The startup studio business model is a relatively new approach to company building and one that has much room for improvement. This factory approach to pumping out startups as quickly as possible has its appeal from a law of large numbers perspective. But of course, this requires significant investment for each new startup. Thus, the best way to maximize the probability of success is to bring down the initial capital requirement to allow for more attempts at success.
The average investment into each startup studio's portfolio company is between $250k - $500k. TopCofounder requires an initial investment of less than 100k. This is primarily due to the following reasons:
- Subcontract work rather than hire full-time employees - Paying hourly with highly skilled niche work and use cheaper overseas labor for development and marketing.
- Use a product manager to act as CEO until the startup gains traction - The product manager has a diverse set of skills and can immediately bring value to all phases of a startup's early life cycle - development, marketing, and finance.
- Develop a pipeline of diverse CEO candidates - These candidates would be notified as soon as a position becomes available and reduces recruiting costs.
- Focus on exploiting opportunities in tech - Tech companies are high margin opportunities whose infrastructure can be easily replicated for use in other products or industries.
- Agile AND Serverless - Incremental development is a given for startups without much early traction. But development should focus on serverless solutions to solve problems. Infrastructure costs for early stage startups should be minimal to non-existent.
- Racer studio model - This is the "copycat" strategy employed by Rocket Internet and other studios. They seek to emulate successful startups from different geographies. These studios are extremely lean because they don't require as much innovative research. Emulation is much faster and cost effective.
I'm primarily focused on the application of technology in machine learning, internet of things, and software as a service. My current project is 500 Sense, which performs real-time sentiment analysis on publicly available information for all S&P 500 companies. Using a scalable & serverless approach, I can easily replicate the infrastructure to perform sentiment analysis on a wide variety of products.
My pitch for TopCofounder can be seen below. If you have any interest, I'd love to discuss further. And if you have any ideas on how to improve the startup studio model, I'd love to hear them as well!