Starting a company is hard. Countless brilliant entrepreneurial minds are spinning their wheels, stuck in dead-end positions or at startups lacking momentum, unsure of how to best utilize their talents. So they start searching for something to give them a jumpstart–but where to start? Entrepreneurs are faced with a plethora of possibilities, each touting a vision of success.
Today we’re talking about two of the big players in the startup ecosystem: accelerators and company builders. Read on to learn how these pathways to potential profitability compare and contrast.
What’s a company builder?
Put simply, a company builder (aka a venture builder, venture studio, or startup studio) creates startups from scratch. Typically, a company builder recruits qualified entrepreneurs, gives them some feasible ideas to work on, then supports them as they craft that initial idea into a bonafide, profitable venture. In return, company builders get equity in the new company!
What’s the difference between a company builder and a startup accelerator?
A lot of people will read this and think aren’t they just talking about a rebranded accelerator? In a word, no. Stay with us. The differences between a company builder and an accelerator may seem slim to the uninitiated, but they’re vast (and critical). In a startup accelerator (or seed accelerator), existing startups apply to join an acceleration program. If they’re accepted, they’re given benefits like education, resources, coworking space, and even funding – for a price. Speaking generally, most accelerators will help out an ambitious startup for a small slice of the pie: 5-10% ownership in the company.
A company builder, on the other hand, is a Day-1 presence in a young startup’s life. It’s the parent; it doesn’t raise up an existing company and help it spread its wings. It literally creates a company from scratch. It offers many of the same benefits as an accelerator, sure, but that comes later in the process – to be accelerated, a startup must first exist. A company builder takes a group of qualified candidates, gives them a problem worthy of solving or falsifying, enables them in any way possible, and lets them begin.
Startup studios are like parents who give birth to a baby, then raise the baby themselves, make their own decisions for him/her, and prepare their child for an independent life as an adult.
Attila Szigeti, Author of the Startup Studio Playbook
It Takes a Village
Let’s look at startup support teams for a moment. At typical startup accelerators, a group of unrelated startups are lumped together in a “cohort,” and all the members of this cohort are supported by the same team of experts and administrators. This team helps drive the startup forward from its fledgling state to a more established operation. Depending on where the startup is in its lifecycle, the team at an accelerator offers a wide variety of assistance, from supporting startups as they acquire new customers and helping them build their product to mentorship sessions and funding the product build itself.
A company builder, on the other hand, doesn’t provide the same support for every startup in its program. Instead, company builders employ a more dynamic concept that puts a focus on contextual needs, agility, and strategic team growth. Where one startup may need office space and some software licenses, another may need to hire a technical specialist and a managing director. Some startups need coaching, some need access to bigger networks. There’s no one-size-fits-all support strategy. Instead, company builders deconstruct the classic rules of validation and reshape them to offer startups the highest chance of success.
Making the Grade
Joining these programs has different requirements, too. When applying at a company builder, you’re just presenting yourself and your experience in an industry. It requires considerable confidence in yourself as a business leader.
On the other hand, applying for a startup accelerator sees you pitching your idea, team, and product. Founders entering accelerators must also be confident in their own abilities, but it’s often the strength of their idea, their product, or their team that will make or break their chances of success. Maybe the quality of the whole concept can compensate for a weaker founder in an accelerator. In a company builder, that’s not the case – it’s all on you.
True Grit
Company builders expect entrepreneurs to demonstrate an exceptional amount of grit and determination – even more than the already-high level required by the startup experience. Future founders need to prove themselves worthy of an idea, and even if they start as part of a trio on a three-person validation team, they might not actually make it to the final stages. Company builders put their time and money into individuals, not ideas, which means that they only accept the best.
As the founders work together to refine their product or service, weak or unsuitable founders may be replaced by the company builder if they’re not carrying their weight. Startup accelerators don’t have that kind of power – they don’t typically vet the team members or mess with the team makeup. They look at participants as part of a full package, able to be assisted but not changed.
Goodbye Forever or See You Later?
Another crucial aspect of the company builder/accelerator dichotomy is what happens when the program ends. The DJ plays their last track, the lights come up, the cleaning staff gets to work…and then what? Is the party just over? At a startup accelerator, the answer is a resounding yes. When the program ends, the accelerator’s involvement does as well. If a startup got some benefit along the way, great! If not, tough.
Think of a startup like a cyclist. Maybe they’ve got a pretty good bike already, maybe not. They join an accelerator and suddenly find themselves on a top-of-the-line e-bike. They’re going faster than ever before – and it’s way easier, too. Now they’re cruising, feeling good. Suddenly, the program ends, and the accelerator takes the battery out of the bike. Sure, the startup’s still moving – maybe due to momentum, maybe due to a nicer bike – but they’re closer to where they started than where they were in the middle. If they get a flat tire or something breaks further down the line, they’re on their own.
A company builder isn’t so all-or-nothing. They’ll take your existing bike and give it a few upgrades, and they’ll coach you on how to better ride. As you improve as a cyclist, the company builder periodically upgrades your bike even more, little by little. And when the program ends…you get even faster. You’re a better cyclist with a permanently upgraded bike now, and you can increase the momentum on your own. And if you get a flat or break your chain somewhere down the road, the company builder helps you get the repairs you need (and maybe another upgrade as well). The support, network, and knowledge continue on long after a startup graduates from the program, continuing all the way to fame and fortune (or the startup’s graceful exit).
Searching for Success
All else being equal, which gives you the higher chance of success: founding a startup and accelerating it, or going to a company builder? The answer’s tricky, and the data fluctuates a lot from year to year.
Previously, the outlook for accelerated startups wasn’t so happy. A 2020 study based on randomized Crunchbase data indicated that accelerated startups outperformed regular startups by a whopping 2%. That’s nothing! Four years later, a 2024 study found that accelerated startups “were 3.4% more likely (than unaccelerated startups) to raise venture capital.” Unfortunately, that doesn’t move the needle too much. However, the study goes on to say that accelerated startups also “…generated more revenue, hired more full-time employees, and paid more in wages to their employees, on average — indicating that they were scaling faster than their peers.”
Though even the best company builders can’t guarantee success, there’s definitely a higher chance of coming out on top if you’re going to a startup studio – a roughly 30% higher degree of success, actually. On top of that, startups built by company builders exit 33% faster than classic startups.
In the end, both accelerators and company builders are viable, tried-and-true options for ambitious entrepreneurs, though they come with a wide variety of pros and cons. No matter what path one takes, knowing the differences between company builders and accelerators is critical for creating a long-term business plan.
Want to see a startup builder for yourself? Apply now!
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