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Science Inc., the Santa Monica-based startup studio, is getting some more competition. David Carter, who co-founded Amplify.LA, and Allen Hurff, who was EVP of engineering at Myspace during its heyday, have just launched Zuma Ventures, a new early stage startup studio.
“The venture capital model is in a state of flux. We’re experiencing a shift in the investment landscape where traditional venture capital funds are not maximized for a large part of the market,” said David Carter, co-founder and CEO in a statement. “Zuma Ventures’ model is architected for today’s environment. It’s a different way of doing venture.”
Instead of drawing on and developing external companies within a rotating class program, the startup studio model develops companies much like a movie studio. Companies start internally and are built within the support structure of the company. Zuma will provide technical expertise, technology support, will hire early employees, and of course will invest capital.
The allure of a startup studio comes from many factors. Outside the rigid schedule of typical incubators and accelerators, startup studios are able to build companies internally for as long as they feel fit, before pushing those companies out into the wild. The startup studio model also gives more control to heady founders with lots of ideas. Instead of relying on outsiders to bring companies to you, startup studios can build teams around their best ideas. That tends to keep things simple.
“Zuma creates companies internally and is not investing in external companies at this time,” said Carter. “Since we are creating companies internally in our initial phase, there is no need for term sheets, scheduling companies or classes.”
However, the increased involvement of the studio means it will produce fewer companies. For example, in three years of operating, Science Inc. has produced just 14 companies. In contrast, Los Angeles’ newly minted Disney Accelerator has produced 10 companies in the last three months. Accelerators and incubators tend to take a shotgun approach to hits; startup studios believe in quality over quantity, thus their strategy is much more about good aim.
“We have one company in development at this time and plan on creating at least three within the next 18 months,” said Carter.
Moreover, Zuma believes that process and narrow focus will make their work much more efficient and lucrative. “Zuma Ventures is structured to accelerate development and go-to-market,” said Allen Hurff, co-founder and CTO. “The Zuma Ventures team has the experience and know-how to drive a startup through the early stages. We are experts in the startup lifecycle.”
Also in contrast to their incubator and accelerator predecessors, Zuma won’t be focusing on major billion dollar plus exits. Rather, the startup studio believes there is plenty of opportunity for smaller, earlier exits. By focusing on these modest sales Zuma may be able to fill in a part of the market that isn’t being well served by others.
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