Venture Building – does it ring a bell? By now, probably most people would say yes. Though, like with many other topics with a certain level of complexity, your bell might have a very different tone than someone else’s. This blog focuses on giving you an overview and explains what Venture Building is, why it could be relevant for your organization, how to go about it and much more. Let’s get started!
Venture Building is a means of intentionally and methodologically exploring fields of opportunity with the goal of founding a new, self-sustaining business.
Venture Building is a means of intentionally and methodologically exploring fields of opportunity with the goal of founding a new, self-sustaining business.This usually happens in the form of venture studios, companies that focus on founding new ventures themselves, or as a Corporate Venture Building endeavor. In the context of this article, we’d like to focus on the latter. Typically, Corporate Venture Building happens through a partnership between a corporate and a separate Venture Builder, like TheVentury. Both bring their unique strengths into the venture to create an unfair advantage and a great starting ground.
As mentioned, we want to help you demystify Venture Building. Therefore, this article will answer several key questions about the topic.
- Why should you consider Venture Building?
- What is the intended outcome of Venture Building?
- How long does it take?
- Who operates the venture?
- For what type of innovation is it?
- How can I get started?
Let’s get right into the first one! Shall we?
Why should you consider Venture Building?
New things are uncertain, risky and can fail sometimes. While corporates usually master the skill of exploitation, structures are not necessarily made for constantly exploring new business opportunities. Still, to be able to sustain a leading position, corporates must have the capabilities to do both and that—at the same time. This is where Venture Building comes into the equation. It offers corporates a way to be ambidextrous and not only to be efficient with core operations but also to master exploration with the help of partners.
As a corporate with a distinct reputation and focus, it might be a worthwhile option to launch new products and services under a different brand name. Generally, the corporate can still be connected to the new venture if you decide to do the research through shareholder structures, invoices, etc. Still, from an outside perspective, the connection is not immediately evident.
Lastly, purposefully placing the operations of a venture outside an organization ensures a faster and nimbler environment for the future company to thrive and learn fast. The usual Venture Building setup allows us to work outside corporate structures and decision-making processes, using all the advantages that come with it while still accessing vital corporate services like accounting, legal, HR and more.
What is the intended outcome of Venture Building?
As mentioned, most of the time, the ultimate goal of it is to build up a separate legal entity. This does not only has many practical advantages, but in the case of a shared risk approach (the Venture Builder participates in the risk, therefore gets a piece of the cake), it might even be necessary.
It builds an excellent foundation for a new venture to have a healthy disconnect from the corporate venture partner while still being able to access all the benefits of their ecosystem, resources, and reputation (if needed and wanted).
For the corporate, the outcome of Venture Building ultimately results in a portfolio of new, self-sustained Ventures that open up new technologies, markets, or target groups.
How long does it take?
How long does it take to build a company? Fair question, but tough to answer. Usually, we aim for approximately 12 months to go from the initial spark to reaching at least a problem-solution fit, scratching product-market fit. The latter might occur even later, or potentially never, under certain circumstances.
Problem-solution fit happens when you find a solution for your target audience and their problem that you identified and estimated in size beforehand. The product-market fit, however, describes the point when you reached certainty about the solution and identified a sustainable business model that fits it. Marc Andreessen describes Product-Market fit as:
“The customers are buying the product just as fast as you can make it – or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can.”
Once the venture reaches a certain maturity and finds a working business model, the operations are ready to be handed over to a new team that can be either hired externally or, if wanted, installed through the corporate.
We split our Venture Building process into 4 phases. We start by looking at a specific target group or area to find and prioritize problems. We call the described step “Problem Identification”. Following this, we go ahead and validate the most pressing problem. We get out there and quantify and qualify the problem’s size in the “Problem Validation” phase. Next is the “Solution Validation”, where, once the problem is there, many solutions are drafted and explored until one sticks. Before performing the mentioned handover and letting the venture thrive on its own, the last phase is called “Market Fitting”. Here, we ensure that we find and implement a suitable business model that fits both the market and the product. This process is packed between the setup and scaling phase.
Who operates the venture?
There is no straight forward or right or wrong answer to the question. There are many ways of handling this. Based on our own previous experiences, we can share what one option of a successful setup can look like.
At TheVentury, we put one Venture Lead in charge. Most of the time, this person has founded a company at least once before starting a venture with us. Alternatively, they have many years of experience in the field of innovation. On the other side, at the corporate, a Venture Architect takes the lead. This person helps them with validating the business. Depending on the stage and needs, we equip the venture with Designers, Developers, Growth Marketers or other experts.
To ensure that we have an unfair advantage over others, the corporate usually provides 1-2 experts with a flexible operational involvement, as well as enablers and networkers. They help us accelerate decisions, get introductions and overall support the development of the venture on a non-operational basis.
For what type of innovation is it?
If corporates try to improve their core business incrementally, having people on the inside is crucial. In that case, intrapreneurship is often the way to go. If you want to dive into intrapreneurship, find our best practices here.
If corporates are looking to explore opportunities outside their immediate daily business that require a fair bit of research and experimentation and don’t necessarily need a deep on the existing business streams, Venture Building is the way to go.
You can access seasoned entrepreneurs that can quickly and thoughtfully immerse into an opportunity.
How can I get started?
Are you wondering how to get started and are excited to kick things off? Then don’t hesitate to get in touch with us. We would love to give you more insights on this topic and how to get started. Find our checklist here, or feel free to contact us.
