One of the benefits of the startup studio model is the ability to share infrastructure across the companies in your pipeline. Today I’m going to talk about how resource-sharing can work in different scenarios, and what kind of uptake we’ve experienced with our own entrepreneurs here at Stanley Park Ventures.
The concept is simple…
A startup studio employs a small team of designers, developers, marketers, and administrative staff, which it then makes available to its early stage startups. This provides the fledgling companies access to the help they need without having to resort to expensive consultants or full-time hires during the prototype phase of the startup.
Not only do companies get the help they might otherwise be unable to afford, but in addition, with each new project, studio staff can use the experience they’ve gained and the knowledge they’ve shared to refine processes that speed up the iteration process on the next go around.
Furthermore, since a startup doesn’t necessarily need a full-time designer or developer, they can’t apply for grants from programs like the SR&ED or IRAP. But by bundling different roles for companies together, a startup studio can take advantage of these programs. Startups gain access to cheaper resources and investors get a better ROI.
Resource sharing at other startup studios
But as we discovered when going through our customer discovery process for startup studios, this approach wasn’t necessarily adopted in all the studios we chatted with.
Xcerion, a Swedish studio we spoke with, cautioned us about centralizing resources on the development side. They found that in subsequent funding rounds, investors were wary of clear IP ownership. Investors were also concerned that the best resources would be pulled away and put into a younger company to run up the valuation.
Another studio, this one based in NYC, told us they shared everything. If studio staff decide they want to stick with the startup, “it’s no problem”, claimed the managing director. “Once you’re funded, the companies can take the good people with them and we’ll fill in the holes. People want to work here because it’s cool.”
How we share infrastructure at Stanley Park Ventures
We’re not sure we are prepared to bank on cool, but after reviewing this input we decided to start with the following:
- Admin, legal and finance are provided by the studio until the company gets a seed investment. Companies aren’t charged for their time here, but all hard costs are passed back to them.
- Design, front-end development and writing resources are offered during prototyping and are “billed” at our fully loaded costs minus government grant money. (which can add up to 40% of an individual’s annual salary).
- Studio companies can use or refuse any or all of these resources.
The response so far has been interesting.
- Of the companies currently in the C stage in our studio, each has leveraged the admin, finance, and legal resources.
- Our designer talents have also been used by everyone, with a few supplementing design with outside consultants.
- Writing resources have been used by some, but not all.
- Everyone has taken prototyping help.
No surprise on this last point. It’s no small thing to get forms, databases, email, tracking, analytics, and ads, integrated and working reliably. Mike has really taken it upon himself to go above and beyond prototyping to help our B2C companies build a strong foundation and go live faster than they otherwise might have building one-off systems. Certainly in this case we’ve seen how knowledge sharing within the studio can speed a startup along the path to de-risking assumptions earlier than ever and ultimately to profitability.
It’ll be interesting to see how our shared resource pool evolves over time. Do you have any experience with sharing resources? We’d love to hear about it.