In the past 11 years, eFounders has refined the startup studio model in Europe. The company has helped launch more than 30 different startups, including three unicorns — Specifications, Air call and Front side.
While things seem to be going well for the startup studio, eFounders is running — more or less. Starting today, eFounders Hexaa holding company of several startup studios.
You could have seen this change coming as eFounders have not been only eFounders for a while. In addition to the initial studio focused on the future of work, eFounders has already launched two new studios: Logic founders for fintech startups and 3 founders for web3 startups.
Hexa will run three different studios: Logic Founders, 3founders and, yes, eFounders. So what happens to eFounders then?
“I started writing a LinkedIn article saying it’s the last time I write as a founder of eFounders,” Thibaud Elzière, co-founder of eFounders, told me. But he’s not going anywhere as the core eFounders team will now simply work for Hexa.
As with Hexa’s other studios, there is a dedicated eFounders team that includes a studio head and a core team of product people. Matthieu Vaxelaire is now at the helm of eFounders.
Combined, Hexa companies have hired 3,000 people and have reached a total valuation of $5 billion. And Hexa is not going to change its formula in the future. Hexa’s startup studios match an idea with a founding team.
The studio team then provides resources and assistance to launch a product. After raising some money, startups gain their independence and the startup studio can move on and focus on new projects.
“We have reached a limit when it comes to scalability. It’s a virtuous model, but it’s also very handmade,” Elzière told me. In addition to supporting Hexa’s existing studios, the company wants to launch studios around new industries, such as climate, education and health.
But it will depend on the heads of the studio they meet and eventually hire. Hexa wants to launch two new studios next year.
“It’s a crazy bet for us. We create a brand from scratch. And we do that because eFounders is a strong brand when it comes to SaaS startups, but also because eFounders outperformed other studios,” says Elzière.
An interest of 30%
“What we do with Hexa is that we democratize team entrepreneurship. We offer an alternative to traditional entrepreneurship,” says Elzière. “Like many things in life, it works better when you work as a team.”
But that doesn’t mean that Hexa and its startup studios are launching new startups for fun. They take a significant stake in every new startup.
“We want to launch more startups. But it costs us about 800,000 euros to start a business. We can invest some money ourselves, or we can set up a small fund like Y Combinator. Investors could contribute and they would end up on the dressing table.”
When Hexa’s startup studios launch a new startup, they try to maintain a 30% stake in the company after raising a seed round. With outside investors, Hexa could reduce its stake to about 25%, and investors would get 5%.
Hexa’s self-interest would be split between Hexa and each startup studio. “You would have 5 to 10% that would be allocated to the head of the studio and their team,” said Elzière. The bottom line is that Hexa and its partners would still take a 30% stake. Then it would be split between multiple partners.
“That deal may seem a bit unfair,” said Elzière. But he thinks eFounders’ track record speaks for itself. With about 3 unicorns out of 30 portfolio companies, entrepreneurs are more likely to create a unicorn with the help of eFounders than without. Essentially, founders may be able to get a smaller portion of a larger cake.
The life and death of startup studios
But where exactly does Hexa come from? It comes from the hexadecimal numbering system. In particular, hexadecimals are used to represent binary digits (0 and 1) in computer programming. Each hexadecimal character represents a sequence of four binary digits.
“For me, it’s the simplest expression of the human-machine interface,” said Elzière. As a bonus, hexadecimal characters are also used by designers for color coding.
He believes that startup studios will operate just like startups. Some of them will thrive, others will fail. “Studios have a certain lifespan. At some point they will run out of steam because the head of the studio will no longer be there or there will be no more opportunity,” said Elzière. As always, we will judge the quality of Hexa’s work by the new startups emerging from those studios.