What sets them apart, and at what cost?
Your startup is in the early stages, and it’s more than an idea but not quite a business. Most likely, you’re exploring and networking through the startup ecosystem, wondering, “Who can help me? Where do I go? What should I do next?”
You’ve heard of incubators. Maybe you’ve also heard of startup studios. But which organization, if either, is the best fit for bringing your idea to life? What’s the difference between them, especially regarding their abilities to help you right now?
Let’s review what each one’s purpose is, explore their differences, and see how (and if) they can help your idea turn into reality.
What’s an incubator?
Incubators specialize in helping companies that are early in the startup process. Most entrepreneurs reach out to incubators only when they’re just getting started and need some advice and direction on how to turn an idea into a business. An incubator’s primary focus is to help guide entrepreneurs and give them a space (figurative and literal) to decide where they’re going. They’ll help them map out their next steps.
The main focus of an incubator is to hatch a solid business plan. To do this, an incubator usually provides the following:
- Mentorship opportunities
- Affordable co-working spaces (usually for a flexible, month-to-month fee)
- Assistance with a business plan and minimum viable product
- Networking connections, from experts to possible investors
During this vulnerable stage of a business, an incubator can provide an oasis for companies trying to get off the ground. There’s a place to co-create and network, filled with utilities, organized events, and, yes, coffee and snacks.
However, while they’re focused on helping with business ideas, they’re not involved in actually executing the work. So even if you’re in the ideal incubator for your field and are introduced to the right experts, the experts are usually limited to advisory roles. Most of the time, they’re not involved in the action.
Likewise, incubators will help you find mentors to help advise you on your business plan and create a minimum viable product (MVP) to bring to market, but they don’t jump in beyond advice.
What’s the main objective of an incubator?
Many incubators are publicly funded and supported by various angel investors or VC firms. However, their involvement is often perceived as a form of community service. In many ways, they see their actions as an investment in the community. Thus, they’re usually community-oriented in their mission.
This isn’t to say that incubators aren’t focused on the success of their businesses. After all, they give time, attention, and possibly dollars (if a particular startup idea shows promise). But keep in mind that their main goal is to enliven the startup community. They want to foster a flourishing ecosystem of new businesses filled with potential growth, ideally bringing wealth and energy to the area. There’s specialized help, but it’s limited.
At this juncture, this kind of general assistance might just be what some entrepreneurs need. There is true value in the role incubators play, especially in these early stages.
It’s all in the name.
Think of the word itself—it’s a space for entrepreneurs to play around with ideas and see which ones have a chance to survive. An incubator helps foster this atmosphere and will provide tactile support. However, if a company has the chops to grow fast, it’ll quickly need resources to push them out of the incubator.
So when you’re deciding whether or not an incubator is best for your business, ask yourself these questions.
What’s my timeline?
If you’re looking to start your business with intensive speed, an incubator might not be what you want. If you have the means to make this your full-time job immediately, you might want to look at another program that’s ready to jump in with your intensity. On the other hand, if you want to test out an idea while you still keep your day job, an incubator might be the ideal place to start.
What’s your experience?
If this is your first business, an incubator can be hugely rewarding. On the other hand, if you’ve been intimately involved with startups before and have worked on the ground floor in previous roles, an incubator might not prove as critical beyond simply being a place where you can execute your work and be “seen” in the startup space.
What is a startup studio?
In the startup ecosystem, startup studios have seen incredible growth in the past several years. Like the incubator, they’ll help entrepreneurs take an idea and make a business plan based on sound research and expert business acumen. Often, they’ll also provide affordable co-working space that’s ripe for collaboration and networking. And, yes, there will still be coffee and snacks.
Like incubators, they’re very focused on connecting you with the right human capital, but they do this beyond advisory roles. They bring startups to life by transcending the immediate need for financial capital by instantly putting their dollars to use within the studio.
What do they do?
Startup studios aren’t usually sponsored by government programs, angel investors, or VC firms. They’re less focused on the local community and more focused on the real-life problems the startups want to solve. Ironically, it can be said that startup studios are disrupting the way startups are made.
First, they focus on the overarching problem that the founders want to solve and explore their idea to solve it. Second, if the idea sounds like it has promise, they’ll conduct in-depth market research and create a business plan.
While the founders create a minimum viable product (usually with help and mentorship), the startup studio takes action using its own infrastructure and resources. And this is where the real difference shines.
What sets a startup studio apart?
Startup studios own infrastructure and resources—dedicated resources ready to focus on your company and bring it to life. While the founders focus on getting the actual product to life, the startup studio provides a multidisciplinary team to take it to the next level. This can include:
- Digital marketers
- Industrial, graphic, and web designers
- Branding experts
- Financial gurus
- Recruiters (preparing for those next steps after you’re up and running and out of the studio)
- And more!
Ultimately, they want to help get your idea up and running and ready to launch, bypassing a lot of early investors because of the support and resources they provide. As a founder, this can give you incredible power.
What do they want in exchange?
Because a startup studio is intimately involved with creating your product, they will likely take a large chunk of equity. However, while the amount might seem like a lot, their hands-on focus can catapult your business way ahead.
Moreover, by having a viable business and a full-on go-to-market plan blessed by the experts in the field, you’re most likely getting way ahead of the game. Going the traditional route of gaining money through VCs may give away much more equity due to less efficient progress. A good startup studio will work within your boundaries and help you come up with a fair win-win for everyone involved, including you.
The main distinction between an incubator and a startup studio boils down to this:
An incubator will help you figure out where you want to go and assist in creating a plan to wow investors with your pitch deck and dreams.
On the other hand, a startup studio takes you in, shelters you, and maps out a detailed long-term plan, leaving you free to jump in the car, take the wheel, and drive your company onto the highway. (While you have them on voice-to-text the entire drive.)
For more information about the P&G Ventures startup studio or a chance to share your game-changing innovation, visit www.pgventuresstudio.com.