In the startup world, founders have more pathways than ever to launch and grow their businesses. Venture studios, incubators, and VC funds are some of the most common models, but they’re often confused. Each plays a different role in a startup’s journey, and understanding how they work can help you choose the right support at the right time.
After reviewing real-world examples, startup reports, and founder experiences, this article breaks down how each model works, how they differ, and when they are most useful.
Venture Studios Create Startups From Scratch
Venture studios don’t wait for external founders to pitch them ideas. Instead, they come up with startup concepts internally and build them in-house. The studio handles early research, product development, branding, and even hires founding team members.
The goal is to create multiple startups each year, test them quickly, and scale the most promising ones. Studios usually retain a large share of equity in the companies they build and stay involved long term. This model offers strong support but less ownership for incoming founders.
Example: Atomic is a top venture studio that co-founded companies like Hims and Bungalow. It provides full support, from engineering to legal, giving startups a strong foundation.
Venture studios are still relatively new compared to incubators and VC funds. Globally, there are estimated to be 500–700 venture studios, while there are thousands of VC funds and incubators. This model shows how investors are moving earlier into the startup lifecycle, often building startups from scratch so that investment and company creation happen simultaneously. Venture studios also reflect a growing trend of investors getting involved earlier in the innovation process, from the ideation phase onward. Unlike traditional VC funds that invest after a product or business model is validated, venture studios combine capital and company creation at the same time. This trend shows how the line between ‘builder’ and ‘investor’ is increasingly blurred.
Incubators Help Early-Stage Founders Shape Their Ideas
Incubators are designed for individuals or teams that already have a startup idea and need help turning it into a viable business. They typically offer mentorship, training sessions, office space, and sometimes small amounts of seed funding.
Most incubators run structured programs that last a few months. Founders join a cohort, attend workshops, get access to experienced mentors, and leave with a more developed product and pitch. The equity taken is usually minimal, and the focus is more on growth than ownership.
Example: The Founder Institute helps first-time founders get started by providing a step-by-step curriculum, access to a network of mentors, and feedback from experienced entrepreneurs.
VC Funds Invest in Startups That Are Ready to Grow
Venture capital funds work differently. They invest money into startups that already have a product, some traction, or a proven business model. VC funds are made up of pooled capital from outside investors called Limited Partners (LPs), and they typically take minority ownership in startups.
VCs don't build startups or run structured programs. Instead, they provide funding, advice, and connections to help companies grow faster. Founders usually seek out VC funding when they need to scale operations, expand into new markets, or hire aggressively.
Example: Andreessen Horowitz is a leading VC firm that has invested in companies like Airbnb and Coinbase. It provides both capital and high-level strategic support.
Key Differences Between Venture Studios, Incubators, and VC Funds
When they get involved:
Venture studios come in at the idea stage. They build startups from zero, often without an external founder involved at first.
Incubators support startups that are just beginning and need help shaping their ideas.
VC funds invest in startups that are already operating and need capital to grow.
How they operate:
Venture studios act like co-founders. They are deeply involved in building the company and typically stay long term.
Incubators act as mentors and program hosts. They guide founders through the early stages but usually step back after the program ends.
VC funds act as investors. They fund startups, join boards, and provide access to additional resources.
What they offer:
Venture studios provide internal resources, team members, capital, and strategic direction.
Incubators offer mentorship, training, and sometimes small funding or services.
VC funds offer larger amounts of capital and help with scaling strategies, fundraising, and hiring.
Equity expectations:
Venture studios usually take a significant equity stake, often ranging from 30 to 80 percent depending on how much they contribute.
Incubators take a small equity stake, often around 5 to 10 percent.
VC funds typically take between 10 to 30 percent, depending on the round and valuation.
Which Model Is Right for You?
The right model depends on where you are in your startup journey.
If you want to build a company but don't yet have an idea or team, a venture studio could be your best option. You’ll get full support, but you’ll share more equity.
If you have a startup idea but need help turning it into something real, an incubator is a great choice. You'll learn, build, and grow with peers, while keeping most of your ownership.
If your product is live and you're looking for funding to expand, a VC fund is the natural next step. You’ll raise larger sums in exchange for equity and get access to high-level strategic support.
Final Thoughts
Venture studios, incubators, and VC funds all aim to build successful startups, but they approach that goal in very different ways. Choosing the right one depends on your stage, goals, and how much ownership or involvement you’re willing to trade for support.
For founders who understand these differences, the startup journey becomes clearer and more strategic, and the chances of building something meaningful increase significantly. As more investors move upstream, the choice of partner; whether studio, incubator, or VC, is more strategic than ever.