Starting your own company means you are embarking on a journey of unpredictability and tremendous risks. The overwhelming majority of startups fail way before ever reaching product-market fit. Your task as an entrepreneur is to steer through this unpredictability, all while identifying and mitigating risks attached to your venture. After going through this journey with my own startup, I am now employing my knowledge in corporate venture building projects – and realized how important the experience and learnings I have made as an entrepreneur are for the successful execution of those. While this list, on the one hand, acts as a reflection of these learnings, it should also be seen as insights for innovation managers or venture builders who do not have previous entrepreneurial experiences, providing actionable best practices.
1. Understand that you can’t do everything by yourself
One thing I quickly realized as a founder is that it would be highly inefficient if I tried to do everything by myself. Knowing your strengths and weaknesses and finding team members that complement your skill set is crucial. In a startup setting, this meant bringing additional co-founders and advisory board members and later growing the team through new hires.
In a venture-building context, heterogeneous skill sets are often achieved through the collaboration of corporate employees, ideally from various hierarchies and departments and agency team members. In the case of TheVentury, our organization consists of experts in growth marketing, software development and innovation management. The team is most often led by the so-called entrepreneur in residence from the innovation agency.
The most crucial part for the entrepreneur in residence is to unfold the potential of those complementary skill sets to his availability. Similar to managing internal startup teams, in a venture-building context, the team leader has to make sure that they “speak the language” of both worlds, the agency employees and the corporate team members. They are responsible for setting the right incentives to motivate both elements of the newly built venture team. From my experience, the ideal way of achieving this is by having a robust, shared mission and vision, which all people involved are working towards. This is precisely why we at TheVentury work closely with our partners on impactful projects, strengthening the team spirit by working towards a joint mission.
2. Get support from all relevant stakeholders early on
One of the first realizations I have made as an entrepreneur is that the wishful thinking of the startup founder who gets to do whatever and whenever he wants to is (in almost all cases) long over. Especially young startups, with their liabilities of smallness and newness, are subject to numerous dependencies. Whether it is the crucial suppliers that could easily crush the dream of creating a product at realistic market prices, the investors and public funding agencies as primary capital sources, or any other interest group that holds a say in the successful implementation of your idea.
It is the task of the founders to convince those stakeholders that the startup, despite its high risks, is worth spending resources on – even if it is just time that specific stakeholders are spending on meeting with the founders. Other resources that startups may ask for are money, time spent on co-developing the product with suppliers, better conditions for raw materials, lower fees for external consultants, or know-how, for example, shared by potential advisors.
Similarly, in venture building, the venture team, headed by the entrepreneur in residence, is asking for resources from both internal and external stakeholders. For example, the team requests C-level management buy-in to get the necessary funds (monetary and time) allocated to the project. On the other hand, the company owners and/or investors must be convinced that this is a new business area worthwhile pursuing. Depending on the set-up of the venture building project, it might even be the case that new investors should be attracted explicitly for this endeavour.
Going through countless stakeholder meetings taught me how to adapt my pitch depending on the interest group I am talking to. Just like knowing your customers’ needs and problems, it is crucial to understand what keeps your different stakeholder groups up at night and how you can help them solve those problems.
3. Validate, validate, validate
Trusting your gut is great in some situations. When building a company, you don’t want to rely solely on your gut. Quite the opposite – you want to ensure that what you are creating is actually needed by the people out there.
Especially early-stage founders often struggle with coming up with an exhaustive list of their underlying assumptions, seeing many of their hypotheses as proven or having a large extent of implicit suppositions that they can’t articulate and, therefore, also not validate.
At TheVentury, we analyze all of our venture building and innovation projects along the categories of feasibility, desirability and viability, which is a framework guiding you to a comprehensive list of assumptions and hypotheses regarding your innovative endeavour.
However, setting up assumptions is only one-half of the story. To learn your customers’ needs and problems, you must get out of the building and talk to your target group. This is probably the most crucial phase of an early-stage venture, and I have experienced how difficult it can be to ask meaningful questions. A book that helped me to learn the art of asking the right questions during the validation process is Rob Fitzpatrick’s The Mom Test, a great read I can only recommend to anyone embarking on the innovation journey.
Startup founders may be hesitant to talk to others about their ideas, afraid of their idea being stolen. However, as my colleague Valentin, partner and head of startup services at TheVentury, put it in this blog post explaining the most common mistakes startup founders make, the risk of not getting sufficient feedback far outweighs the risk of talking to people about your idea.
The same, however, holds true for corporate company-building settings. That’s precisely why we at TheVentury approach every venture building project with an extensive initial validation phase, where we draw up the key hypothesis for our business and set up meaningful experiments to test these assumptions. If this phase turns out to be successful, we continue with the project and potentially found a separate legal entity. While we have a clear understanding of the direction we want to go in with our project, an open-minded approach towards the concrete solution we will end up with is crucial to not oversee relevant learnings from our validation process. As a result, one of the key tools we are working with is the validation roadmap, which gives an overview of the most essential hypothesis and the experiments to validate those.
4. Learning how to grow an initial idea into a company with highly limited resources
Another key learning I have made as an entrepreneur was how to grow a venture from an initial idea to an actual business with highly limited resources. While venture building projects come with initial budgets, spending the resources available in a highly efficient manner is still crucial to the endeavour’s success.
This resource efficiency can be achieved by identifying and focusing on the core value drivers. Especially at the beginning of a new startup or innovation project, opportunities seem endless. And while exploring those is an integral part of the innovation journey and should not be neglected, it is crucial not to forget to move into the exploitation phase once you thoroughly understand the problem, market and what your solution should look like. In a startup setting, for example, I have experienced plenty of founding teams getting lost in the “competition space”, as I like to call it. Startups, especially such that win pitch competitions/hackathons/etc. early on, tend to apply for yet another competition, even though they should have already been working on other key growth drivers, such as building up a sales funnel, for example.
Applied to a venture building context, that means that key performance indicators (KPIs) should be defined from the beginning onwards to know whether the venture is moving in the right direction. Keep in mind, however, that you can’t define your KPIs once and think that you are set for your entire innovation journey. Following the concept of Lean Analytics, it is crucial to set up the right key performance indicators for the right time in your venture building project’s phase.
It becomes evident that the venture building process, at least in some areas, does not differ too much from the startup-founding process. It requires the same rigorous validation and testing process in both types of innovation projects to derive a successful outcome. While the starting point might be different for startup founders and venture building teams, both with regard to team constellation and initial resources, the core challenges are very similar.
Do you want to learn more about our approach to venture building? Then this is the right sport for you: book a free initial consultation with our expert entrepreneurs in residence now!