Corporate Venture Building

By Elias Aad and Fabian Neuen

Corporate venture building is an increasingly significant strategic approach in which established companies create startups or launch new business units to tap into a range of benefits. Venture building can help accelerate growth by embracing a more entrepreneurial mindset and exploring new business models. A new venture can also deliver greater agility and maximize the freedom to explore innovative solutions.

Why corporate venturing & business building matters

Startups are known for their ability to iterate quickly, experiment, welcome innovation, and adapt to market demands. Corporate venture building injects these capabilities into established corporations, enabling them to grow more systematically following customer feedback on their value proposition, products, services, and processes. Early-stage ventures are often at the forefront of technological innovations and emerging trends. By engaging with startups, corporations can gain early access to disruptive technologies and solutions. This enables them to stay ahead of industry trends, adopt new business models and technologies, and leverage them to improve their own operations, products, and services. It also allows large companies to explore potential partnerships or acquisitions for strategic advantages.

Venture building can even help a corporation to grow beyond its current boundaries into new ecosystems. In this way, it can benefit from a holistic value proposition and create greater convenience for both existing and prospective clients. In fact, some studies suggest that enterprises conducting corporate venture building can grow up to 10 percentage points faster than the market – in a way that is significantly more profitable than their core business.

Our perspective on corporate venturing

Growth and profitability are the lifeblood of most organizations. Unfortunately, the dynamics of a company's main business tend to slow down over time. Venture building can be an excellent way to stimulate your corporation and build new growth pockets. A successful new venture can also have a transformational effect on a parent company's culture.

Yet we still observe a large number of corporate laggards when it comes to digital innovation and business building. We also see many companies unable to reap the full benefits offered by new digital opportunities. Common missteps include setting up a corporate accelerator, taking an executive management trip to Silicon Valley, launching a startup hub, perhaps even a corporate venture capital unit. Why do these options frequently fail? There can be myriad reasons, but some recurring patterns include:

• Focusing on ventures that are too far away from today's main business
• Lack of meaning- and impactful MVP's to conquer an initial market share through low-threshold solutions
• A lack of true customer obsession or willingness to adapt the company's value proposition, product, and/or go-to-market strategy following valuable learnings from the customer
• Not enough sponsorship support from corporate management for the venture
• Inadequate talent involved in business building, combined with insufficient robustness in innovation and development processes

Important trends in new business building

While many initial corporate ventures were based upon a marketplace idea, we are now observing a much broader variety of business models. Still, common themes are visible across industries such as:

• Establishing new businesses with a recurring revenue model ("SaaS-ifiication")
• Scaling solutions around circularity themes to manage ESG goals
• Leveraging innovations in AI to drive a company's wider digital transformation

Our expertise

Our team has proven itself in successfully establishing a variety of ventures, including in the automotive industry, telecommunications, and insurtech, to name just a few.

Many people believe a venture relies solely on creativity, but we are deeply convinced that successful corporate venture building also requires clear structure and absolute thoroughness, especially when understanding prospective customers' needs and challenges. From a commercial and impact perspective, we realize that successful startups are often more "painkiller" than "vitamin."

Obviously, there is no guaranteed way to always identify a killer solution. But we are convinced that a ruthless customer focus and rapid product iterations are two fundamental levers that will help you shape your successful corporate venture.

We can draw from a wide catalog of corporate assets, allowing us to identify and leverage fundamental characteristics you already possess for your new venture. These may include patents, sales channels, brand reputation or back-office support.

Unlike many large-scale corporate IT projects, our proven approach includes constant progress in product development and the go-to-market approach, thus accelerating the success of your venture. 

How we support clients

We acknowledge that there is no one-size-fits-all solution; different corporate cultures and business models require different setups. We are experienced at working in hybrid teams with a company's intrapreneurs, but we can also realize significant progress operating more independently.  

Regardless of how we collaborate, our chief aim is always to provide your venture with turnkey businesses and products. Some clients call it "innovation and growth on autopilot" – recognition we feel honored to receive. If required, we can also help corporations hire the right people for their new venture, or even operate it on their behalf until it is ready to be integrated into the core business. We adopt design principles that merge lean startup methods and corporate venturing best practices to help you achieve your growth and innovation goals:

• Love for the customer: We won't just love you and your business – we'll also love your end users to ensure the quickest and best-possible product-market fit.
• Vision and data: It's not either or; it's about pursuing a compelling vision and being rigorous about testing each element within this vision to achieve systematic growth.
• Split-testing all the way: One can over-analyze, but one cannot over-test. Our priority is clear.
• Metrics that matter: Unlike in a corporate setting, less is more. We believe there are certain metrics that matter most, such as CAC, viralness, or churn.
• Act like it's our money: There are too many well-funded ventures on the cemetery of good ideas. Frugality, where required, is key, while simultaneously preparing for hyper-growth stimulated by a successful new business.

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