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Startup Studio Research Part 1: The Different Types of Startup Studios

By: Dr. Tobias Gutmann | Date: September 18th, 2019 | Categories: Startup Studio Research Part 1: The Different Types of Startup Studios,


Various synonyms can be found for the forms of organization Company Builder, such as Startup Studio, Venture Builder, Venture Building Company, Tech Studio, Startup Factory, Venture Production Studio, Startup Foundry, Startup Creation Venture or Venture Lab.

This diversity is also reflected in the attempts to define this form of organization, as shown in the table below.

The name "Startup Studio" alludes to the similarities with a film studio. While several films are shot there at the same time, the founders of Startup Studios intend to build several companies at the same time.

I define a Startup Studio or a Company Builder as follows:

A Startup Studio is an organization whose task is to establish independent companies using a professionalized, repetitive founding process. Such companies are mostly based on internally developed startup ideas. The Startup Studio acts as an investor holding a considerable share of equity capital.

There are different models of Company Builders. A complete and unique illustration of the individual models is not given since slight variations and partly mixed forms have established themselves in many companies based on the 2013 work by Rao. However, there are generally 5 different categories - based on Mocker and Murphy’s 2014 work and my own research. These are highlighted in the table below:

The categorization into five Company Builder archetypes is a first step towards the description of this form of organization. But this one is not fully disjoint.  Although most of the Company Builders analyzed can be assigned to individual archetypes, some have also changed from one form to another.

Company Builders follow the principle of organizational ambiguity and take on a variety of different forms that allow them to be both efficient and flexible at the same time. This allows Company Builders to integrate both exploring the new ("exploration") and exploiting the existing ("exploitation"), enabling them to more effectively identify new business opportunities, develop and validate business models, and ultimately implement and scale them up.

A qualitative evaluation of the Company Builder models with regard to their degree of process orientation and their source of funds or financing results in the following allocation in a matrix based on the collected data. 

Technology Transfer Company Builders are very strongly process-oriented and to a large extent internally financed. External investors partly support the development of the companies.

Corporate Company Builders are internally funded by the parent company. The degree of process orientation is highly volatile.

Operator Company Builders are mixed funded, but for the most part from internal sources. The degree of process orientation is very volatile.

Agency Company Builders are largely financed by external cash flow. Some of the portfolio companies are financed from internal sources to a small extent. Compared to other models, these are more process-oriented. 

Investor Company Builders are largely financed internally and have a very low degree of process orientation.

Such a perspective could provide a way for better understanding the landscape of startup studios globally, and give insights to guide both current and emerging startup studios.

This article is a summary of a larger research report on Startup Studios by Dr. Tobias Gutmann. The full report has been translated from German into English. If you are interested in reading this report, you can download it here.


References
Köhler & Baumann 2015
Mocker & Murphy 2014
Diallo 2015a
Rao 2013
Szigeti 2016, p. 12
Rao 2013
Funk 2015, p. 21
Drucker 1993, p. 161


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Dr. Tobias Gutmann

Dr. Tobias Gutmann is a post-doctoral researcher at the Dr. Ing. h.c. F. Porsche AG Chair of Strategic Management and Digital Entrepreneurship at HHL Leipzig Graduate School of Management in Germany. His research interest is corporate entrepreneurship with a special focus on corporate venturing activities in established companies. He has extensive work experience in innovation management and corporate venture capital and holds degrees in electrical engineering and information technology and international management.