Startup Studio Part 1

Introduction:
A Startup Studio is an entity that designs and launches innovative companies from scratch. The startup studio model, which emerged around 2007, addresses a growing need for early entrepreneurial support and access to resources dedicated to execution. However, it has seen a significant acceleration in recent years. In this article, you will discover not only how the "startup studio" model works in general but also the top 10 French startup studios.🇫🇷
Two special mentions await you at the end of the article 😉

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The Startup Studio Model: 

Startup Studios transforms the development of new businesses into an industrial process, using shared resources and multidisciplinary teams so that founders can focus on one thing: executing their vision & building the product & business development! 

These structures are often launched by seasoned entrepreneurs such as serial entrepreneurs, former VCs, CTOs, CMOs, or consultants, providing expertise across all areas necessary for launching a project. 

You can find experts in business creation, finance, communication, marketing, development, UX/UI, project management, etc that are not ment to replace the start-up team but rather in addition to them.

Startup Studios are distinguished by their long-term commitment, starting from the ideation phase and supporting startups over several years, from the conception of the idea to its post independance were the studio supports in network rather than expertise. They play a true role as co-founders 🔥

Before we start our ranking, here are some figures:

The number of startup studios has doubled between 2018 and 2023.

• On average, it takes a budget of $1.36M to $2.49M to launch and operate a startup - studio.
• For incubated projects, they are 33% faster to be sold (5 years) & 31% quicker to go public - IPO (7.5 years).
• The time to reach a fundraising stage is divided by 4 compared to companies on their own

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Financing & Structure: 

For every company, there exists a different financing model or Business Plan. Startup Studios are no exception to this rule!

Traditionally, they prioritize taking equity stakes in the startups they support. This collaborative model not only allows for sharing entrepreneurial experience but also provides financial support and specialized guidance (expertise, advice, etc.), similar to what is offered by some venture capitalists. This system involves sharing risks among all involved entities. 

In the event of success for the incubated companies, the studio can sell its shares, thus realizing a profit.

However, this model requires significant initial investment to enable sustained long-term project development.

Typically, a studio holds between 20 and 40% of the shares in each company it helps create, with exceptions where this percentage may be higher or lower.

Like any business, it's not uncommon for a studio to raise funds, with the valuation directly depending on the quality of the startups in its portfolio. However, acquiring a significant portion of the equity can be perceived negatively by entrepreneurs, especially in the very early stages of the project. This can also deter future investors during the initial funding rounds due to the dilution already experienced.

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Concerning the structure of a Startup Studio, 2 main types are commonly found:

• Holding: A studio that initiates and finances startups by acquiring stakes in them. Initially, the studio captures investor interest in offering participation to LPs (Limited Partners or investors) in the holding company. For incubated startups, it's the holding company that holds the shares and receives potential revenues generated by these companies.

• Double-entity model: holding company + fund: This is a double-entity structure where the studio and the fund are separate entities. In this configuration, the studio acquires common shares at the launch of startups, while the fund is allocated preferred shares when investing in these companies. To cover its expenses, which are typically not covered by the usual 2% fees, the studio has two options: it can either withdraw some of the capital from the fund (thus giving the fund a stake in the studio), or seek investments from external investors, independent of the fund.

Each Startup Studio selects the financing and support model that suits it best. There are typically three different standard models:

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The initial investment in proprietary funds (the money from the Startup Studio):

PyratzLabs is a good example of this model, with some additional peculiarities:

• Balance Sheet Investment: 100% of funds from the Startup Studio, without involving external investors. This aligns the interests and goals between the Startup Studio and the Startup.
• 50/50 split between Services & Equity: With the aim of reducing service costs for a startup. This also allows for subsequent "topping up" of the equity stake as needed, for example, in case of dilution.
• Services: 360° Senior team available to produce (Product / Tech / Marketing / Fundraising / Global Strategy)
• Equity: Between 15 and 25% for a 500k investment (including advisors).

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Investment with external funds (VCs, Corporates, Investors, Advisors):

In our ranking, you will find Startup Studios that use this model, such as eFounders or FoundersFuture:some text

• Investment: In this model, there is no investment from proprietary funds. Instead, each startup obtains external financing through a VC, for example.
• Services: Like other Startup Studios, they offer comprehensive teams to support project holders.

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No investment, provision of services:

• It's a model that reduces risks for the Studio since it doesn't invest money or take equity. It exclusively earns revenue through billing for its services to the supported startups. Matters, one of the top Startup Studios in France, utilizes this model.

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The 6 best startup studios in France:

• Hexa (ex eFounders): Hexa, formerly known as eFounders, has been a pioneer in the SaaS startup sector since 2011. The studio is renowned for launching several technology companies that provide software solutions as a service. Hexa continues to innovate by developing tools that enhance business productivity worldwide.‍
• Founders Future: Founders Future is a hybrid of a venture studio and an investment fund, active since 2018. This studio focuses on supporting startups with high growth potential, offering capital, strategic advice, and access to a vast network of entrepreneurs and experts.‍
• Matters: Matters operates primarily in the creative and digital content industries. They are dedicated to developing startups that innovate within media, entertainment, and digital communication. Matters offers a comprehensive suite of services to their startups, including branding, marketing support, and technology development, emphasizing storytelling and user engagement.‍
• La fabrique by CA: La fabrique by CA, an initiative by Crédit Agricole, acts as both an incubator and a startup studio that supports young companies across various sectors. This studio aims to accelerate the development of innovative solutions by providing access to a broad network of professional and financial resources, leveraging the banking expertise of the group to guide startups towards success.‍
• Factory 319: Based in Marseille, Factory 319 focuses on the healthcare and biotechnology sectors. The studio aims to transform scientific discoveries into commercial enterprises, supporting innovations that can radically improve healthcare and overall well-being.‍
• Anova: Anova is a studio dedicated to artificial intelligence, facilitating collaboration between entrepreneurs, data experts, and investors. The studio aims to propel startups that develop AI-based solutions for various industries, focusing on innovation and adaptability. Anova positions itself as a catalyst in the AI sector, providing strategic and technical support to transform concepts into viable businesses.

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Special Mention: 

• Station F: Station F, based in Paris, is the world's largest startup campus and serves as a hub for entrepreneurs. While it's not strictly a startup studio, Station F provides substantial resources, incubation programs, and a dynamic environment for startup development and acceleration.‍
• PyratzLabs: PyratzLabs is the first Startup Studio fully specialized in Web3. We take innovative ideas from concept all the way through to launch, using our expertise in market-leading Technology, Funding & Advisory.

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Graphics source: The Big Startup Studios Research EN https://drive.google.com/file/d/134aBLg0G-0d5rRgby-LotJOc5kPNC8ZT/view?usp=sharing