Differences Between Venture Builder and Other Models
August 2016. I was at a startup conference trying to explain our venture builder to potential entrepreneurs. After my fifth conversation of the day, a smart founder looked at me skeptically and said: “So you’re like an accelerator?”
“No, we’re different. We’re—”
“An incubator, then?”
“Not exactly. We—”
“A fund?”
“Sort of, but—”
He cut me off. “Look, I don’t get it. Are you going to give me $100K and mentorship for three months like an accelerator, or what?”
I realized I was losing him. Worse, I was confusing him. And if I couldn’t clearly articulate how a venture builder differs from an accelerator, incubator, or investor, I had no chance of recruiting the best entrepreneurs.
That confusion is deadly. If entrepreneurs don’t understand what makes a builder different, they’ll either (1) expect the wrong things and get disappointed, or (2) choose an accelerator when a builder would have been better for them.
This chapter exists to draw bright lines between venture builders and everything else in the startup ecosystem. Not because builders are better; they’re just fundamentally different. And understanding those differences matters enormously.
The Core Distinction: Time Horizon
The single biggest difference between venture builders and every other support model comes down to one question: How long is the relationship?
- Accelerators: 3-6 months
- Incubators: 6-18 months
- Venture builders: Until exit (typically 3-10+ years)
Everything else flows from this. When you’re only committed for three months, you optimize for fast iteration. When you’re committed for three years, you optimize for sustainable growth.
Understanding the unique characteristics of a venture builder is crucial because the confusion isn’t just semantic: it changes what kind of support you provide, how you structure deals, and who you recruit.
Incubators and Accelerators
Venture builders stand apart from accelerators and business incubators due to a fundamental distinction: while incubators and accelerators offer support to companies for a limited time and typically specialize in a specific phase of business development, a venture builder is a long-term co-founder that evolves alongside the company.
The builder as a co-founder is a crucial concept to grasp. This relationship is the primary differentiator between a venture builder and other entities like accelerators, incubators, or investment funds. A venture builder’s engagement with its portfolio companies is enduring. It involves deep involvement in the startups it fosters, lasting until the partnership is dissolved. In essence, the builder’s connection with these companies isn’t marked by an expiration date but aligns with the long-term perspective of entrepreneurial partnerships. A venture builder is, in effect, a collective co-founder.
The following table illustrates how different entities assist startups at various stages of their business journey:
| TABLE 1-3 | ||||
|---|---|---|---|---|
| Institutions that help startups in different stages of maturity | ||||
| Ideation | Testing | Sales | Scaling | |
| Incubator | Yes | Yes | No | No |
| Accelerator | No | No | Yes | Yes |
| Venture Builder | Yes | Yes | Yes | Yes |
Citation: Institutions that help startups in different stages of maturity. Builder's Handbook: Builder's Guide by Taig Mac Carthy.
With this perspective, many venture builders tailor their startup creation and development processes to align with the various phases through which a startup evolves.
This means that a venture builder may categorize its startups as being in either the incubation or acceleration phase. However, this classification doesn’t imply that the builder’s involvement is confined to only one of these stages. Rather, it’s a reference to the current maturation stage of each startup in their portfolio.
Consequently, it’s quite common for companies incubated within a venture builder to participate in external acceleration programs. This might seem surprising to those unfamiliar with the venture building model, but it actually aligns perfectly with the builder’s approach of supporting startups through various development stages.
Therefore, a more apt comparison would be between different types of co-founders, rather than equating venture builders with other startup support institutions.
Types of Co-founder
Reiterating an important concept: the venture builder is, in essence, a co-founder. Like any co-founder, the builder plays a significant role in various aspects of the startup, including company administration, product development, talent recruitment, and financing.
The management team of a venture builder actively participates in the ideation and creation of the product. Following this initial phase, they continue to co-lead the company through marketing, scaling, and internationalization phases, with no predefined endpoint.
To accurately compare a venture builder to entities operating at a similar level within the startup ecosystem, we should look at other types of co-founders. The following table provides a comparison of some key characteristics of different types of co-founders or partners who may be involved in the creation of a startup.
| TABLE 1-4 | ||||
|---|---|---|---|---|
| Types of co-founder | ||||
| Working partner | Venture builder | Equity partner | ||
| Contribution to product development | High | High | Low | |
| Contribution to commercial activity and marketing | High | High | Low | |
| Shares you own | High | High | Low | |
| Contributed financial capital | Low | Medium | High | |
Citation: Types of co-founder. Builder's Handbook: Builder's Guide by Taig Mac Carthy.
This table offers a comparative analysis of different types of co-founders: Working Partners, Venture Builders, and Equity Partners. It highlights the varying levels of contribution each brings to the table.
Considering this comparative framework, we can assert that a venture builder is akin to a working partner, contributing more financial capital and exercising greater control over the company. This comparison highlights a distinct difference from a purely capitalist partner, whose primary contribution is financial.
Additionally, it’s important to note the unique role of venture builders that specialize in specific verticals, like virtual reality, artificial intelligence, or robotics. In these cases, as outlined in the section on transfer instruments, the builder’s contribution to product development significantly exceeds that of any other partner. This specialized input is a defining feature of venture builders in such niches, further distinguishing their role from other types of co-founders or partners in the startup ecosystem.