In recent years, the startup ecosystem has seen a rise in the number of support systems and programs available to help entrepreneurs bring…
In recent years, the startup ecosystem has seen a rise in the number of support systems and programs available to help entrepreneurs bring their ideas to life. They vary in the type of support, capital and perks they bring to startups and take all forms and shapes. Such of these programs and support systems include startup studios (such as eFounders), accelerators (such as Y Combinator), incubators (such as Capital Factory), co-founder matching programs (such as Antler or Entrepreneur First), and the more obvious one being venture capital firms. While they all share the common goal of helping startups grow and succeed, there are distinct differences between them depending on the level of human capital and financial capital they bring.
We wrote this article because we still hadn’t found one that effectively summarized the key differences between all these structures and we wanted to equip you with all the information needed to decide which one might suit you best. We do not think one program is better than another, far from that, and we don’t believe that picking one excludes you from considering another either.
A startup studio is a structure that builds startups from scratch. Startup studios typically generate startup ideas internally and then partner with entrepreneurs to co-found these ideas with them. They employ their own team of experts to develop and launch a product or service, often in-house. Startup studios provide resources like funding, mentorship, and infrastructure to their companies. They are hands-on and directly involved in every aspect of a startup’s development, including strategy, product, marketing, HR and operations.
💡The purpose of a startup studio is to create an independent and ambitious company that can stand on their own.
Some examples of startup studios include High Alpha, Expa, Builders, and the startup studios from the Hexa ecosystem such as eFounders, Logic Founders and 3founders. And here’s a comprehensive list of startup studios worldwide, courtesy of Morrow.
- In-house ideation. Ideas are usually generated in house and thus the studio can ensure that they are thoroughly tested and vetted before being pursued. This process ultimately increases the chances of startup success by minimizing the risk of pursuing a flawed idea.
- Human capital & operational support. Access to human capital, a co-founding team, and hands-on support are the key differences between a startup studio and an accelerator or incubator. The startup studio team is usually composed of experts in their respective fields, such as marketing, HR, product, and finance. They join the startup and work operationally alongside the startup founders for a period that can last up to 18 months. Startup studios usually position themselves as a co-founder and not an investor meaning they’re heavily invested in the startup’s success and bring a lot of support from the very start.
- Strategic guidance. Startup studios, having played a pivotal role in launching the company, have a vested interest in its growth and success. Although their operational support typically concludes after the initial 18 months, they continue to provide valuable strategic guidance throughout the lifetime of the company. In many cases, they maintain a presence on the board of directors, ensuring ongoing involvement in key decision-making processes.
- All costs are covered. Since startups are conceived of and built in-house, all their costs are usually covered. Meaning that the entrepreneurs founding the startup get a salary and the salaries of the first recruits of the startups are also covered by the studio. This allows the company to accelerate at a crucial point of the company building and makes starting a startup risk-free.
- Repeatable processes. Studios are founded by entrepreneurial leaders that know how to build companies. Having a repeatable process helps create successful companies at scale, during all stages of the company’s life cycle, beginning with ideation and validation, followed by company creation, fundraising, and scaling.
- Funding & Equity. Studios act as a cofounder and thus take equity in the startups they create. Entrepreneurs that co-found with a studio get similar equity ownership that they would have if there were three co-founders and had raised a pre-seed round.
🔍 Zooming in on Hexa
Hexa is home to three startup studios: eFounders (future of work), 3founders (web3), and Logic Founders (fintech).
The startup studios within Hexa work closely with founders to launch new companies. Most startup ideas are generated in-house, then startup studios partner with founders and together co-found companies. Throughout a period of 12 months, the Hexa team works hand in hand with founders to provide crucial support in getting the startup off the ground. At the heart of Hexa is the operational support it provides to founders and its team entrepreneurship model. Instead of building alone in their garage, founders can come to Hexa and benefit from the power of a 20 strong team who’ve already contributed to building dozens of startups.
Hexa also provides access to a network of investors and business contacts. It fosters a community of like-minded entrepreneurs and offers a tried-and-tested framework for startup success. Additionally, founders receive lifelong mentorship to guide them throughout their journey.
An incubator is a program that provides startups with a variety of resources to help them grow. These resources include things like workspace, mentorship, and networking opportunities. Unlike accelerators and startup studios, incubators tend to offer a lighter form of support. They are less intensive and more informal. Incubators are particularly useful for businesses that are still in their initial ideation phase, providing a nurturing environment for startups to develop their ideas and build their businesses. Incubators are more of a platform that helps entrepreneurs network and connect with each other and benefit from startup perks.
💡The purpose of an incubator is to provide a shared infrastructure for entrepreneurs to meet like-minded individuals and access perks and events.
- Early stage. Incubators usually support startups at the very early stages of the journey. But compared to startup studios, entrepreneurs need to have a startup idea and co-founding team before applying to incubators.
- Infrastructure & services. They usually provide the infrastructure and logistics necessary to building a startup with a very small team. In addition to offering a co-working space, they can also provide valuable services such as access to discounts on tools and software that are relevant for building a startup.
- Funding & Equity. Incubators do not usually take equity, with a majority of them not taking equity and being more of a physical space with startup building perks. Many incubator programs charge a small monthly fee to cover office and equipment expenses.
- Flexible. No cohort system, not a program set in a time period, usually very flexible in terms of timing, a startup can stay in an incubator for a while depending on needs. Usually easier to get in compared to an accelerator.
- Limited strategic guidance. Most incubators do not provide tailored strategic guidance for startups or if they do it’s limited compared to what a startup studio or accelerator would offer.
- Community and events. Incubators typically provide startups with a community of like-minded entrepreneurs, as well as various events, networking opportunities and mentorship hours designed to help them connect with potential investors, customers, and partners.
🔍 Zooming in on Station F
Located in the heart of Paris, it is the world’s largest startup campus, with more than 30 different startup programs offered to entrepreneurs from around the globe. The campus is housed in a massive building that was once a train station, covering over 34,000 square meters of space.
Station F offers several incubation programs within its 30 startup programs. It is important to note Station F also offers acceleration programs. Featuring resources both on-campus and online — including a huge investor community, more than 150+ perks and offers, 35 public services, 600+ events and workshops per year — Station F offers everything entrepreneurs need to launch and grow their businesses.
An accelerator is a program that helps startups grow and scale their businesses quickly. Accelerators usually provide funding, mentorship, and resources like office space and networking opportunities. Accelerator programs are typically shorter, ranging from 3 to 6 months, and can be quite competitive compared to incubators.
Accelerators come in different shapes and sizes. They can vary in terms of duration, funding, and support. Y Combinator, for instance, follows a three-month program and assures funding for each startup that completes it.
💡The purpose of an accelerator is to get a startup from point A to B much faster than they would have on their own
- Early stage. An accelerator is for you if you already have your founding team and your idea and vision, maybe you even have your MVP, but you feel like you might benefit from all the perks associated with an accelerator program.
- Short and intense program. Geared towards acceleration and usually culminating with a demo day in front of investors. Accelerators have a clear start and end date and work with a cohort system. They typically last 3 to 6 months.
- Limited operational support. Most accelerators do not provide operational support (or co-founding team) but focus on strategy only. This would be one of the main differences compared to startup studios who provide a team of operational experts.
- Strategic guidance. Accelerators have structured mentorship programs in place, with office hours given by successful entrepreneurs and operators. The mentorship provided is usually strategic and high-level. Unlike startup studios, accelerators do not provide a team who operationally work alongside the startup.
- Large cohorts & community. Accelerators are typically held multiple times a year with large cohorts — compared to startup studios. These programs often form a large community that creates many synergies between its members. Beyond the program’s duration, accelerator attendees can reap the benefits of being part of a community for the long term.
- Funding & Equity. Accelerator deals are typically standard across all startups. The accelerator will provide capital in exchange for equity in your startup. This is a pre-requisite to enter the acceleration program.
🔍 Zooming in on Y Combinator
Zooming in on Y Combinator Y Combinator is a startup accelerator that provides seed funding, mentorship, and resources to entrepreneurs. It has helped launch many successful companies, including Airbnb, Dropbox, and Reddit. If you’re accepted into the program, you’ll receive an investment in exchange for equity in your company (here’s their standard deal). This investment will give you the initial capital you need to get your business off the ground.
Y Combinator offers a comprehensive package of resources and support to early-stage startups. The centerpiece of their program is a three-month accelerator program, during which selected startups receive funding, mentorship, and access to a vast network of experts and investors. Startups participate in intensive mentoring sessions, workshops, and weekly dinners where they receive guidance from successful entrepreneurs and industry leaders. Y Combinator culminates in Demo Day, a highly anticipated event where startups pitch their businesses to a room full of investors, media, and industry professionals.
Co-founder matching programs
Co-founder matching programs could be considered a subtype of accelerators. However, for the purposes of this article, we have decided to distinguish them from accelerators like Y Combinator. Indeed, being accepted into a co-founder matching program might lead to an acceleration program but only if you have found your match and found a compelling vision for a product. If successful, the co-founder matching program will provide acceleration and capital. Inversely, being accepted into a typical acceleration program such as Y Combinator automatically leads to funding.
💡 The purpose of a co-founder matching program is, as the name implies, to match you with potential co-founders, aiding in idea validation, and providing mentorship.
- Pre-team, pre-idea. You can apply for a co-founder matching program at the earliest stages of your startup journey, when you don’t have a co-founder yet and haven’t yet come up with an idea. The purpose of the program is to match you with a co-founding team. This stage is similar to the one you encounter in a startup studio, but different from an accelerator, where you typically have a co-founding team and an idea.
- Funding & Equity — if successful. If you have found a successful match and validated your startup idea, the program will provide initial capital in exchange for equity. Programs usually also connect you with further investors and venture capital to fund your business. At Entrepreneur First, approximately 40 to 50% of startups make it to this stage.
- Limited operational support. Most co-founder matching programs do not provide operational support (or co-founding team) but focus on strategy only. This would be one of the main differences compared to startup studios who provide a team of operational experts.
- Strategic guidance. The co-founding program typically offers office hours with experienced entrepreneurs and leaders who can guide you in the right direction, help you test ideas, and coach you along the way. They can also make connections with relevant stakeholders. Even after making the first investment, the program remains a long-term partner, providing advice, introductions, resources, and follow-on funding — all the way to your exit.
- Community. Such programs typically bring together a global community of builders, investors, operators, experts, and partner organizations.
🔍 Zooming in on Antler
The Antler program begins with an intensive pre-team phase, during which participants have the opportunity to connect with potential co-founders and refine their business ideas. Once teams are formed, they enter the core program, where they receive funding, mentorship, and support to develop and launch their startups.
Antler provides participants with access to a global network of experienced mentors, industry experts, and investors. These mentors offer guidance, industry insights, and valuable connections to help startups overcome challenges and accelerate their growth.
Antler has offices in 25 cities across six continents, including Austin, New York, London, Berlin, Stockholm, Bangalore, Jakarta, Singapore, Seoul, Tokyo, and Sydney.
There’s no need to go into much detail on what venture capital firms are; there’s already a ton of information on the topic, and most entrepreneurs have a pretty good idea of what a venture capital firm does. What’s interesting is that venture capital companies started out as institutions that provide capital, but they’re increasingly offering more than just capital. They have enriched their offerings with community aspects, events, expert advisors, and more in a world where venture capital firms needed to differentiate themselves from the competition and where many startup support systems were enriching their offerings.
When it comes to startup support systems, venture capital have had an outstanding role to play in supporting the startup, with as their name would suggest: capital.
There are lost of venture capital firms out there, each with their own specificities. Top tier ones include Sequoia, a16z, Accel… This list from Sifted lists some of the top European VCs as well.
- Capital. Venture capital firms often invest larger amounts of capital in startups.. Their investments can range from several hundred thousand dollars to several million or more, depending on the stage of the startup and the funding requirements.
- Stage of involvement. While the above programs come in at the early stage of company building, Venture Capital comes in at all stages from early to growth. Venture capital firms typically invest in startups that have already achieved a certain level of market validation and are seeking funding for scaling their operations or entering new markets. They provide financial support and, in some cases, strategic guidance, but they do not have a direct operational involvement in the company.
- No operational support. Venture capital firms typically do not provide operational support to the startups they back. Their primary role is to provide funding in exchange for equity and support the growth and success of the companies through their financial investment and strategic guidance.
- Strategic guidance. Their involvement is generally more focused on high-level strategic decisions, financial planning, and governance.
- Community. Venture capital firms typically do not provide a community in the same way that startup accelerators or startup studios do. However, some venture capital firms may foster a sense of community among their portfolio companies by organizing events, networking opportunities, or knowledge-sharing sessions where founders can connect and learn from each other.
The support available to startups today is unprecedented. In this blog article, we have highlighted the key differences between various programs. However, it’s important to note that you can mix and match different programs to suit your startup’s needs. Choosing one program does not exclude you from considering others.
By leveraging a mix of startup studios, accelerators, incubators, and venture capital firms together, startups can benefit from a comprehensive support ecosystem that covers various stages of their journey, from ideation to scaling. This integrated approach maximizes the resources and opportunities available to startups, enhancing their chances of success.