A few notes & observations on venture studios success & fail rates (I will not promote)

(TLDR: This is a numbers-heavy post on studios that act as institutional co-founders. Worth a read if you've ever considered joining one as EIR/co-founder, or contemplating to create one. The bottom line: in the long run, only about 40% of studios make it past their first decade of operations. But those that make it are really good at producing new ventures...) Hi Folks, I'm Attila, entrepreneur since ~2014, focusing on startup studios / venture studios since ~2015. Back then I was just leaving the corporate world for a startup idea, that of course failed, and it felt like I made ALL the mistakes a first-time founder can make. Was looking for an approach that somehow solves the most common biases and obstacles from earliest-stage startup building (e.g. falling too much in love with an idea, sunk-cost issues, having to hustle too much on stuff that doesn't matter vs building the product and talking to customers...) That's how I found out about Idealab, Betaworks, Science, Rocket Internet, eFounders and a handful more studios, that "promised" a more effective way of startup building. I wasn’t entirely convinced that this is real thing, so back in 2015 I created a report on 50 studios and ~200 of their portfolio companies. Chart 1 (see in the comment): a slide from the 2015 report, showing nr of startups created by studios Chart 2: a slide from the 2015 report, showing nr of portfolio exits related to studios By the way, "startup studio", "venture studio", "startup factory" basically mean the same thing. It's just a branding question. -- This year I’m revisiting the same companies to see how they are doing. Worth mentioning, that these 50 studios collectively produced close to 1k portfolio companies over their lifetimes so far. 17 of the 50 are still active, continuing to build new ventures, studio-style, as instututional co-founders/co-builders. Of course, there is a wide range within “survive & succeed”. Some of them only produce a new venture every couple of years, while the main positive outliers (like Hexa, Science, Atomic) create multiple amazing new ventures every year. 12 studios changed their main business model and became a fund, an accelerator, or an agency. They did this around year 3-8 in their existence. Only 21 actually went inactive: dormant, closed, or absorbed. Chart 3: a sankey flow diagram about how the original 50 studios evolved. From the 21 "fails" the biggest reason was an overly successful portfolio company consuming all the focus and resources. If you look at the early studio as a “temporary vehicle of exploration”, that's actually not a bad thing - they created a company that experimented with a handful to a few dozen different products, and went with the winning one. Only 7 of the 21 were “normal” financial or operational failures: running out of funding without meaningful portfolio traction. And then there were 3 studios that got acquired or absorbed into their parent organizations. -- The Europe vs US thing: In the original studio selection 19 came from North America and 26 from Europe. And it seems that there's a significant gap is the studio durability: more European studios pivoted or went inactive rather than continuing as studios. I don’t think this means Europe is worse at building. My best current guess is that a bigger, more connected-unified market gives spinoff company an easier path to its next funding round. And this makes it easier for the studio itself to keep operating. (If you wonder why there aren’t more studios from Africa or Asia in the report: in 2015 there were barely any outside EU and US.) -- Some lessons, takeaways If you’r e running a studio approaching year 5-6: This is a good time to make a reality check and deliberately choose: recommit fully to the studio model, redesign the parts that aren’t working, or consciously evolve/change into a fund, agency, or accelerator. If one of your portfolio companies is on track to become a big hit: Decide to either protect the studio’s ability to keep building new ventures, or fully commit to the main successful startup. If you decide on the latter one - make sure you gracefully depart from your other startups, give them a fair chance to transition out. If you’re an investor evaluating a studio: decide on what you’re actually trying to buy into before signing the deal. Do you want to invest for the deal flow coming out from the studio, financial returns, or both? Because the right structure differs depending on which one you’re really after. Then check whether the founders are up to the task, ready for a 10-15 year commitment. If you’re thinking about a new studio: be honest about whether this is the right approach. Not every vision needs the a venture studio. Hope you'll find this useful :) -- P.S. 1: About the portfolio companies: from the 200 in the original report scope about 27-ish seem to have made an exit (acquisition or IPO), but I need a couple more weeks to verify those results. Might be worth a separate post - not to cram ALL the numbers into this one. P.S. 2: Studios in scope: 212media, archimedes, atomiclab, betaworks, bmuse, bootventures, btwinz, codegent, cursivelabs, dfra, disrupted-backspace, drukka, elepath, expa, fastlane, finleap, fireid, forwardpartners, founders, hanseventures, hexa, hitfox-ioniq, hvflabs, idealab, italeaf, justaddred, lightbank, liquidlabs, livit, madrona, makeshift, mintdigital, monkeyinferno, neverbland, nmsf, novafounders, quasarventures, rainmaking, redstarventures, rheingaufounders, rocketinternet, roniin, scienceinc, seedstars, silvertreecapital, startersquad, tandemlaunch, thegiantpixel, ventacpartners, venturestars.