What is corporate venture building, and why is it important?
Understand what corporate venture building is and how to uncover the untold potential of venture building as a powerful instrument for every corporate decision-maker.
In the ever-changing landscape of corporate environments, nurturing new business ideas can be daunting. When these ideas go beyond the core business areas, uncertainty adds another layer of complexity. Enter corporate venture building — an innovative and successful approach that addresses these challenges head-on.
By establishing separate innovation entities unbound from corporate bureaucracy, companies can explore new revenue streams with the support of entrepreneurial teams. This blog post delves into the concept of corporate venture building, its definitions, benefits, success factors, and how it differentiates from other corporate innovation vehicles.
First of all, what do we mean by venture building?
Venture builders (also: company builders, venture studios) are organizations that use their in-house resources of serial founders, marketers, developers, and other experts to quickly validate a business idea, take over an interim role to build the venture, and recruit a team that will at a certain point in time take over the lead.
Additionally, the venture builder leverages its network of partner companies, mentors, and potential investors. In some cases, the venture builder even invests in the newly founded startup, sharing risks and rewards with the other parties.
What makes corporate venture building different?
Corporate venture building is focused on established companieslaunching separate ventures from scratch. To seize unexplored opportunities beyond the current business, a novel brand, team, revenue stream, or P&L (profit-and-loss) structure is established, focusing on untapped areas such as emerging customer segments, technologies, or capabilities.
A corporate venture builder collaborates with established corporates to combine the best of the two worlds: speed and agility from the venture builder with the power to scale of the corporate.
By combining the best of two worlds, corporate venture building brings radical ideas to life
Corporate venture building is especially suited for exploring revenue streams outside of the core business. It is the ideal approach for radical ideas that do not fit within the existing corporate structure, lack a logical home or sponsor, or require different resources and access. This is because you can better manage the uncertainties around the market and technology, where risk cannot be predicted or measured.
Corporate venture builders are different from other corporate innovation vehicles
Corporate venture builders are often confused with incubators or accelerators. However, it is neither an accelerator, where new companies receive close supervision for a specific time period, nor is it an incubator, which gives startups easier access to experts, capital, and knowledge.
A corporate venture builder is an active part of the startup, helping to develop the product, gain first customers and assemble the final team. If the client wishes, venture builders can take over the entire setup of the venture and hand over the new company "turnkey". Therefore, it is often named the all-inclusive approach to corporate venturing.
A corporate venture builder is:
An active part of the team and invests the sweat and blood required to make it happen, from idea to market entry and scaling.
A corporate venture building is not:
An accelerator that targets startups who have already taken the first steps and have a more passive role, offering supportive programs to develop initial pilots and partnerships.
An incubator that offers an early-stage home for ideas by supporting the founders to validate the concept and justify further investments of resources, time, and money.
Corporate venture builders feature high autonomy, which is success-critical for building new businesses
One of the key reasons why corporate venture builders have emerged as a powerful force in the world of business innovation is their high level of autonomy. This autonomy is crucial for the success of building new businesses. Venture builders provide a safe space for experiments, allowing ventures to be launched or discontinued at any given time without risking the reputation of the parent company. This freedom enables swift decision-making and the ability to pivot quickly, adapting to changing market dynamics.
Furthermore, the clear ownership and decision-making structure ensure that the venture builder remains in the driver's seat, enabling rapid adjustments and strategic maneuvers when necessary.
In a nutshell, venture builders provide the ideal environment for innovation and growth, combining autonomy, risk-sharing, and a talented team to drive high-risk opportunities and turn them into successful new ventures.
Internal versus external corporate venture builders
When comparing Internal Corporate Venture Builders to External Corporate Venture Builders, companies must weigh the benefits of greater control and alignment with corporate values offered by the internal approach against the external option's fresh perspectives, lean methodologies, cost-effectiveness, and full adaptability. While internal venture builders tap into existing resources and talent, external builders open doors to serial entrepreneurs and experts, enhancing innovation and market agility. Choosing the right approach ultimately depends on an organization's willingness to embrace internal capabilities or leverage external expertise to drive successful ventures.
Learn more about your corporate venture building options and how to identify which approach works best for building your next venture by downloading our guide.
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Senior Innovation Manager
How to choose the right approach to venture building
The only guide you need to learn more about your corporate venture building options and how to identify which approach works best for building your next venture.