October 2, 2019
A Startup Studio or Company Builder 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 Company Builder acts as an investor holding a considerable share of equity capital.
But you may wonder what the difference is between a Startup Studio and an Incubator or Accelerator program.
Köhler & Baumann in their 2015 study developed a conceptual approach on how company builders can be distinguished from existing incubators and accelerators on the basis of an in-depth case study on Rocket Internet. They consider both forms of organization to be hybrid organizations and compare them on the basis of the following four key dimensions:
These 4 dimensions provide a scale across the market-hierarchy spectrum. This is a concept in economics that highlights whether activities are coordinated based on the using services from the market or based on creating a hierarchy or a more organized structure. Using such a concept, it is possible to see the key differences between incubators and accelerators, and Company Builders.
As the figure above shows, incubators and accelerators behave similar to the market in all key dimensions, so startups are incubated and scaled purely based on bringing together a variety of services to support the entrepreneur. On the other hand, Company Builders are true hybrid forms of organization in which they behave similar to the market in some respects - incentives and time horizon - and similar to the hierarchy in others - ownership structure and decision-making process.
Thus, Company Builders take the best of both worlds, creating an organized structure for creating startups, while maintaining some of the market-based features of incubators and accelerators. As a result, Company Builders are able to ideate, develop, and scale in a more structured and standardized manner.
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.
Köhler & Baumann 2015
Mocker & Murphy 2014
Szigeti 2016, p. 12
Funk 2015, p. 21
Drucker 1993, p. 161