TOA14: Startup Studios Set to Be a Hot Post-Accelerator Trend

By David Knight |

The sun always shines on Tech Open Air. Fact. For the third year in a row, the most Berlin-y of all Berlin events was once more enjoying clear skies and hot temperatures. And despite leaving the famous Kater Holzig venue, TOA’s new digs didn’t disappoint either – an equally funky, down-and-dirty place called the Alte Teppichfabrik which also lies along the Spree river.

And the content at this year’s unconference has also taken a turn for the surreal, from eating like cavemen to smelling like dead celebrities. Right.

But there was also plenty of more mainstream talks, and one which caught the eye in particular was by Englishman Sam Matthews. Having lived through startups successful (Fnatic) and not so successful (Ugame), he is now focusing on a London-based project entitled Neverbland, one of a new wave of so-called startup studios.

And pay attention – because just as Berlin experienced a stream of accelerators setting up shop a year or so ago, we will likely see a similar trend with startup studios.

A startup studio essentially takes the idea of an accelerator or incubator one step further. The basic idea of a startup is one person or a group of people developing a product and building a business around that product, on their own. With acceleration or incubation, they can receive help from a team of experts for a period of time, (usually) in exchange for some equity.

A startup studio, according to Matthews, is a company that builds companies, providing in-house expertise to accelerate them to the product/market fit that he believes is crucial to the success of any entrepreneurial endeavour. There is no time limit – each startup within the studio is funded to Series A level, in exchange for 20 percent in equity (in the case of Neverbland).

That means that the startup is given the benefit of the in-house expertise for as long as they need it, rather than being left to their own devices after, say, three months.

Other advantages, according to Matthews, include a focus on few products compared to an accelerator, which, he said, usually have a “spray and pray approach.” This leads to a better focus on complementary products, while the experts themselves, top-notch designers say, don’t get bored from working on just one project the whole time.

There are also the usual economy of scale benefits like having legal, HR and financial support within the umbrella organisation, and reusable components such as infrastructure and offices.

After his talk, Matthews told Silicon Allee that the downsides include the higher amount of equity the startup has to give up, but he disagreed with the assertion that startups would be looked after too much rather than fail as they might have done in a standard entrepreneurial environment. The studio itself, he said, would be the ones to say if they no longer wanted to support the startup, whose founders could then continue on their own if they wished.

He also revealed that Neverbland, which currently has three startups in-house, has so far been self-funded but is now looking into the market for investment. Other studios which have been leading the way include betaworks, founded in 2008, which has attracted a total of $47.5 million (about €35.1m at today’s exchange rate), as well as Idealab, EXPA and eFounders.

As the age of some of those companies will attest, the idea of a startup studio is hardly new. But it just might be at the centre of a new trend in entrepreneurship in Europe.


Other highlights from Day 1 of TOA 14:

Rather than the 20,000 different things humans are able to smell as was previously thought, recent research suggests we can actually whiff a TRILLION separate aromas. Still behind dogs who can identify three trillion, mind.

Palo Alto builds great businesses, but you don’t need to be in Palo Alto to do so – “it’s just marketing,” said Julie Meyer, a native of the Californian tech hub but who has spent 25 years in Europe.

Idan Cohen, meanwhile, argued that while it doesn’t matter too much where you build your startup during its early days, you eventually need to move closer to your market, partners and potential acquirers – for Cohen, who founded boxee, that meant moving to the US and eventually being bought by Samsung.

I’d love to write about the talk on the paleo diet, but a whopping 15 minutes into the day’s schedule, I wasn’t allowed to ask a question because we needed to have a five-minute break. I’ll never know if beer is allowed on the paleo diet or not…