Stop Funding Accelerators. Invest in Venture Studios Instead.
The most underwhelming moment for an entrepreneur in a startup ecosystem is the ribbon-cutting on yet another accelerator. Confetti flies, politicians pose, local media snaps a shot of the logo on the wall, and everyone goes home to wonder why venture capital still doesn’t show up. If you’re not familiar with why your region isn’t flush with VC dollars, start here: Why Venture Capital Avoids Your Startup Ecosystem. The short version? It’s not your climate. It’s not your cost of living. You have tech people. And no, it’s not because of a lack of capital.
Venture capital avoids your ecosystem because your region isn’t producing fundable companies.
Before you roll your eyes, be realistic about what makes a company fundable: startups with experienced teams, with unfair advantages in distribution, go-to-market, or technology; scalable business models with early traction; and a meaningful path to exit. Now ask yourself: what part of a local accelerator is delivering that?
Here’s what we know from working with ecosystems across the country: Accelerators usually fail the fundamental tests of venture capital readiness. The accelerator in town likely has a lot of events, they do have a great many people come through, and they do offer panels and talks. We call this “startup theater” because it looks good and as far as your local leaders are concerned (keeping voters happy), it’s probably sufficient to do that. People in my line of work increasingly scratch our heads and wonder why the founders continue to be there.
VCs avoid regions for a few common reasons:
No distinctive deal flow: If your accelerator just picks from local applications, you’re drawing from a shallow, often inexperienced pool. Most founders applying are doing it for the free coworking space and mentorship.
Lack of market-driven focus: Accelerators often run generalist programming. Venture capital, on the other hand, chases market signals. If you aren’t sector-specific, and your startups don’t understand or lead their market, investors don’t care (and shouldn’t).
Over-indexing on pitch training for appearances: Too many accelerators spend more time on slide decks than supply chains but worse, when you look at what they’re doing, they’re not helping any more than polishing the standard pitch deck template. Most have no idea of the psychology behind how an incubator like Founder Institute orients what a team says, and as a result, Demo Days are literally theater. Real traction happens behind the scenes.
No capital leverage: Accelerators rarely commit meaningful capital. Without real skin in the game, they can’t attract co-investors who rely on smart, aligned lead capital.
So, what does that mean? That your region’s shiny new accelerator isn’t really an engine of innovation. It’s a signaling program; one that signals, clearly, that you’re not ready for venture capital. You could argue it’s a sparkplug, a bit of a jolt for the engine, but in and of itself, they tend to fall short because they aren’t an engine.
Invest in Venture Studios: An Actual Business that Builds Startups
Where accelerators recruit startups, Venture Studios invent them. Picture a studio as a startup foundry. It begins with a market problem, not a pitch. Studios validate ideas, hire founding teams, build MVPs, and often pre-sell before launch. They don’t hope a founder walks through the door with a billion-dollar idea, they create the conditions for it.
Unlike an accelerator, a Venture Studio is a business itself.
It holds equity in every company it spins out. It funds early development, shares infrastructure across its portfolio, and earns returns when those companies succeed. Studios typically retain 30% to 70% equity in each venture at formation, acting not like mentors or even investors, but like co-founders.
Funding comes from studio capital, outside investors, or often a dedicated fund. Some partner with corporations; others are funded by previous exits. But all operate on a focused, measured cadence—producing a few high-quality companies each year instead of hoping one out of 100 applicants finds traction.
I was going through some of Morrow’s Global Startup Studio Network work and it would seem venture studios have a success rate of nearly 30% to 60% for their startups reaching scale or exit (compared to 1% for accelerators). That’s not a small improvement. That’s a different game entirely.
Seriously, what the hell are you doing (cities and even investors) not demanding these things are in place?
If you need more academic analysis to support why that works, consider the recent research shared by John-Erik Hassel: Köhler, R., & Baumann, O. (2016) – Organizing a venture factory: company builder incubators and the case of Rocket Internet. Available at SSRN 2700098.
Their analysis of Rocket Internet revealed the not-so-secret behind its startup factory success:
Centralized Control Beats Distributed Autonomy – Unlike incubators and accelerators, venture studios own the venture. They direct resources, strategy, and execution.
Modular Teams and Shared Infrastructure – Venture studios deploy internal HR, legal, product, and marketing teams across ventures, increasing speed and efficiency.
Replication > Reinvention – Startups launch from templates. Novelty takes a back seat to execution precision.
Venture Ideas Come Last – The system comes first: a platform of talent, tools, and tactics. Ideas are plugged in after the infrastructure is ready.
Rapid Iteration and Internal Benchmarking – Ideas are benchmarked constantly and cut quickly when underperforming.
This is not a startup incubator (which should be what you ALSO have for entrepreneurs!). It’s a startup assembly line. The most successful venture studios act like manufacturers:
Process-driven
Outcome-focused
Relentlessly efficient
And if you’re building or evaluating a studio, you don’t need to start from scratch. Recently, Matthew Burris compiled an exceptional resource at Venture Studio Forum: a curated, up-to-date library of real-world pitch materials from across the venture studio ecosystem. This deck bundle includes:
27 Venture Studio Pitch Decks
1 Studio Partner Deck
3 EIR Presentations
4 VC Fund Memos
33 VC Fund Decks
Each resource was sourced through deep Google-fu and updated as of July 31, 2025. Use it to:
See how top studios are positioning themselves
Benchmark your deck structure and narrative
Get insights into how LPs and GPs are presenting their funds
It’s a window into the playbook of the most sophisticated builders and investors in the world. And if that’s not the kind of transparency and benchmarking your region needs, what is?
Why Civic Dollars Belong in Studios, Not Startups
Let’s make this political: If you’re a city, state, or EDC allocating public money to support startups, you have a fiscal responsibility not to light it on fire. Founders will tell you they want capital. But giving tax dollars directly to early-stage startups is a moral hazard. Most will fail. Most should fail. That’s how innovation works.
Here’s why it works for government:
Studios are sector-specific by design. A region wants to be a leader in agtech, clean energy, or medtech? A studio can specialize. It builds what the market lacks.
Studios create durable infrastructure. This isn’t about free panel discussions and pitch nights. Studios build reusable systems (HR, marketing, engineering, customer acquisition) that lower the cost and increase the success rate of startups.
Studios are measurable. You want results? Look at companies formed, jobs created, follow-on capital raised, revenues generated. Studios perform.
Studios attract private capital. They have a track record, leadership, and equity to offer investors, not just a parade of founders asking for checks.
And this doesn’t mean they’re *not* for entrepreneurs with ideas! What they’re doing is specializing, focusing, and developing in the infrastructure, so you don’t have a fintech founder languishing among everyone else with an idea, you have a fintech founder who might be meaningful to the work the FinTech Venture Studio is doing.
The kicker? Venture Studios don’t even need that much from public partners. A lease on a building. A grant to co-fund prototype development. Access to procurement pipelines. This isn’t a blank check to chase dreams. This is civic infrastructure for innovation, built on a proven business model.
Build What Works to help Entrepreneurs Building What Might
I’m working closely with public sector leaders, private investors, and veteran operators who are all recognizing the same thing: we’ve been investing in the wrong things. If you’re serious about economic development, if you want innovation that creates jobs, revenue, and pride in your community, let’s talk about venture studios.
This isn’t hypothetical. It’s working. And if your region doesn’t get there first, someone else will. Let’s build it.