Let’s say you have a business idea. You want to solve a problem and you hop onto the bandwagon of creating your own company, a startup. You approach the usual platforms to seek support and funding such as accelerator programs, incubators, or angel investors. You even apply for government grants, pitch to Venture Capital and pour your soul into the business.

But a startup’s journey is always thorny — it is very likely that your company does not take off as you envisioned it to be. Very quickly, your team is dismantled, resources drained and your precious time is gone. One may say this is the risk an entrepreneur should take. However, a new model of business incubation, Venture Builder, may be an option for you to consider for your entrepreneurial career.

A venture builder is an organisation that aims at building several companies in succession. They start a business idea by themselves or with partners, provide the business infrastructure and gather key resources to kick start the project. They get involved deeply in the venture creation process and the business operation.

Their emphasis on talents and re-use of their startup experience and knowledge increases the chance of success in a long run. The venture builder model is especially useful for deep tech venture creation. Examples of Venture Builders are Rocket Internet, eFounders, Makeshift in Europe, Interplay Ventures, Giant Pixel and Atomic in US, Stanley Park Ventures in Canada, 25Fifteen in Australia and JCS Venture Lab RE.A.PRA in Singapore.

Pool of resources and infrastructure

Venture Builders follow a startup model that consolidates resources and brings startup opportunities to entrepreneurial professionals. This model of creating companies is increasingly prevalent in the startup ecosystem with similar names such as “startup studios”, “startup factories” or “parallel entrepreneurship”.

Venture Builder takes a different business incubation approach in starting a new venture company. They pull business ideas with their selected partners and form teams from the talents in house or in their network to develop the business. With their partners, Venture Builder provides the resource to kick start the start-up project. The team spends most of their time in pushing the product into the market and focuses little on raising funds at the beginning. It also helps to streamline the venture building process by centralizing various supporting functions such as HR, Finance and IT, allowing the team to spend more time and resources on the core business.

Also read: Venture builder model vs. venture capital, what are the differences and advantages?

People, people, people

There are different types of business incubation models, and most of them are using the traditional Venture Capital approach. Below is the table of comparison between Venture Capital and Venture Builder.

  Venture Capital (VC)  Venture Builder (VB)
Resource Direct cash injection Resource, cash, infrastructure
Initial Idea From Entrepreneurs Jointly or solely initiated by VB
Development Entrepreneur’s initiative Jointly or entirely done by VB
Operation Entrepreneur and his team VB’s team Deeply involved
Team Entrepreneur and his team Talent in house / in network
Equity/Risk VC takes less VB takes more
If startup fails Team dismissed / Sunk cost Keep the talent

Venture builders focus on talents and value their experience and knowledge acquired during the venture building process. Even if the project fails, the team stays with venture builder and re-use their knowledge and best practices for new start-up projects. A 2006 Harvard University study shows that entrepreneurs who have failed in their previous enterprise have a much higher success rate in their next start-up than that for first-time entrepreneurs and not far below that of entrepreneurs who have had a prior success [*].

Also read: Venture Builders are a criminally underrated contributor to the startup economy

De-risking commercial and developmental bets

A Venture Builder is not playing a number game by holding a portfolio of startups in various industries to minimize their risk exposure. It beats the odds by developing and re-using the knowledge, the experience of its entrepreneurial talent community and infrastructures from one startup project to another. Thus, a Venture Builder’s startup project has higher success rate and accelerated process. For entrepreneurial professionals, Venture Builder brings them real life startup experience, forges their connections with resources in the ecosystem and increases their chance of success in the long run.

With a Venture Builder, you don’t need to take excessive risk to start your business. It is a platform where you join a team of like-minded people and are given resource and opportunities to forge a different entrepreneurial career path. A startup’s journey need not be lonely. Joint Venture Builder, get involved in their projects and never stop hustling, keep trying.

—-

Authors

  • Dr. Li Wei, General Manager, JCS Venture Lab
  • Dr. Chen Yiren, Manager, ETPL, A*STAR

[*] Paul Gompers, Anna Kovner, Josh Lerner, and David S. Scharfstain, “Skill vs Luck in Entrepreneurship and Venture Capital: Evidence from Serial Entrepreneurs,” National Bureau of Economic Research, Oct 2006

e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.

Photo by Kelly Sikkema on Unsplash