Startup studios, company builders and parallel entrepreneurs > 10 leading startup studios successfully growing multiple ventures simultaneously
10 leading startup studios successfully growing multiple ventures simultaneously
Following in the footsteps of successful parallel entrepreneur Bill Gross, these startup and venture studios have shown the many different ways it’s possible to grow companies simultaneously.
The many variations include whether the ideas come from the core entrepreneur or external founders, the sources of capital, whether venture teams are fluid or separate, and the degree to which ventures are kept close to the fold or spun off to follow their own path. All combine seasoned founders and emerging tech to identify and solve problems to build highly scalable ventures.
Idealab
Founded by Bill Gross in 1996, Idealab is the phenomenally successful product of Gross’s prescient decision to move from being a serial entrepreneur, limited to one idea at a time, to a parallel entrepreneur engaged in multiple companies.
Twenty-five years on, Idealab had taken on more than 5,000 ideas, leading to 150 companies and 50 IPOs and acquisitions.
The Los Angeles-based company was modeled after Edison Labs as a startup studio – looking for opportunities that are big and broken and then brainstorming technology solutions to fix them. It only spins out its own ideas as opposed to those of other founders, and Gross says around 95% of the ideas are his.
Gross is often credited with having invented Google’s business model. One of Idealab’s earliest successes was pay-per-click advertising pioneer Overture, which IPO’d in 1999 and was acquired by Yahoo! In 2003 for US$1.63 billion.
Rocket Internet
https://www.rocket-internet.com/
Fresh from selling their German version of Facebook to a VC firm for €85 million in 2007, brothers Oliver, Marc and Alexander Samwer started Rocket Internet to build and scale internet companies globally.
Often described as a startup “factory”, the firm says it industrialised the process of building startups in the same way Ford motor company improved the manufacturing production line.
Its model of cloning successful US technology firms for other markets proved so successful it was able to sell 10% of itself to the Philippines’ largest telecoms company in 2014, valuing the firm at €3.3 billion. Later that year it listed on the Frankfurt Stock Exchange with a market valuation of €6.7 billion. The value wasn’t sustained however, and its market cap dropped to €2.6 billion before it announced plans to delist in 2020.
Oliver Samwer says the number one difference between an American founder, a Chinese founder or a founder from Europe or other parts of the world is the latter fundamentally don’t dream big enough.
“Every single one of the top 10 internet companies in America…all of those founders had just a very very big dream.”
Rocket has helped launch more than 200 companies with 36 exits. Some of its bigger names include German online fashion firm Zalando, food delivery service Delivery Hero and meal-kit provider HelloFresh.
Betaworks
Founded in New York in 2008 by former Time Warner exec John Borthwick and former AOL exec Andy Weissman, Betaworks became more focused on company building in 2011 when Weissman jumped ship to work at VC firm Union Square Ventures.
The Build part of Betaworks incubates projects internally and brings in “Entrepreneurs In Residence”, but the group also runs Camps, a three-month in-residence program for founders working in a specific vertical.
The new media focused group counts some big names in its investment portfolio including
Tumblr, Twitter, Gimlet, Kickstarter, Medium and Anchor. It helped build Giphy, Dots, bitly, Tweetdeck and Chartbeat, and typically only supports companies already in beta phase. It has seen more than 50 exits.
In 2020 it launched Betalab, a project designed to fund early stage startups that aim to fix the internet.
HVF Labs
An acronym for Hard Valuable Fun, HVF Labs was founded by PayPal co-founder Max Levchin in 2011.
Levchin started HVF to solve problems with a longer time horizon than the four years he says is typically afforded to VC-backed startups.
The firm focuses on opportunities that create value by leveraging data. It works with a maximum of two projects at a time for a period of 12-24 months, and while its spinouts have not been numerous, they have been notable.
HVF-backed fintech Affirm listed on the Nasdaq in 2021 with a market value of US$23.6 billion.
Expa
The brainchild of Uber co-founder Garrett Camp, Expa started life in San Francisco in 2013 as a “community of builders” with ambition to become a global network of entrepreneurs helping each other build companies.
“Most of these guys could just go and invest and not have to do any work again, but they decided that they wanted to keep building things,” says Expa partner Vítor Lourenço.
Expa spins out both its own ideas and those of other founders, with a three pronged strategy that includes building its own companies, advising founders in exchange for equity, and investing in companies it doesn’t always work with. It focuses on only a few projects at a time.
So far, six of its companies have been acquired, including Gitalytics (by Github in 2019).
Pioneer Square Labs
Both a startup studio and VC fund, Pioneer Square Labs was founded in Seattle in 2015 by Ben Gilbert, Mike Galgon, Greg Gottesman and Geoff Entress.
Gilbert, an entrepreneur who cut his teeth helping Microsoft innovate, also runs the popular tech and VC podcast Acquired.
He says while most people start a company 0 or 1 times in their life, there are a rare couple of percent of entrepreneurs that start two or more. “What that basically means is there is a huge missed opportunity to provide economies of scale to the stuff most startups need to go through in the early days anyway.”
Pioneer Square Labs follows a 5-step process whenever it creates a company, either of its own (around 50%) or in partnership with a founder. Along the path of ideation, validation, creation, spinout and scale up it kills off 9 of its 10 ideas in a bid to ensure only those likely to succeed retain support.
In 2020 it spun out its 25th venture-backed company, derived from a pool of 250 ideas.
High Alpha
Specialising in B2B software-as-a-service companies, High Alpha was founded by former ExactTarget executives Mike Fitzgerald, Scott Dorsey, Eric Tobias and Kristian Andersen in Indianapolis in 2015.
Alongside High Alpha Studio and Capital is High Alpha Innovation, part of a growing trend that sees startup studios working with large companies to combine the speed of a venture studio with the knowledge and scale of a large organization.
In its studio, High Alpha runs quarterly “Sprint Week” where external ideas are tested over a four-day process and employees compete against each other to determine what business the company should incubate.
High Alpha’s studio has so far spun out 24 companies, five of which have been acquired, including student engagement platform ClearScholar, and document generation platform Octiv.
Science Inc
Founded in LA as an incubator and venture fund in 2011, Science Inc spun out 75 companies in its first round, 6 of which were acquired for a collective value of US$1.3 billion
The most successful of these was Dollar Shave Club, acquired by Unilever for US$1 billion in 2016.
Founders Greg Gilman, Michael Jones, Mike Macadaan, Peter Pham, and Tom Dare were early to see the blockchain opportunity, and the firm built an early exchange and Coinbase competitor in 2013. Gilman says it helped that the firm’s electricity was included in their fixed rent at the time, at least until the landlord figured out what was going on.
The group went on to set up Science Blockchain in 2017 – what it says was the first incubator in the world to be funded by its own tokenized compliant securities offering.
The original startup studio now runs a large team in Bangalore and focuses on mobile, marketplaces and select e-commerce investments.
eFounders
Hailing from France and Belgium, Thibaud Elziere and Quentin Nickmans founded eFounders in 2011, and since then have spun out 28 companies.
The group’s focus is on software-as-a-service companies selling to SMEs, and it likes to get involved at the pre-accelerator or pre-venture stage, meaning it typically takes a large equity share of any company it gets behind.
Unlike builders that invite entrepreneurs with ideas to come to them, eFounders pitches its ideas to entrepreneurs, and then builds a founding team to run the project, with it acting as the third co-founder. It then spends 12-18 months with the founders to transform the idea into an early company, and once up and running, pitches the company to early stage investors.
Atomic
Launched in San Francisco in 2012 and gaining the backing of billionaire investors Peter Thiel and Marc Andreessen, Atomic comes up with and vets ideas and then finds founders to build them.
Founder Jack Abraham, who sold his local shopping startup Milo to eBay for $US75 million in 2010, says the group focuses on developing technologies, processes, teams, expertise and playbooks to rapidly test distribution, unit economics and scalability of ideas as early as possible — ideally, before writing a single line of code.
Atomic has tested hundreds of ideas, and more recently has spun out a new company at a rate of one a month. Its biggest success has been telehealth startup Hims & Hers, which was taken public in 2021 at a valuation of US$1.6 billion.
