Any entrepreneur or business leader needs to understand the differences between a startup studio and an accelerator. Both are concepts that either serve to bootstrap new startups or help them thrive, ultimately leading to a higher chance of success. These organizations boast a mix of business domain insights and innovative technology talent helping them provide essential services for their clients.
Sometimes the types of services provided by startup studios and accelerators blur, but working with one remains essential for anyone looking to turn a great idea into a thriving business. Studios provide the talent and know-how to properly incubate new startups with a real chance of success in a competitive business world. On the other hand, accelerators assist existing startups with the insights and strategies to optimize operations during their initial stages.
What follows is a high-level overview of both the startup studio and accelerator. Use this information as food for thought when determining which path to take when transforming your compelling business idea into a successful company. In the end, both startup studios and accelerators ensure entrepreneurs and investors have a better chance of success.
Simply stated, a startup studio exists primarily to form new businesses. Their involvement with a startup typically lasts from the initial business idea to its eventual launch. In some cases, their involvement may even last for a few years after the incorporation. Additionally, principals within the studio also may retain a percentage of ownership in the startup.
In short, startup studios provide capital, business acumen, and technology expertise to the new organization. Depending on the size of the studio, multiple new startups might be in the forming stages at the same time. This requires a deft hand from studio leadership to ensure all startups receive the necessary amount of nurturing.
While the studio may provide seed capital to their emerging startups, they also help find additional investments when necessary. As noted earlier, studio leadership might decide to keep a stake in any business they form. Obviously, it behooves them to take this approach with new businesses showing a strong potential for success and profitability.
Mature studios also enjoy the benefits of continuous improvement, as they gradually hone their technical skills and gain valuable experience in certain industry sectors. This helps them launch new businesses more efficiently and at a faster rate.
Notably, startup studios following the agency builder model benefit from also working for third-party clients. This provides a critical source of revenue used to seed new businesses, while also helping leadership build an understanding of the specific pain points in certain business sectors. Developers and other software engineers also gain valuable experience leveraging state of the art innovations in real-world business applications. This know-how provides significant benefits when bootstrapping new businesses.
More critically, significant domain experience dealing with an industry sector’s unique pain points serves to inspire more compelling business concepts. Since great ideas remain the lifeblood of a startup studio, an agency builder gains a significant advantage compared to other studios. Studio leadership also enjoys better insights into potential market opportunities within that sector.
Additionally, this approach helps a studio network with other professionals, making it easier to find new talent able to manage these new businesses. Remember, an inability to source the necessary tech and business talent remains a potential risk for any emerging business. Agency builder leadership build vital professional networks when engaged on project work for clients. This facilitates recruiting the human capital they need when forming a new startup.
A startup accelerator provides critical assistance to newly-formed businesses, helping them achieve success at a faster rate. They might be a business formed specifically for this purpose, or a program existing within a venture capital firm, larger enterprise, or even a college or other educational institution. They provide emerging startups with a variety of resources, including expert advice, mentorship, and even funding.
Accelerators tend to be run by management professionals with a history of forming successful startups. They also typically focus on helping startups within the same industry sector where the accelerator leadership boasts experience. This provides extra weight to any advice or mentorship provided to the startup. Additionally, these mentors might also have crucial insights on the application of technology innovations relevant to the startup’s operations.
Note that a startup studio might also provide similar services as an accelerator. However, this extra service offering tends to be more helpful at a mature startup compared to one recently formed.
Another major difference is usually in the time frame. Accelerators, as their name suggests, are meant to help move startups forward in a specific period of time. This can create a very focused growth plan, but it may also mean that the accelerator ends without meeting all the goals set at the beginning.
Keep this in mind when vetting accelerators and startup studios as potential partners.
If you want more insights on accelerators and the startup studio concept, check out NineTwoThree’s Digital Studio Playbook. It provides crucial insights and best practices on successfully operating a startup studio. Feel free to connect with us with any additional questions. We love to network with other entrepreneurs!
