Startup Labs 101: What every tech entrepreneur needs to know

By Editor March 23, 2016

One of a startup’s biggest problems is its rocky ascent to success. With countless roadblocks along the way, it’s not uncommon for a startup to falter to the point of folding before it has ever reached even the simplest of business goals. The rub is that a startup likely has the ideas to take it straight to the top, but it’s also likely that the company lacks the business skills to make it truly successful. Moreover, startups don’t necessarily face the same issues other business models do – although finances may plague more than less — with troubleshooting having now entered unchartered territory.

In one of business’s most fickle markets (and with no certain or proven path to success), startups must ask themselves: How to successfully break into technology’s most competitive business without any true business experience? The solution: Startup Labs.

What is a Startup Lab?

A Startup Lab invests guidance, strategy, and takes equity in a carefully selected collection of early and seed stage startups. Led by a powerful team of entrepreneurs that takes a major role in the entire lifespan of the seed stage startup, a Startup Lab provides the backbone for its startups by building and developing a strong foundation. With services ranging from branding to technology to marketing, labs also guide the company to a successful investment and ultimately a strong exit. Some more experienced Labs may also have a major talent pool available for use by its companies, as well as develop and build their own products.

How does it work?

A company pitches an idea to the Startup Lab and if the Lab deems the idea viable, then the idea is accepted and the framework for the project is created. A talented group of specialists including engineers, designers, financial analysts, and lawyers are assigned to develop various facets of the company’s framework. Depending on what a startup needs, the cost and equity share will vary — ranging from a full scope of projections, a business plan, and modeling, to a simple consulting partnership. The Startup Lab usually takes equity in return for talent that is dedicated to the company.

Why does Silicon Valley/Alley need them?

Right now, Silicon Valley has a highly creative pool of talent, but there is a blaringly obvious missing link between creativity and business. Startup Labs get involved in the life of the company and become its business partner from all angles, which increases its likelihood of succeeding. Labs provide guidance and expertise, making the startups more attractive to venture capitalists. The seed stage startups also save time and money while increasing efficiency because Startup Labs have the knowledge and tools for real success.

Silicon Valley is a breeding ground for ideas. Ideas can only come to life with a successful path to development and beyond. With the investment climate consistently growing in new technologies, investors want to ensure that their venture is reliable. Startup Labs establish a confidence between the investor and the seed stage startup that the idea will be both disruptive and successful.

How does this help startups? VCs?

The Startup Lab decreases risk by providing a strong structure, which yields good investment potential. Startups tend to have an uncertainty factor associated with them because often times a good idea can be stifled by a poor business or marketing strategy. A Startup Lab is experienced and knowledgeable about what makes a brand successful, thus diminishing the uncertainty factor when the company is being developed and the timelines are being set.

What does the state of the Startup Lab industry look like right now?

The Startup Lab industry is evolving and gaining a strong reputation. In a landscape that also features incubators and accelerators, Startup Labs are creating an industry of their own. Instilling knowledge, tools, and opportunities in the companies they work with, they are becoming a very strong choice for startups to launch successful brands.

Where are Startup Labs currently growing?

There has been a noticeable growth and expansion of Startup Labs in Southeast Asia in countries such as Vietnam, Philippines, and Singapore. With a plethora of new talent being unearthed constantly, Southeast Asia is becoming a hub for establishing Startup Labs. The same can be said for Eastern Europe, where an array of designer and developer talent is coming out of the woodwork; creating a lucrative environment for successful startups. Other areas include the east and west coast of the U.S.

Why is it better to work with a Startup Lab over the alternatives?

What really sets a Startup Lab apart is that the entrepreneurs running the Lab take a genuine role in the company. It is not just a workspace with an advisory panel; a Lab is a dedicated team of specialists that is working consistently to build the brand as though it were their own. There are various options a startup can consider when beginning a project, ranging from incubators to accelerators to web development and branding agencies. However, none of these take as much of a hands-on role and investment as a Startup Lab when it comes to developing the product and making it attractive to investors.

Where are Startup Labs headed? What does the future look like?

The future of Startup Labs is heading towards a major expansion. As global talent discovery continues, Startup Labs will begin to churn out their own ideas. Down the road, this may lead to a potential metamorphosis of Startup Labs into powerful institutions of capital and knowledge that build ideas.