a problem for you even before you generate revenue.

Starting Capital

The necessary financial funding to set up a startup studio depends on you and the startup studio model you want to create.

Having unlimited funding is ideal. However, you can’t always make it happen.

So, prepare a set amount to cover the costs of the abovementioned three variables.

For example, you need to prepare funds to cover manpower ($50,000), operating expenses ($100,000), and sunk and relevant costs ($200,000). And if you tally all these, you should be ready with $350,000. 

How Do Startup Studios Make Money?

Startup studios make money depending on the type of startup studio they are. 

Below are the types of startup studios according to how they make money.

Equity-Based Startup Studio

An equity-based startup studio makes money by requiring equity from startups. 

For early-stage startups, equity-based studios are the ideal choice.

The equity stake may be small. But, because they need in-depth help moving forward, the equity startups give up seems justifiable.

Here are a few things to know about these studios:

  • Many of these studios take 34% equity.
  • Startups need to be careful and not give away too much equity in an early stage. For all they know, the equity could be more valuable.
  • Equity percentages depend on a startup studio model.

Fee-Based Startup Studio

A fee-based startup studio makes money by requiring a fee from startups. 

For late-stage startups (or startups close to launching), it’s more practical to approach this type of studio. 

That’s because the studios won’t invest a lot of work anymore. Plus, they may only give the startups a little nudge in the right direction and can operate independently in no time.

Here are a few things to know about these studios:

  • The fee may be equivalent to the equity they require if they were an equity-based studio. For example, if an equity-based studio takes 34%, a fee-based studio may also take 34% in fees.
  • They don’t take an equity stake in their services. But, they may be the ones who instruct a startup to give equity (and how much of it) to the founders, investors, and other essential people.
  • The fee that startup studios require depends on how much work they need to do. For late-stage startups, these studios may require lesser fees.

Startup Studio List: Examples of Successful Startup Studios

Many startup studios are behind revolutionary companies.

Below are five of the best:

  • Symalite Labs: Both a startup studio and a micro-private equity company, it specializes in Software as a Service SaaS, Chrome extensions, newsletters, productized services, niche services, and Artificial Intelligence.
  • eFounders: It’s a product-focused venture studio with multiple headquarters and is about building software enterprise ventures.
  • Nobody Studios: This promising Laguna Beach-based venture builder wants to disrupt the business creation process. It taps into the potential of crowd-sourcing and capitalizes on the brilliant minds of entrepreneurs, investors, and studio teams.
  • Idealab Studio: With a knack for parallel entrepreneurship, its founder appreciates next-generation serial entrepreneurs. It began in 1996 and made a robust reputation for itself.
  • Human Ventures: It has ambitious founders with a radical way of thinking. It acknowledges every business idea but focuses on developing the best ideas and new ventures.

Read more about these startup studios: 5 Best Startup Studios for Idea-Stage Startups.

Pros and Cons of Running a Startup Studio

Pro: Shortens the cycle between ideation and scale

If a startup is on its own, it may take forever to launch.

However, with startup studios, you can build startups faster.

A big part of it has to do with the startup studio’s business model, founders, and their network.

Con: Risk is heavily concentrated on fewer startups

Compared to a startup accelerator and other studio models, startup studios produce fewer companies.

For example, Y Combinator is an American startup accelerator with technology solutions and companies filling its entire portfolio.

Because its model allows it to specialize in batch funding, it helped launch thousands of companies (including Reddit and Airbnb).

Pro: Access to a wide range of resources

On their own, startups may have access to fewer resources.

But, with the help of a startup studio, they can experience better support.

The support that a startup studio can extend to startups includes:

  • Financial help and other resources
  • Workstations
  • Mentorship and advice
  • Networking opportunities

Con: Requires more significant capital

Years can pass before startup studios profit and recover their investment capital.

This is why you need to be realistic.

Prepare to have other income sources to support yourself while your startup studio grows.

Pro: Higher earnings potential

The role of startup studios is priceless.

They give startups much-needed help before going public.

They also guide startups and provide them with what they need to succeed.

Because they are pivotal during the formation stage, they retain a sense of ownership.

Con: Raising funds can be difficult

Raising funds can be challenging.

Most of it has to do with the skepticism of Venture Capitalists (VCs) who don’t want to invest a considerable amount.

They fear how the shares also go to the studio and the co-founding team.

Determining the valuation of a startup studio can also be complicated.

Best Startup Studio Resources for Beginners

Do you still want to proceed after exploring the pros and cons of setting up and running a startup studio?

Then, it seems like you’re all in, even when you know what you’re getting into.

But to add to your foundational knowledge about startup studios, below are additional resources you must read:

Startup Studio Playbook

Startup Studio 101 - Startup Studio Playbook

This book by Attila Szigeti is an excellent take on how startup studios operate.

It contains valuable lessons for anyone wanting to learn about the startup world.

Because the author is a respected authority in the field of startups, you will find his stories helpful.

Below are the lessons this resource covers: 

  • Startup studios function well because of the essential people behind them.
  • Operating a startup studio takes guts. And it’s up to you to be brave enough to take on challenges and overcome adversity.
  • Building a startup studio can fail. But it will happen if you’re committed to doing whatever it takes to make it happen.
  • Some products of a startup studio won’t make it. And you need to accept this possibility.
  • There is no one-size-fits-all approach to a problem. You need to consider unique angles to redeem your startup studio when it’s down.

The Knowledge Entrepreneur: A New Paradigm For Preparing Tomorrow’s Engineers And Scientists

This resource by Bernie Carlson explores the nature of science and entrepreneurship — and how the two don’t go together.

Below are the lessons this resource covers: 

  • To be a knowledge entrepreneur, you should unlearn problematic habits and make room for effective ones.
  • Identifying problems is crucial. And it inspires you to find solutions.
  • With problems comes the opportunity to network.
  • You should strategize and lay out a clear and actionable plan to innovate.
  • The environment you are in plays an integral role in success. Change and re-adjust as much as possible.
  • Stay ethical, compassionate, and mindful.

The Genius of Frugal Innovation

Frugal innovation is about adopting a new frame of mind when entertaining business ideas.

It’s about what frugal innovators do — appreciating the world for what it is.

Then, it’s where you craft a brilliant strategy on how to improve it.

Below are the lessons this resource covers: 

  • “Do better with less” is a straightforward mantra. And if you want to be a frugal innovator, evangelize it.
  • Human creativity is a resource that anyone can use.
  • Building a circular network is better than building linear value chains.
  • Don’t underestimate the power of crowd-sourcing.
  • Empower employees and everyone on your team.
  • Simplify matters. You can’t innovate and improve complicated operations.
  • Incentivize, use Key Performance Indicators, and use sustainable, frugal habits.

Use Jugaad to Innovate Faster, Cheaper, Better

Jaideep Prabhu, Simone Ahuja, and Navi Radjou brought you this resource that reflects Indian culture.

It’s about using Jugaad, a Hindi word that means “the art of overcoming adversity and other harsh constraints and improvising effective solutions using limited resources.”

Thought-provoking and relatable, it’s an insightful take on an essential attitude of aspiring startup studio owners.

Below are the lessons this resource covers: 

  • Being in a complex environment isn’t necessarily a problem.
  • You need to have a formidable spirit.
  • Resilience is vital for success. The top startup studios had their share of failures, too.
  • The world is on your side — and it’s up to you to recognize it.
  • Make relevant and affordable products and services.

How to Start a Startup Studio the Right Way

Setting up a startup studio the right way means you need to have a plan.

Below are ways you can work on your startup studio.

Gather Resources

Find like-minded people

Meet people interested in setting up a startup studio.

You can find them in startup studio communities, events, and conferences.

Acquire funding

Create business plans and share them with your network.

Also, be open to reaching out to VCs and angel investors and embrace the nature of crowd-funding.

Understand your cash flow and create a budget

Know how money goes in and out, then create an operational budget and stick to it.

Develop Processes

Vet entrepreneurs

Reach out to entrepreneurs who can help develop business ideas. You can also study how they operate their businesses.

Establish qualifications

Consider the startups you plan on working with. Afterward, create a system that can help you determine their competence.

Plot models

Create a definite plan and go into the details of how you can help startups grow.

Attract the Right Startups

Identify ideal startups

Think of your target buyer persona. Irresistibly finetune your processes.

Create marketing campaigns

Get the attention of your ideal startup and make them want to join your studio.

Partner with influencers

Team up with people who can help you achieve your goals.

Get them to promote you and establish your authority as a respectable startup studio.


Setting up a startup studio is no easy feat.

But if you love challenges and have a penchant for building companies, go for it.

If you persist, remain determined, and adopt an “all obstacles be damned” attitude, you can make it happen.

Want to be headed for success?

Then, understand how startups work, why they fail, and more.

Read this article to learn more about why startups fail.