On Entrepreneurship Day, we want to take a look at the entrepreneurial landscape from an unusual perspective: the corporate one. Yes, entrepreneurship exists in large companies as well, and in fact, the collaboration between a corporation and a venture studio like Corporate Lab makes the risk much lower, timelines shorter, and returns higher. Discover the data that compares the life cycles of traditional startups and those from venture studios.

Venture Studio: What is this Entrepreneurial Model?

Venture studios are a relatively new type of company that is experiencing significant growth thanks to the rise of corporate innovation. But what exactly is a venture studio?

Venture studios (sometimes called venture builders or startup studios) aim to create a new company for a large corporation. By outsourcing this service, a large company can diversify its business, either by creating one that is completely radical to its core (disruptive innovation) or by taking its field of specialization to other areas (lateral or adjacent innovation).

With its startup-as-a-service model, the venture studio is responsible for taking all the steps to create a startup and make it profitable: from the initial steps (market research, audience testing, development of a minimum viable product), through the intermediate development (advertising campaigns and marketing strategies), to the final point (finding a specialized team to take charge of the project and lead it within the portfolio of the company that hires the service). Thus, the business model of a venture studio consists of a company hiring its entrepreneurial services. The service delivered to the client is a profitable and viable startup in the long term.

It is in this profitability where the crux of the matter lies. The study “Disrupting the Venture Landscape: Why the Startup Studio Model is Where Investors Find Capital Efficiency”, carried out by the  Global Startup Studio Network, provides evidence on something that everyone in the sector knows firsthand: that startups from venture studios are more profitable, reach new phases in less time, and have much less risk.

Twice as Profitable in One-Third of the Time: This is How Startups From Venture Studios Work

The startup-as-a-service model is more profitable and takes less time, reducing the risk significantly when starting a new business. These are the findings of "Disrupting the Venture Landscape: Why the Startup Studio Model is Where Investors Find Capital Efficiency" (Global Startup Studio Network).

Profitability: Internal rate of return is more than doubled

According to the data from this research, the internal rate of return (IRR) for a startup from a startup studio is 53%, compared to 21% for traditional startups. 

In addition, 84% of startups created in a studio reach seed funding. Although this study does not compare this data with that of traditional startups, the global average for traditional startups currently stands at 3%.

Time: Venture studio startups are three times faster

The speed at which a startup grows and reaches new phases is as important as its profitability data. When a startup grows at a good pace, it not only stands out from its competitors but also obtains funding and better possibilities to attract talent, which in turn pushes them to keep growing. Fast and sustained growth over time is a sign of short and long-term success.

According to the data from this study, startups from venture studios take only 10 months to go from zero to reaching their first seed round, while traditional startups take 36 months, which is almost one-third of the time. 

This pattern is repeated in subsequent phases. When moving from seed to Series A, startups developed by studios take 14 months, while traditional startups take 20 months. Finally, reaching the exit phase, a studio startup takes 3.85 years, compared to 6.6 years for traditional startups.

Why is the venture studio model more profitable in less time?

The data is clear, but why does this happen? On one hand, a venture studio like Corporate Lab combines all the advantages of the more traditional entrepreneurial world.

A studio focuses heavily on the early stages of the project, where a minimum viable product must be built. To achieve this, it is necessary to focus on validating the business idea as soon as possible, in order to minimize time and costs.

In addition, experience is always an advantage and this is something that a venture studio can boast of. In our case, our team is made up of entrepreneurs who have different experiences in developing their own startups and who also have experience working in corporations. Thanks to having developed several projects, with different models and for different sectors, the process is as agile as possible.

On the other hand, besides the entrepreneurial experience, we must consider the unfair advantage from corporations. Its presence in the market, its strength in more complex departments (such as legal or human resources) and its extensive network of contacts and investors allows its startups to have unique opportunities. All of this allows them to launch new products and services more quickly, increasing efficiency and maximizing business opportunities.

This study coincides with a trend that has been growing steadily for a few years: venture building. The union between corporations and startups achieves the best of both worlds: defined processes, presence in the market, a good network of contacts, agility, and technological innovation.

The startup-as-a-service model is the most recommended for entrepreneurship. That's why, if you have an idea you would like to develop within your company, Corporate Lab can help. Contact our team and start your venture in the most profitable way possible.