Venture Studio – A new business model is emerging to support the start-up building space globally
In building out a start-up, an entrepreneur is faced with the choice between three types of support structures, each playing a different role in startup creation –
1. Venture Capital Funds that inject capital into existing ventures to scale them.
2. Accelerators/Incubators that help build out validated ideas.
3. Venture Studios that serve the value chain from end to end by ideating in-house and guiding the venture all the way till scale-up.
Venture Studios are a new way of building start-ups in a structured manner. The concept has gained traction with more than 200 studios coming up around the world (with more than 4 studios in the Middle East) particularly after a few large-yet-successful exits.
MENA start-up ecosystem gap can be addressed by Venture Studios
When compared to the rest of the world, the Middle East has a thriving funding ecosystem largely dominated by venture capital firms of various sizes. Venture Studios remain fairly unchartered territory. There exist more than 4 studios in UAE and KSA that are relatively new but have made significant strides.
These studios can provide a boost to the ecosystem which can help accelerate the region towards a more developed start-up ecosystem.
Venture Studios targeting 3% of the $3 bn+ committed funding in the region
Governments in UAE and KSA have committed ~$3.3 bn for entrepreneurship through various programs and initiatives. Our estimates indicate that Venture Studios in the region are looking to raise $100 mn for the next wave of start-ups in the following year or so.
Governments could potentially allocate a small portion of the existing $3.3 bn available for jump starting the start-up ecosystem. We believe that start-up studios will slowly mature in terms of processes and will see exponential growth once there a few exits. This will bring significant buoyancy in the ecosystem.