Venture Building, a new model for entrepreneurship and innovation

Abstract: by industrializing innovation, venture builders are changing the way new companies and products are created. This article explains the characteristics of the promising new model responsible for companies like Tweetdeck or Dollar Shave Club, and increasingly adopted by the corporate world.

Venture builders are organizations dedicated to systematically producing new companies, which they help grow and succeed.

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.

There are also two important activities that only some venture builders pursue: employing a methodology of entrepreneurship, and providing talent to the ventures.

Venture builder’s activities

Five core activities

Identifying business ideas can be done in different ways. Some clone existing models. Others choose an opportunity space where they develop research projects, explore different ideas and prototype concepts. Regardless of the specific approach used, the goal is to come up with a viable business idea (e.g. Founders’ Factory or Tech @ Founders Factory combines expertise in entrepreneurship with strategic corporate partnerships to identify potential concepts).

Venture builders create teams from the ground up. This is undertaken once the business idea is clearly identified (e.g. eFounders and LeStudioVC have a Talent Acquisition teams constantly looking for founders for their ventures).

Venture builders facilitate access to capital for the startups they develop. They do this either through a fund they own, or by connecting the different ventures to their network of investors (e.g. Nuclio Venture Builder supports it’s startups in their fund raising efforts).

Venture builders help lead the ventures. They can have a governance role, they can participate in the management of the companies, or both (e.g. Blenheim Chalcot uses their team of experts to give its startups what they call an unfair competitive advantage).

Venture builders provide shared services to their ventures, such as legal, design or accounting (e.g. RocketInternet’s ecommerce ventures have access to their logistics’ platforms).

Two non-core activities

Some venture builders rely heavily on methodologies and learning processes. They build systems that help them share knowledge across their ventures, so they all benefit from the experience of others. (e.g. Polymath Ventures is constantly building and improving its methodologies for designing and growing businesses)

Finally, some venture builders provide talent to the ventures in times of need. The venture builder’s operating staff may switch between ventures as talent needs arise. (e.g. BCG Digital Ventures supplements its ventures needs with its own talent when needed)

Differences with other models

There are some important differences between the venture builder model and other types of organizations:

  • Startups: usually concentrate on one core business, venture builders continuously produce new ventures
  • Accelerators or incubators: provide mentoring and some shared services. They do this for a limited period of time, and they bring in outside teams with mature ideas. On the contrary, in a venture builder all ideas are developed in-house, and teams are built from the ground up. A venture builder’s relationship with its ventures is long term; it’s deeply involved with the startups it produces up until they exit
  • VC funds: 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
Venture builders compared with other types of organizations

The identification of the business idea is the activity where we observe most variations between different venture builders. It is a very important area so we’ll explore this activity in detail. We’ll also discuss what the remaining activities mean at the different stages of the ventures (design, acceleration and scale-up).

However, we must first understand the three different business models venture builders have.

Types of ventures builders and their business models

Some venture builders work for investors, others provide their services to corporations, or are part of corporations themselves. Each has a particular business model.

Three business models for venture building

Working for investors: industrializing entrepreneurship

Business angels and VCs invest in the startups that spring from venture builders as they would in any other startup. Investors are hoping that the expertise and seniority the venture builder accumulates will offset part of the risk that comes with entrepreneurship.

Investors can also put money in a pool of ventures, or in the venture builder itself.

In this scenario the business model for the venture builder is based on the equity it retains — along with investors and founders — from every venture it produces. Its efforts are rewarded when the startup is sold, so the goal is to bring the startup to an exit. Meanwhile, the venture builder charges the ventures for the services it provides.

Some examples of venture builders that work for investors are Polymath Ventures, betaworks, or RockaLabs.

Working for corporations: venture-building-as-a-service

A second version of a venture builder is the one that works for corporations. In this consulting model (venture-building-as-a-service) corporations are simultaneously the investor and the client.

Because the corporation owns the business or businesses that emerge from the engagement, the venture builder and its talent can’t retain equity from the ventures. Corporations are charged fees per hour.

Venture builders that work for corporations divide these projects in stages that are sold independently. The most common stages are:

  • Innovation: here the venture builder goes through a 4-month process where multidisciplinary teams explore an industry or an area or opportunity. Human-centered design, lean startup and other tools are used to explore the defined space and produce business concepts, financial models, go-to-market strategies and prototypes
  • Incubation: in this phase the founding team is built and the concepts defined in the previous phase are tested with high resolution MVPs. During this 6-month period, go-to-maket strategy is executed and the product is evolved with the goal of validating product-market fit
  • Commercialization: during this phase the venture is focused on scale-up efforts, building management systems and middle management layers, as well as growth strategies

This three stages more or less correspond with the phases commonly called: design, acceleration and scale-up — we’ll refer to these later to explain the different activities venture builders pursue.

BCG Digital Ventures and Mach49 (The mach49 Blog) are some examples of these kind of venture builders. At the same time, we’re seeing some strategic design firms moving in this direction.

In-house venture building: empowering innovation

The corporate world is renewing its efforts to innovate and fight disruption — or be the agent of disruption. Creating a venture builder under the corporate umbrella is an emerging model chosen by the firms which are most committed to the future.

In this third model the corporation owns the venture builder, which becomes a vehicle for investing in new businesses. Interestingly the venture builder is also the context that facilitates developing competencies in innovation.

So far we’ve explored three different models: the ones working for investors, the ones providing services to corporations, and the ones working inside corporations. Now, let’s look at how venture builders choose the businesses they’ll build.

Paths to identifying business ideas

There are three main approaches to deciding ‘what to build’: using methodology, cloning and gut feeling. This is the activity where venture builders diverge most among one another.

Venture builders focused on methodology

Coming up with a successful business idea is not easy. The quality of the work done during the design phase echoes throughout the entire life of the venture. In addition, venture builders are continuously creating new business concepts, so they benefit from having a systematic process. This is why some venture builders are developing their own methodologies, specially for identifying business ideas.

Surprisingly not many venture builders follow this methodological approach. Only in the consulting space (venture-building-as-a-service) are all players working with clear tools and methodology. It seems reasonable to think that no corporation would pay large amounts of money to follow someone else’s gut feeling, or to clone existing ventures.

Cloning startups

These venture builders identify the business models that are working in other geographies and copy them. Later, when the original venture has money to grow, they sell them their local version. Rocket Internet, with companies like Airbnb’s clone Wimdu, is maybe the best known example.

A methodology for coming up with new business concepts is not needed, as one is just copying. Sometimes these venture builders have platforms (digital or logistic) that their different ventures can use as shared services.

Working by gut feeling

Most venture builders are created by experienced entrepreneurs. They’ve been successful once, and they believe that following their instincts will make them successful again. This breed of venture builders moves forward with the business ideas judged to have potential by the leaders of the organization.

I’m not very fond of this model for two reasons. On the one hand, I believe that the fact that serial entrepreneurs show greater chances of being successful again pleads the case for more methodology and learning, not for less. On the other, I also think that dependance on certain individuals limits the venture builder’s ability to scale.

Up to here we’ve identified three very different ways of coming up with business ideas. Now let’s take a deeper look at the rest of the important activities venture builders develop.

Activities venture builders develop, and the value it provides to startups at different stages

As the following matrix shows, venture builders provide different value propositions to their startups at different stages — design, acceleration, and scale-up.

Activities at different stages

I’ll start with methodology and talent. Although these two activities are not shared by most venture builders, they are definitely important to the venture builders engaged in them.


The core idea of the venture builder model is that expertise in the organization will significantly increase the chances of success. This is only true if there is a systematic way of doing things, and if learning and building methodology are at the heart of what the venture builder does.

Methodology is transversal to many activities. It also means different things for the three different stages:

  • Polymath Ventures, BCG Digital Ventures, and Mach49 use a mix of human-centered design, lean startup, and management consulting tools to come up with business concepts in the design phase
  • Methodology in acceleration is much more than defining good KPIs and validating product-market fit. It involves setting up learning processes, creating a culture, introducing management systems, etc.
  • Finally, scaling-up operations and teams is not as well understood as acceleration, so there’s much more to be learnt. This happens because few ventures survive up to this phase, and few people experience scale-up multiple times throughout their careers. It’s a space where learning is adding up fast

Providing talent

Finding the right talent is hard, so most startups are launched with insufficient in-house staff. In this case, the venture builder provides the human resources needed to start operations.

A different scenario is when hard problems arise. That’s when the venture builder temporarily sends senior talent, or SWAT teams, to help startups deal with those issues.

Building teams

People are the most important element. Smart people can do great things, and building a team is not the esoteric work of destiny and planetary alignment startup literature has often presented, but the result of hard work, lots of empathy and proper testing.

Startups benefit from the branding the venture builder provides. Also, the expertise, the pool of great talent, and methodological approach of the venture builder, create an umbrella that attracts people whose risk profile would otherwise never be a fit for entrepreneurship.

Finding capital

Although venture builders initially financed the design phase, some have built a solid reputation that enables them to raise money before the concepts are defined.

As for their startups, fund raising is a never-ending task. They benefit from leveraging on the venture builder’s network of investors. In other occasions the venture builder has a fund dedicated to its ventures.

Leading ventures

The venture builder is a cofounder, and thus has a role in the management of the company. Senior leadership of the venture builder may join the meetings where the leaders of the different startups make key governance and management decisions.

Shared services

Startups need many services that are either not core to the business (e.g. accounting), or that would deeply benefit from a shared trademark with the venture builder (e.g. graphic design).

Having these services in-house is a heavy financial burden during the early stages. The shared services format allows for good quality and benefits from economies of scale.


Today it’s hard to say if venture building will succeed in the two different contexts where it’s proliferating: entrepreneurship and corporate innovation. I address challenges and opportunities of the model in a separate article here. However, it’s undeniable that venture building is industrializing something that used to be more art than science. It’s demystifying creative processes, and empowering organizations and individuals to build new value from the ground up in a systematic way. What used to be anecdotal is, in the age of disruption, a set of core competencies no organization can afford to disregard.

Coda: venture builders all over the world

Here is a couple of lists with venture builders from all over the world (also called startup studios, startup factories, or company builders):

If you got here, congratulations. For any feedback or thoughts you might have, please feel free to comment on this article or write me directly.

Disclaimer: my involvement with Polymath Ventures may have influenced some aspects of what is expressed in this article.