Entrepreneurs, What Are Your Funding Options?

Angelina Yang
3 min readNov 20, 2023

YCombinator just wrapped up its W2024 application round. If you’ve applied, how did it go? 🤓

While many startup founders turn to accelerators for product-market fit and initial capital, there’s an alternative for those still exploring the right idea or assembling a team — Venture Studios.

Unlike traditional funding models, Venture Studios incubate their own ideas, develop a minimum viable product, establish product/market fit and early customers, and then bring in entrepreneurial founders to lead and scale the business.

Notable companies born out of Venture Studios include Twilio and Moderna.

If you’re stepping in to manage and scale the startup, you significantly mitigate early-stage risks. However, this often comes at a cost, with Venture Studios taking anywhere from 30% to 80% of the equity.

Contrary to the conventional startup journey of the following steps: 🚀

  1. Coming up with an idea
  2. Forming a team
  3. Starting to test MVP
  4. Raising seed funding
  5. Obtaining venture capital

Accelerators and venture studios offer a unique path for you.

The “safer” options

Incubators, accelerators and venture studios, serve as viable options to mitigate the risks of early-stage startup failure by assisting founding teams in discovering product-market fit and securing initial capital.

Prominent examples like Y-Combinator, Techstars, or 500 Startups, represent accelerators, typically offering intensive 6–12 weeks bootcamps on a cohort basis. These programs seek founders with technical or business insights and a cohesive team. Accelerators furnish these teams with technical and business expertise while connecting them to a robust network of fellow founders and advisors. The culmination of these programs is a “demo day,” where each startup pitches their company to venture capitalists and angel investors. In some cases, accelerators provide initial funding themselves. In return for participation, startups typically relinquish 5% to 10% of their company’s equity.

With thousands of accelerators worldwide, most operate on a business model geared toward selecting startups capable of generating venture-class returns, aiming for valuations in the billions. Admission to most…