In the entrepreneurial ecosystem, terms like "venture studio," "accelerator," and "incubator" often come up when discussing about equity fundraising. While all three may provide equity funding, they operate differently and cater to startups at various stages of their development.
What is a Venture Studio?
A venture studio, also known as a startup studio or venture builder, is an organization that actively creates and builds new startups. Venture studios differ from the other 2 as they provide not only funding but also strategic guidance, resources, and operational support. Some even assist to assemble teams, or directly handle everything from product development to business operations, all under one roof.
However, not all venture studios accept external application as some exist solely to generate their own startup ideas such as SC ventures.
When is it suitable?
Early-stage founders with an idea but lacking the team or resources to bring it to life.
Entrepreneurs seeking a more hands-on, active role in their startup's creation with substantial support.
Those who need constant guidance, infrastructure, and resources to scale quickly.
What is an Accelerator?
An accelerator is a program designed to fast-track the growth of existing startups. Unlike venture studios, accelerators typically focus on startups that already have a product or business idea and are looking for rapid growth. They provide intensive mentoring, networking opportunities, and seed funding, often in exchange for equity.
Example, YCombinator, one of the most renowned accelerators, having launched companies like Dropbox, Airbnb, and Stripe, which is credited with creating the SAFE (Simple Agreement for Future Equity) note as a simpler, more founder-friendly alternative to traditional convertible notes or priced round. And which accordingly to Carta, are used in 98% of all fundraising below $500,000 in the US.
In Singapore and Asia, Accelerating Asia, Meet Ventures, are some of the well-known ones.
When is it suitable?
Established startups that already have a product or idea and are seeking rapid growth.
Entrepreneurs looking to scale their business quickly with the help of experienced mentors and investors.
Companies that need exposure to a network of investors and clients to secure funding and partnerships.
What is an Incubator?
An incubator is a program or organization designed to help early-stage startups with their initial development. Incubators are generally more long-term and less intense than accelerators, focusing on providing resources such as office space, mentorship, and networking opportunities, typically for a longer period. Incubators are often geared towards entrepreneurs who are still refining their business models or building their products. Some popular incubators in Southeast Asia and Singapore include Antler, Founder Institute.
When is it suitable?
Early-stage entrepreneurs who are still in the ideation phase or refining their product and business model.
Those looking for long-term guidance, office space, and operational resources.
Startups needing a supportive environment for research and development without the pressure of rapid scaling.
While there is no shortage of equity fundraising channels available, you may take into consideration between equity and loans, which we touch upon in this article.
