Venture Builder, also called startup studio, startup factory, or venture studio — is an organisation who build startups using their own ideas and resources. That’s right! they hire founders and pay to run the startup. The promising new model responsible for startups like Twitter, Medium, Lazada, Food Panda and Zalora, just to name a few, and increasingly adopted by the corporate world.
The venture studio is not a new model to the West; the originator being Bill Gross’s Idealab from way back in 1996, which served as an incubator. However, in Malaysia (and the rest of South East Asia except Singapore) context, this is a relatively new idea to explore as our startup ecosystem has come to certain maturity.
A Startup That Builds Startups
A Venture Builder is similar to a fast-paced tech startup, where its product is the venture, the prototype is the business model, and deliverables means perfect and timely deployment. In this context, the Venture Builder is essentially a startup that builds startups. Applying Lean Startup, Design Thinking, Design Sprint, Agile principles as process management, validated learning, iteration, and innovation accounting to the venture building process. Leverages extensive network and ecosystem reaching out seasoned entrepreneurs for share resources (capital, skills, and market expertise).
Those resources then joint-ventures and operate in areas where the venture partners have a significant competitive advantage (an existing business, traction, superior market knowledge, dedicated operational resources, etc.) — As a result, a successful business matching at the end for a new venture to begin.
There are five core activities in which Venture Builders engage: identifying business ideas, building teams, finding capital, helping govern or manage the ventures and providing shared services.
Venture Builder vs Venture Capital vs Incubator vs Accelerator
Venture capital firms are different as they are not operational organizations. They invest in promising teams and business ideas that meet their criteria. On the other hand, Venture Builders are very involved with daily management of the operation. When a Venture Builder owns equity in its ventures, it’s because it generated the idea and invested significant effort in growing the company — not because it provided capital. Having said this, it’s also true that more and more Venture Builders are creating funds to alleviate fundraising efforts.
Unlike incubators and accelerators, Venture Builders don’t take any applications, nor do they run for a limited period with any sort of competitive program that culminates in a Demo Day. Instead, they pull business ideas from within their own network of resources and assign internal teams ground up to develop them (engineers, advisors, business developers, sales managers, etc.). A Venture Builder’s relationship with its ventures is long term; it’s deeply involved with the startups it produces up until they exit.
Filling the Gap for Bootstrapper
Venture building have an obvious advantage over startups that are bootstrapped or funded by grant or angel investors, it’s a potential fix for the funding gap long awaited by early stage startups. Any startup that belongs to the Venture Builder will no doubt have certain equity be taken (equity will be diluted when startup raise funding along the way anyway, e.g. seed, series A,B,C), but the startup can accelerate in his initial stage with injection of expertise, shared services and salary doing what they love. Win-win for both sides — Hence, increases their chances of success.
Venture Builders leverage vast knowledge and business experience or by hiring experts. They shared technical expertise — with skilled developers who can deliver quickly with the right frameworks and advice, with quality code. Even with repository of proprietary technologies that can be applied to further shorten development time.
But building a business isn’t just about founding the team and providing software development. Venture Builder took care of other aspects needed to successfully launch and grow a venture including marketing, strategy, branding and communications. Also, take care of the operational management, e.g financial, legal advisory, human resources, administration, and more.
Having the nitty gritty covered for the early stages, the team focus solely on developing technology, validating and polishing business models and testing MVPs.
This model leads to an important point — Save Time. Venture Builders can rapidly develop new products and launch them in the market, effectively shortening time-to-market and way ahead of competitors.
In short, to run a successful venture building has to leverage vast network of resources or the whole ecosystem. The ecosystem that consists of other ventures, on different stages of development. Not only do they provide services, technology and other resources, but can also complement each other.
The Sharing Economy Creates Venture Builders
The uberification of society, on-demand services, and the new sharing nature created venture building ecosystem. The term uberification, which is derived from the popular on-demand taxi service Uber. The uberification effect creates on-demand services that in turn create a new sharing economy that redefines the way society accesses resources.
Similarly, one of the important characteristics of a venture building company is the presence of a strong sharing network capable of unifying a vast available resources in the most effective way.
Venture Builders rely heavily on the quality and the dynamics of their networks and thus need to figure out which combination of resources will produce the most explosive results in order to capture market share quicker than its competitors.
The challenge lies in the Venture Builder ability to facilitate all these resources under one governing body that can build ventures in a very focused and dedicated way. The Venture Builder’s network must act as a pool of instantly available resources that create an internal culture of trust, deal flow, attentiveness, and determination.
This network-focused model is certainly different from the standard startup business model, and there is a good reason for it: As the entrepreneurial world adapts to the ever-changing needs of consumers and corporate clients, startups and organizations will need to evolve and share resources under a unified business model in order to remain competitive and to respond to their clients’ needs faster.
As you probably noticed, the Venture Builder model is close to that of the venture capital firm: It funds ventures, builds a portfolio, and looks for successful exits. However, it is also much more involved in the operational aspect of its ventures than a traditional VC. In some cases, it goes as far as pulling all the necessary resources from its vast connection network to crush its competition and scale extremely fast.
This “Do it full speed exponentially or die” operational technique, which is highly reminiscent of Uber’s and Rocket Internet’s business strategy, proves that Venture Builders are gifted entrepreneurs and savvy business developers who don’t simply pour money into ventures and watch them grow. They implement aggressive business management techniques that benefit all the ventures that are part of their network.
The Notorious “Rocket Internet”
Thanks to the highly successful and equally controversial Samwer brothers at Rocket Internet for leading the way and showing what the rest of the world the capabilities of Venture Builders, who are famous for copying every successful Internet startup idea under the sun and deploy in other markets as unscrupulous copycats, some famous copycats are namely Lazada, Zalora, Foodpanda and etc. While there is no denying that they copy existing business models, they also have a superb execution ability to deploy successfully in unknown markets in the most perfect way. It again proven that ideas are worthless but execution is everything.
Conclusion
The Venture Builder model is growing. It’s debatable venture building is a better model. Whilst all have their merits, venture building is more enabling and beneficial for a promising early stage bootstrapping startup, especially one which yet to sustain with cash flow.
It’s undeniable that venture building is industrializing and demystifying a process that used to be more art than science, and empowering organizations and individuals emphasizes the use of human capital to build new value from the ground up in a systematic way, increasing the chances of producing and building successful startups.No longer a solo charismatic that drives the startup but rather the use of proven methodologies based on success case studies, combined with the right team and deploy at the right timing that made stories told.
For any feedback or thoughts you might have, please feel free to comment on this article or write to me directly. Also, I’m open to partnership in startup studio for South East Asia.
