Venture builders are companies that employ and train people to become startup founders with them, as opposed to investors or accelerators where founders with existing teams or products apply to work with.
Unlike investors or accelerators, venture builders take active roles in operational processes in their startups, on top of investments and guidance, and represent a much more collaborative and effective way of building startups. Rocket Internet and Entrepreneur First are examples of venture builders.
Crucially, venture builders centralise various departments for their startups, for example, HR, Finance, and IT. By collaborating across multiple startups and sharing core functions, founders learn through the sharing of play-books on business processes. These play-books include critical strategies, KPIs to track and avoiding mistakes made by other portfolio startups. This operational stability frees founders to focus on establishing their secret sauce and unique value proposition.
Louis Warner is COO of Founders Factory, a venture builder that builds innovative startups with corporations like L'Oreal, similar to Plug And Play. With 13 years with venture builders, his energy for venture building shines through. Louis notes that “Founders Factory has a team of 60 full-time experts, so founders can draw on best practices for growth hacking, product design, fundraising, and strategy, not only through mentorships, but even for operational help".
Leveraging networks with corporate and investment communities, Louis also focuses on hustling deals for their startup cohorts that they might not otherwise achieve on their own.
Asim Qureshi, founder of ThinkProperty.my (later acquired), jokes with me, "Frankly, I didn't have a clue what I was doing. I was smart, but I didn't have a network to bounce ideas off, and I didn't have experience".
Asim went on to found Launchpad, a venture builder in Malaysia.
Asim notes that "being a startup CEO is lonely”, and he enjoys finding founders and letting them develop an idea around their expertise. In terms of support, Asim reveals that the ventures have "benefitted massively because I pop in and out of each venture, learning from each and applying my learnings. Additionally, Launchpad’s network of startups all help each other."
For graduates and entrepreneurial professionals, being provided with operational support, mentorship and a constant salary de-risks the entrepreneurial journey and provides hands-on experience building companies. By building entrepreneurial skill-sets and spreading opportunities to grow a company in a more stable manner, venture builders have a secretly immense impact on entrepreneurial ecosystems globally.
Perhaps the most famous venture builder, Rocket Internet has experience in this. Hanno Stegman, CEO of Rocket Internet APAC, has overseen the growth of 13 companies, including Lazada, across 15 APAC countries.
When pressed, Hanno replies with a slight pride in his tone, "Our sole aim is building value for our shareholders, but there has been an undeniable side-effect to our work. Being in Berlin for 10 years, a certain ecosystem has built up there and almost every successful entrepreneur I know has a background with Rocket Internet".
Such an ecosystem has spread aggressively to Asia. Nadim Makarim, founder of Go-Jek, an early Southeast Asian unicorn, was Managing Director for a Rocket Internet company after a McKinsey stint. Bfab, EasyShip, and HotelQuickly are among the many startups created by Rocket Internet alumni in Asia.
Who participate in venture builders?
Venture builders are a perfect entry point for experienced professionals looking to build their own company. Rocket Internet is particularly famous for recruiting and teaching bankers, consultants and MBAs how to build businesses. Asim shares on the ideal profile for founders: “Startup are most likely to succeed with founders around 40 years old. Work and life experience give founders an edge”.
Curious, I asked a venture builder founder directly. Paul Lam FRSA is a founder with Zinc Ventures, a UK venture builder. Paul is a seasoned finance professional, having worked with UBS, World Bank, and DfID.
He notes that there are three main types of professionals who go into venture builders. The first were project managers, with experience developing user-driven products. The second were consultants who are excellent at analytical processes. Lastly, were professionals who worked in large companies and were looking to build companies around their domain expertise.
I ask Paul about differences between younger and older professionals joining venture builders. Paul focuses on 3 key things entrepreneurs need, ideas, commitment and execution.
“Generally, younger entrepreneurs are better at ideas and commitment, while their execution might not be as solid, tending to under-emphasise existing competition,” says Paul.
While older entrepreneurs are better at executing strategy, he also finds that they are less enthusiastic of wilder, disruptive ideas.
Louis jokes that younger founders "don't know what they don't know". However, he takes younger founders seriously as they "are adaptable and fast learners". For him, whether someone would make a good founder depends on whether they can be credible to investors and have the personality and communication skills that "smart folks want to work for".
Opportunities are still everywhere for young graduates. Rocket Internet, for example, created the Global Venture Developer [GVD] Program for promising graduates turning to entrepreneurship. As Hanno describes, “GVDs are our SWAT team for projects around the world, in Berlin, Singapore or the dozens of countries we work in. It is a hands-on role where you eventually decide what region, company and role you want to work in full-time”.
Similarly, Entrepreneur First in Singapore and London famously recruited many of their early operational staff and founders out of university.
From a future of work perspective, venture builders are interesting given its potential to nurture entrepreneurial teachings and talents globally as local and international venture builders begin to popularise. The entrepreneurial journey is risky but it does not have to be so, as more graduates and professionals join the world of entrepreneurship through venture building.
Governments in Asia have invested significantly in encouraging venture capital firms and accelerators as means of stimulating entrepreneurship, but it would be interesting to see greater attention paid to encouraging and investing in venture builders setting up in their countries and universities.
"So what does the future of work hold for you?”, I ask Hanno.
Hanno smiles, “We travel around emerging markets looking for opportunities for our shareholders. Sometimes, we work hard to bring different worlds together, like the marketplace in Myanmar with the business analytics of a Moroccan graduate.
We invest in talent locally with local management traineeships and bring entrepreneurial talents to work in emerging markets, teaching them to build companies in developing countries. The venture building we do adds value in different markets and lets us optimize entrepreneurial talent all around the world. It’s a big opportunity.”—