Venture Studios: The Next Big Thing for Regional Growth, Innovation, and Resilience
From Startup Deserts to Innovation Engines: Building Companies Instead of Chasing Them
For decades, regional economic development strategy in the U.S. centered on a familiar playbook: attract a major employer, offer incentives, build a business park, cut the ribbon. But the landscape has changed.
Today, job creation is increasingly driven by smaller firms, innovation is decentralized, and talent no longer flocks to coastal hubs by default. Instead of luring yesterday's employers, regions are learning to build tomorrow's companies.
And one model stands out for its alignment with this shift: the venture studio.
In places like the "Big Country" region of Texas—home to four universities, a military base, and a growing population of technically trained workers—there is no shortage of raw materials. Yet as local economic developer Michael Bob Starr put it, the region is still "a startup desert" with "no founders, no angel investors, and no startups."
The problem isn't talent. It's translation. Despite world-class research and community energy, most regions lack the early-stage infrastructure to turn ideas into companies.
Incubators and accelerators help some, but their hands-off models struggle in ecosystems without a dense founder base or venture capital culture. As Starr asked when exploring options for his region: "Do we start with an incubator—or build a venture studio first?"
From the Venture Studio Forum's perspective, the answer is clear: a venture studio is the only model where you can control the outcome and ensure success from the start.
The Rise of Startup Ecosystems
The evolution of regional economic development has been significantly influenced by the emergence of startup ecosystems and venture studios. Historically, economic development strategies primarily revolved around attracting large corporations and investment, often overlooking the potential of small businesses and entrepreneurial ventures. However, the landscape began to shift in the mid-1990s when many economies recognized the vital role that startups play in driving economic growth and innovation.
During this period, numerous regions started implementing policies aimed at fostering a conducive environment for startups. These policies included tax incentives, incubator programs, and support for venture capital, which collectively aimed to enhance local entrepreneurship.
Notably, the advent of technology-driven businesses during the dot-com boom catalyzed this shift, highlighting the potential of startups to create jobs and stimulate economic activity.
As a result, startup ecosystems emerged as critical drivers of economic growth, characterized by a network of organizations, individuals, and resources that support startup development. Regions that embraced these ecosystems witnessed accelerated innovation, economic diversification, and job creation, thereby transforming their economic landscapes.
The Venture Studio Model
The venture studio model, which emerged more recently, represents an evolution in how startups are conceived and developed. Unlike traditional incubators and accelerators that provide varying degrees of support to external startups, venture studios create companies from the ground up by developing ideas in-house and pairing them with founders to build businesses.
This model has gained traction as a method to enhance local economic resilience, particularly in underserved areas where economic development initiatives focus on localized impact.
By leveraging the expertise and resources of venture studios, regions can cultivate a robust startup ecosystem that not only drives innovation but also addresses specific community needs through mission-aligned entrepreneurship.
A Studio Isn't a Service—It's an Engine
To understand what makes venture studios powerful, we must first be clear about what they are—and what they are not.
A studio is not a co-working space, accelerator, or outsourced product shop.
Paul O’Brien, a public policy advisor working with state and federal leaders, explained: "Something like a venture studio makes a hell of a lot more sense for cities to be behind... and yet they get behind accelerators or funds instead—because they don't know the difference."
Studios build startups from scratch. They operate as entrepreneur, investor, and operator—identifying opportunities, recruiting teams, providing capital and operational support, and guiding each venture from "0 to 1."
This model is especially powerful in regions where early-stage venture activity is sparse, because studios don't rely on deal flow—they create it. By systematically identifying market opportunities, designing ventures in-house, and recruiting talent to lead them, studios act as company generators rather than company selectors.
Traditional economic development strategies depend on attracting existing businesses through incentives, tax breaks, and infrastructure investments. This approach treats innovation as a zero-sum competition for existing resources. Venture studios flip this dynamic by building new economic assets from scratch, creating value rather than redistributing it.
The systematic approach to company creation offers particular advantages for regional economies caught in a cold-start trap, where a lack of investable startups discourages investor participation, and the absence of early capital discourages new company formation. Studios break that cycle by seeding the pipeline from scratch, giving local investors something concrete to engage with and giving entrepreneurs a launchpad they wouldn't otherwise have. In doing so, they become the ignition switch for dormant ecosystems—turning potential into velocity.
Quality Control in Entrepreneurship
Venture studios introduce a systematic approach to quality control in the creation of new companies. By applying rigorous methods to the entrepreneurial process, these studios aim to reduce the inherent risks of launching new ventures. This involves not only providing initial funding but also offering strategic guidance, operational support, and access to a network of resources, thereby enhancing the chances of success for new startups.
The model encourages a structured development process that allows founders to concentrate on building their businesses without becoming overwhelmed by the complexities of team building, fundraising, and operational setup.
Furthermore, studios represent a transformative approach to entrepreneurship that seeks to mitigate the traditional risks associated with startup formation. Historically, the startup ecosystem has operated under a high-risk, high-variance paradigm, often accepting failure as a natural consequence of innovation. This is exemplified by the venture capital industry, which funds a multitude of startups with the understanding that only a select few will yield significant returns, a phenomenon known as the "power law" distribution in investment outcomes.
Venture studios, by contrast, apply a repeatable set of company creation best practices—rigorous idea validation, embedded operational support, centralized resources, and staged capital deployment—to improve the average quality and survivability of ventures. Instead of betting on outliers, studios focus on increasing the baseline success rate across a portfolio of ventures. This model offers regional ecosystems a way to generate more consistent outcomes, reduce capital waste, and build institutional knowledge that compounds over time. In effect, studios shift early-stage entrepreneurship from gambling to engineering—trading the volatility of the power law for a higher batting average rooted in disciplined design.
Beyond Unicorns: Local Wealth Through Cash Flow
One of the most important shifts in studio thinking is a move away from chasing unicorns and toward building durable, cash flow-positive companies.
"The goal isn't always the next Facebook," says JT Benton, head of community and growth at Venture Studio Forum. "Sometimes the better outcome is a patchwork of thriving small businesses that create jobs and financial stability. The math is often better too."
This approach flips the traditional venture capital model—dependent on a few power-law hits—on its head. In regions where the capital stack is shallow, and liquidity events are rare, profitability is the path to resilience.
And as one regional observer noted, that kind of venture creation aligns with the culture of many regional economies: "We have a very generous, mission-driven, faith-based community. Supporting innovation in sectors like agtech, clean tech, and social impact feels like a fit here."
One Montana-based economic development leader underscored this point when discussing a new approach for his community.
Facing budget cuts and reduced staffing, he saw value in the structured path that a venture studio could provide: "Something that's easier to chew on than a massive project... the timing feels right for something like this."
Rather than chasing silver bullets, he is looking to "go to a much more revenue-generating stance," realigning staff to create net new economic output—whether in agtech, industrial tech, or manufacturing.
And in places like Montana or West Texas, the goal isn't just jobs. It's institutional capacity. As one policy expert noted: "Most cities have coworking. That doesn't make them a startup hub. Studios provide the full stack: idea generation, company creation, and talent development all under one roof."
Studio Design Is the Economic Development Strategy
The Venture Studio Forum has developed a framework for defining studio design across three core roles: founder, investor, and operator. This clarity helps distinguish studios from their better-known cousins—accelerators and incubators—and enables targeted public and philanthropic support.
As renowned venture studio researcher Matthew Burris puts it: "The most dangerous answer to 'Do you know what a venture studio is?' is 'Yes'—because most people think they do, but they don't. A studio is a company that builds companies, playing in these three roles. If it's not doing that, it's not a studio."
By mapping the Venture Studio Index—a set of criteria for evaluating a studio's thesis, governance, capital stack, talent pathways, and outcomes—the Forum aims to define the asset class for public, private, and philanthropic investors.
Practical Implementation Framework
Regional leaders contemplating venture studio development must understand that successful implementation requires systematic, bespoke design tailored to local ecosystem characteristics. The core principle underlying all effective studio development is serving the four critical customer constituencies: studio investors, internal staff and founders, external entrepreneurs, and follow-on capital sources. The model works when every required customer can confidently say yes to participating in the studio's value creation.
Phase 1: Thesis Development and Market Assessment (3-6 months)
The foundation of any successful studio lies in developing a thesis that creates an economic engine capable of generating sustainable returns. This is fundamentally about understanding your market position and defining the unique advantages your local ecosystem can leverage within the context of they types of businesses you aim to build and back within the venture studio.
Core Activities:
Define specific investor profile and return expectations
Assess local competitive advantages and ecosystem assets
Identify target entrepreneur profiles that align with regional capabilities
Map potential follow-on capital sources and their requirements
Identify and engage target leaders for the studio as early as possible
Understand potential partners and ecosystem capabilities that can be embedded into the studio model
Establish measurable success criteria beyond job creation metrics
Studios begin with outcome-oriented thesis development that defines how the studio will play its entrepreneurial, operator, and investor roles. This overall thesis encompasses several sub-theses around market focus, company creation approach, and value delivery mechanisms. The capabilities and team operating the studio must reflect these theses and bring demonstrable strength in the required areas.
This comprehensive studio thesis and approach must then align with the four customer constituencies. The four-customer framework serves as a studio design evaluation tool ensuring that all stakeholders can participate successfully in the studio's value creation model.
The critical deliverable from this phase is a coherent thesis that explains exactly which types of companies the studio will build, why the local ecosystem provides advantages for building them, and how all stakeholders benefit from the model.
Phase 2: Infrastructure Development and Team Building (6-9 months)
Building the operational capability of the studio drives forward based on the established thesis, but will likely evolve the thesis as the team and infrastructure shift from concept to reality. There is no one-size-fits-all model for venture studios—the studio operations, activities, and team required are a direct reflection of the thesis, the work being done in the region, and the specific companies being created.
Key Components:
Recruit leadership team aligned with studio thesis and target market
Develop systematic validation and company creation processes
Establish shared operational resources (legal, finance, technology)
Build relationships with follow-on capital sources
Create measurement systems for the four customer constituencies
Successful studios focus on building repeatable systems rather than one-off company support. The operational model must balance serving entrepreneur needs while maintaining efficiency for investors and attracting follow-on capital. Capital allocation typically ranges between 40-60% to direct company building. The remaining allocation supports direct investments into the companies and investment capital.
Phase 3: Company Creation and Portfolio Development (Ongoing)
This phase focuses on turning on the studio and making it active. Initially, this involves a learning phase as the studio begins executing its systematic company creation processes.
Operational Focus:
Execute systematic company creation following established thesis
Maintain cost efficiency while delivering value to entrepreneurs
Build track record that attracts higher-quality follow-on capital
Iterate on processes based on portfolio company outcomes
The sustainability of this phase and ongoing operations depends entirely on driving economic returns and creating value through building companies.
Critical Success Factors
Bespoke Design Requirement: One-size-fits-all studio models consistently fail because the raw materials available in each region differ significantly, and the thesis driving each studio is different. Successful studios require customized design based on local assets, market conditions, and stakeholder objectives.
Four-Customer Alignment: The studio must explicitly define and serve its investor base, internal team, entrepreneur partners, and follow-on capital sources. Misalignment with any constituency creates systemic risks that compound over time.
Minimum Operational Runway: Studios require sufficient capital to systematically test and refine their model while building initial portfolio companies. The specific amount varies based on thesis and target market.
Regional Competitive Advantages: Successful studios leverage genuine local advantages rather than attempting to replicate models from other ecosystems. These advantages must translate into meaningful benefits for company creation.
Implementation Considerations
Regional leaders should evaluate studio readiness across three dimensions:
Market Position: Clear understanding of local competitive advantages and how they translate into systematic company creation benefits.
Resource Alignment: Sufficient committed capital and experienced leadership to execute the chosen thesis over multiple development cycles.
Stakeholder Commitment: Genuine alignment among key stakeholders on objectives, timelines, and success metrics beyond traditional economic development measures.
The goal of this framework is to provide economic development groups with sufficient understanding of studio development complexity that they can effectively evaluate consultants and service providers. Any implementation partner that does not emphasize bespoke design and the four-customer framework should be approached with significant caution, as these elements are foundational to the studio model's success.
Building for Resilience
Venture studios enhance economic resilience by creating companies purpose-built for local needs while providing structured support in volatile markets. Unlike traditional economic development models that depend on external decisions, studios integrate talent, capital, and infrastructure in a single entity, reducing innovation risk through hands-on governance and operational support.
Research published in Economics Studies and Banking Journal demonstrates that entrepreneurship serves as a key component of economic resilience, with entrepreneurial ventures acting as crucial sources of innovation during economic crises by exploring innovative ways to maintain operations and adapt to changing conditions. This systematic approach to company creation enables regions to navigate economic shocks more effectively by maintaining control over innovation processes rather than depending on external investment flows or corporate relocation decisions.
The studio model's distinctive advantages for regional resilience include:
Systematic company creation that generates consistent, purpose built deal flow for the local ecosystem rather than waiting for entrepreneurs to emerge organically
Integrated support infrastructure that reduces the time and capital required to reach viability
Local ownership and control that keeps intellectual property and decision-making within the region
Risk mitigation through process that improves baseline success rates across multiple ventures
Studios don't just spin out companies. They build the muscle memory for ongoing innovation. In a world where disruption is constant, that capability is no longer optional. It's the foundation of a resilient economy.
The implications extend beyond individual startups to broader regional economic architecture. By systematically building companies rather than attracting them, regions develop self-reinforcing innovation capabilities that strengthen with each cycle. This approach transforms economic development from a zero-sum competition for existing resources into a value-creation engine that generates new economic assets—precisely the kind of institutional capacity that enables regions to thrive regardless of external economic conditions.
Building for the Future
In a world where disruption has become the norm rather than the exception, the ability to systematically create and support new ventures represents more than an economic development strategy—it's the foundation of regional resilience.
Traditional economic development models that depend on external validation and investment leave regions vulnerable to decisions made elsewhere. When successful companies relocate for later-stage funding, when external investors withdraw during market downturns, when corporate headquarters consolidate operations, regional economies suffer the consequences of strategies built on dependency rather than capability.
Venture studios offer a fundamentally different path. Unlike approaches that depend on attracting existing businesses or hoping local entrepreneurs will emerge organically, studios systematically build the infrastructure for ongoing innovation. They create local ownership, develop regional talent, and build on existing industrial advantages. They generate returns across multiple exit scenarios rather than depending on unicorn outcomes.
Most importantly, they create sustainable innovation ecosystems rather than branch plant economies vulnerable to external decisions. The regions that embrace systematic company creation today will build competitive advantages that external competition cannot easily replicate. Those that continue pursuing traditional attraction strategies will remain dependent on decisions made elsewhere.
The choice facing regional economies isn't whether to pursue innovation-driven development—it's whether to build innovation capabilities or bet on attracting them from elsewhere. The evidence is clear that building rather than betting offers the more sustainable path to regional prosperity.
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