The article you are about to read was originally written by Quentin Nickmans and published by Medium on June 2, 2020 with the original title: Launching a Startup Studio: How to Finance it? The translation of the content aims to provide a privileged view of the new economy, innovation and how different countries perceive the terms and concepts presented. Enjoy reading!
Startup Studios are relatively new
They are not incubators, they are not accelerators, they are not Venture Capitals and they are definitely not your typical company.
And – like any other venture – to get it off the ground and running , you need to finance it . This article focuses on the first brother cell phone list options available to a Startup Studio.
The Startup Studio is a capital-intensive model whose main objective is to create new startups. In its first years, all the money raised by a Studio will be used to cover all the costs of managing it (HR, administrative and legal, technology sector, etc.) and building its first ventures .
As the Studio matures and the startups it launches become independent, the Studio’s role evolves from just a Venture Builder to also an ongoing investor. If it wants to keep its pro rata rights , it will have to take on the role of investor.
In this article, I will not focus on Studio funding in relation to its investment role, but rather its role as a startup builder . If you want to take a look at the investor aspect, there is a previous article here that focuses on the different models.
Initial Studio Structures
When getting started, there are three main Startup Studio structures:
Background Model
In this model, the Studio is set up as. The Studio “team” (acting as a General Partner (GP)) is by the softline group of companies management fees . The equity owned by the Studio in each venture is by the (and therefore by the Partners (LPs). The Studio team (GP) will enjoy a performance fee (interest) on the IRR. Brought back to the LPs. Atomic VC is an example.
Holding Model
Startups are the australia database directory itself. Which acts as a holding company (e.g., c-corp). The equity belonging to each venture is on the holding company’s balance sheet. Founders is an example.
Dual Entity Model
A combination of the two options above: the Studio is a Holding. Company (funded to cover its operations), but is also the GP of an Affiliated Fund. The equity of each venture is usually by the studio’s Holding Company and the Affiliated Fund. High Alpha is an example.