The Value of Startup Studios for Emerging Founders (Part 2)
This is the second part of our insightful webinar with Craig Kronenberger, 5-time founder and consumer digital strategist. In this part, Craig answers open questions on the Startup Studio Model from the webinar live audience.
If you haven’t yet, make sure to head over to the first part of the webinar series summarizing the key insights of the webinar.
What is the best structure for Startup studios to raise funding and attract investors?
Craig: Our team at Startup Studio Insider is currently working on an article that details all the different levels of funding that startup studios currently offer to the market. In the fund model, the startup studio is responsible for providing funding that is mostly composed of venture capital firms and at times, angel investors and even government grants. In comparison, non-dilutive funding comes from a method relatively new to the traditional financing space: revenue sharing. This model is the one I find the most effective for founders since revenue sharing allows investors to retain some ownership of the startup studio they invest in, but it also provides a flexible repayment model for studios to buy back the investment over time. In other words, non-dilutive funding is more centered around the company’s growth rather than equity, which aligns the interests of startup studios and the ventures they choose to pursue.
In your experience, who are the stakeholders most interested in investing in a new startup studio?
Craig: Startup studios effectively set up core structures that allow them to finance their operations and startup creation efforts. As such, founders can feel secure that their project is not only in the right hands in terms of a knowledgeable and capable team of experts, but also backed by the right financials.
As stakeholders, the process of raising money for a startup can be quite daunting. You are already dealing with a lot of uncertainty and operational tasks, and then you have the added pressure of finding the right group of investors that share your vision and trust in your ability to bring it to fruition. So how do you find investors? How much money do you need? Will they be interested in investing in your business? And once you’ve got the money, how long will it take you to pay back the loan, and what will that ultimately cost you?
Startup studios function by providing capital to startups’ stakeholders that help get the ideas off the ground and fuel them all the way to and through the launch until the startup becomes financially independent. And even then, studios retain their relationship with their portfolio companies and provide capital and shared resources beyond launch.
In your opinion, what are the down-sides of a startup studio model? The main points we should pay attention to?
Craig: The primary downside of startup studios is that they often take the highest amount of equity and many do not accept outside pitches from entrepreneurs. However, startup studios are seen as the safest approach to early-stage investment, being that the studio will see the startup through the acceleration phase and through common obstacles that 90% of startups fail to overcome.
Do you recommend running a startup studio model with some business ideas but without any investment or funding?
Craig: Based on my experience, this isn’t always the case as funding is a fundamental element of startup studio success. Whether you’d like to go one route or the other, it is important to understand that startup fundraising is essential for getting any business off the ground. From growing your team to sourcing more sophisticated resources to develop your business plan and scale over time, funding plays a critical role in the growth and success of startup studios and their portfolio companies.
Why did you sell Stripe Theory if it was such a successful company?
Craig: Last year, we had the opportunity to be acquired by Acceleration Community of Companies (ACC), a new go-to-market business with a series of strategic and complementary acquisitions. With this acquisition, Stripe has played its role to empower ACC to help its clients go beyond data to uncover insights and strategies that measurably and cost-effectively grow and protect brands.
When I started Stripe, I sought to create an agency unencumbered by silos and committed to building a data-first approach to brand promotion and protection. This vision aligns with ACC’s evolution, and we are excited to leverage our skill sets in paid media, strategy, and analytics to unlock new value and understanding for ACC’s impressive portfolio of companies and clients. Together, we are able to grow better and smarter, creating a synergy to provide effective strategies for our clients.
That’s it, these was the second and last part of our webinar on the Startup Studios Model and the value for emerging founders with Craig! If you are a premium member and would like to dive deeper into the best practices of Startup Studios, make sure to revisit the webinar recording and presentation. Not a premium member yet but interested in becoming one? Just reach out to us.
About the Speaker
Craig Kronenberger has over twenty years of experience as a consumer digital strategist with a concentration in global strategy, new product launches, brands and direct marketing, and consumer relationship marketing for Fortune 500 and growth organizations.
Currently the CEO and founder of Stripe Theory, a data-fueled digital agency established in 2015 with operations based in Atlanta and The Philippines. Stripe Theory was most recently acquired by Acceleration Community of Agencies (ACC) to continue its ever-growing success in implementing deep expertise in data analytics to drive relevant, cost-effective, and impactful marketing results for clients like Amazon, Nissan, and Facebook, among others.