Today, startups in Latin America are competing with large platform monopolies for a place in the region's emerging markets. Although LATAM's economy, like much of the developing world, faces many challenges, startups have plenty to be proud of. Entrepreneurs are putting in the work and creating business ventures that deliver results and make an impact in their communities. When building a business from the ground up, entrepreneurs often find themselves with countless decisions to make in order to create and grow companies that can solve real, complex world problems for their customers. Whether it’s looking for funding, mentorship, or an expert team to set things in motion, there’s always a lot to focus on in the startup world.
The GSSN 2022 Data Report anticipates that in the following years, at least 580 new companies will be created, with an average of 23 per studio. The opportunity for growth is limitless, and there is an overwhelming need for the right ecosystem to develop and thrive.
Accelerators and Venture Studios represent two very different business models that offer a host of strategic opportunities and benefits. While accelerators exist to speed up business growth, venture studios aim to create companies from scratch and use their in-house resources to build it up. Whether your entrepreneurial journey involves adhering to a business idea already in the works or bringing your own innovative ideas to the table, both Venture Studios and Accelerators can benefit and encourage your business venture to flourish.
Let’s explore the differences between a Venture Studio and an Accelerator model, their goals, and the benefits they each offer to new and experienced entrepreneurs.
In 2021, Latin America became one of the fastest-growing regions to take part in venture funding, investing an estimated $19.5 billion in up-and-coming startups. Although Venture Studios have become increasingly popular, Latin America has yet to capitalize on the many benefits the Venture Studio model has to offer. With roughly 560 venture studios across the globe, there are but a handful of Studios in Latam, Polymath being one of the pioneers in the region's developing economy with a building thesis focused on creating companies that serve Latin America’s middle-class.
But what differentiates venture studios from the other models?
Some credit the success of Venture Studios to their unique attributes that directly benefit fresh entrepreneurial talent. The Venture or Startup Studio model is often the best choice for new and experienced entrepreneurs alike because its goal is to build a startup from the ground up. New ideas are explored and backed up by methodology, operational support, and funding that help launch scalable startups.
By utilizing an in-house expert team, Venture Studios focus entirely on managing routine operations and making strategic decisions that will help kickstart and grow a new business. Startups are born, validated, developed, and accelerated all from within the studio, and although mentorship is an essential part of the Venture Studio model, there is a greater focus on achieving product-market-fit through operational support.
Contrary to accelerators, where the application process can be rigorous and acceptance rates are often low, Venture Studios draw from the talent and skills of their in-house teams and center on designing companies through intensive research, the implementation of business thinking, and iteration. At Polymath, the design process for each venture is of utmost importance. We make it our priority to assemble teams with talented, skilled, and experienced individuals committed to the needs and values of each startup. We are pioneers in applying human-centered design methodologies to build companies catered to LatAm’s middle-class.
In regions such as LATAM, one of the biggest obstacles startups face is finding the capital to get their companies up and running. Venture Studios offer networking opportunities for founders to raise their rounds by introducing them to capital investors and assisting them in the creation of their financial terms. As a result, funding support is easily accessible to startups throughout their lifecycles.
Accelerators have one main goal – to help early-stage startups scale and get their product to market as quickly as possible. For them, mentorship and investor access to accelerate growth are pivotal.
While venture studios create companies from very little, startups invited into accelerator programs usually have an established product even if they are not at a full product-market fit stage yet. As a result, accelerator programs can be valuable because their focus is to bring investors and startup founders together to facilitate fast innovation and venture success. The Silicon Valley-based Y Combinator, founded in 2005, is the first and most famous accelerator in the startup world. Hundreds of other accelerators such as 500 Startups and Platanus Ventures have broken out in LATAM and across the globe following its success.
One of the main advantages of joining an accelerator program is that they offer startups a structured expert mentorship program and professional support. This limits costly mistakes that can be detrimental to new LATAM businesses trying to scale up in the emerging economy. Working with experienced industry players can help new startup founders identify discrepancies in their team’s skillset, reducing the learning curve, and placing their startups at a higher advantage against competing companies.
Additionally, accelerator programs are great at providing positive signaling for new businesses. Not all accelerator programs are created equal; however, going through a prestigious accelerator program can show potential investors that your startup has faced some critical hurdles and managed to overcome those.
The Latin American emerging market can be tricky to navigate with political and economic risks that often present challenges for investors and entrepreneurs. For that reason, it is essential to find the right ecosystem and business model that will allow your startup to thrive. Whether you are looking to build from the ground up or scale your business quickly, it will depend on what your priorities are.
As pioneers of venture studios in Latin America, we are committed to strengthening the region's entrepreneurial ecosystem. Learn more about how we are building startups in developing economies here.