The article you are about to read was originally written by Maija Palmer and published by Sifted on April 6, 2021 with the original title: Venture building is the best way for big corporations to innovate . The translation of the content aims to provide a privileged view on the new economy, innovation and how different countries perceive the terms and concepts presented. Enjoy reading!
Over the past few years, large corporations have tried different ways to capture some of the startup magic dust — from accelerators to internal intrapreneurship programs to corporate venture funds — but one approach seems to be delivering the most consistent successes: venture building.
Subverting the myth of the “heroic founder” – the idea that innovative projects can only be built through the genius and hard work of a passionate individual.
Are venture builders really more successful?
This approach doesn’t necessarily special database more unicorns, says Michael Niddam, co-founder and managing director of Kamet Ventures, but it minimizes the risk of company failure.
A very high number of startups that emerge from company builders are still common. At BCG Digital Ventures, which pioneered this approach in Europe, Stefan Groß-Selbeck says that the 150 companies built by his team have a survival rate of around 90%.
Venture Building doesn’t create more unicorns, but it minimizes the risk of failure.Not all venture-builder companies raise outside money, but of those that do, a higher proportion tend to secure funding than startups overall. For example, not only are 19 of the 22 companies built by Kamet Ventures still alive, but nine have raised a Series A round and gone well beyond that. Seven of the 11 companies developed by Israeli cybersecurity company builder Team8 have made it to that stage.
So how do they do it?
One of the main characteristics of venture building is that it involves a lot of support around the startups, with how to stop drowning in tasks and start leading initial financial backing. Founder’s Factory typically puts the first US$250,000 into a business.
But equally, there is a team of professionals who help these companies get – data scientists. Designers and corporate finance people who work across all of the portfolio companies.
There is also a lot of hands-on training, says Niddam.
“This also helps reduce the risk of failure,” he says. “This could mean 3-4 hour sessions twice a week to identify challenges. Once the project is, the team will act as angels. Stepping in when needed. They will also help negotiate deals with large companies. This is unique to what a VC can do.”
Niddam says Kamet is very selective about which ideas they pursue to launch. The vetting process can be brutal. The Kamet team has so far designed about 35 to 40 companies, but has only launched 22.
How do project builders find the right people?
Venture funding may start with an idea, but finding the right team to build it is still a key part of the process. Most venture builders have large australia database directory of entrepreneurs and people with experience working in startups who they can reach out to when they need to hire new people. Founder’s Factory estimates that it has a network of 300 to 400 individuals, while BCG Digital Ventures has a large team of recruiters.
“They could be people who have worked at early-stage startups and want to be founders. We’ve experimented with a lot of ways to do that. Sometimes an entrepreneur comes to us with an idea that fits, and Founders Factory can help de-risk it. Sometimes we find someone who fits an idea,” says Lane-Fox.