Why Do We Need a Guide to Venture Building?
Creating several companies simultaneously, in bulk, is a dream that all successful entrepreneurs secretly harbor in their hearts. When a person has found the keys to success, it is logical that they want to apply these keys to new business opportunities to exponentially increase the impact of their work, innovate more successfully and accelerate their creation process.
However, venture building is difficult. Creating one company is already a challenging endeavor. And bulk-creating many companies is exponentially harder. For that reason, running a venture builder demands from it's management the highest degree of experience, professionalism, talent and well-though processes.
However, it's hard to do your job well if you don't know what your job is. This is, in essence, the root of most of the problems that affect a venture builder. If you are supposed to manage a venture builder, you need to understand the rules of the game, the key activities and the performance metrics that should structure your work.
Our guide provides clear insights into the essential activities and decisions that should be the focus of venture building management. We address critical questions such as the extent of management's involvement in entrepreneurial activities and identifying the most relevant success indicators. These indicators are vital for evaluating both the performance of the venture builder and its team, ensuring a smooth and efficient venture building process.
Imagine a venture builder as the board of a boardgame. In this board, established companies and independent entrepreneurs come together to create new businesses. Just like any game, understanding the rules of the game is essential. This guide aims to lay out the rules of the game and demystifying the process of venture building.
Origins of this book​
I'm somewhat ashamed to say that the first notes that gave rise to this book feel more like a letter of help than a business book. In truth, it has been a process of several years of trial and error, as stimulating as tortuous, the culmination of which is this guide for venture building that you are now reading.
The risk of doing something for the first time, especially when it is something innovative, is that there are no references or models to build on. In the absence of guides, I compiled hundreds of emails with legal and tax advisors, calls with experts, brainstorming meetings with partners and an endless process of trial and error. Luckily, the experience gave rise to a model, a methodology for the systematic creation of companies. This model has proven to work both for me and for other institutions and companies around the world. It is a result for which I am enormously grateful to my co-founders, who in 2016 supported me in the idea of ​​turning our company into a business creator, and to my wife, for putting up with my long work days and trips around the world.
In my case, the first successful company I created was launched in 2014. Before this company, I had a long series of failures or small successes. But in 2015 I established a company that after one year already had a turnover of more than one million and whose success took me to a new dimension of business activity.
Immediately, I felt an urgency to find new ways to exploit the resources I was accumulating and to replicate the patterns that had led me to success. As a result of my activity, I met with clients, distributors and investors and these interactions presented new ideas, new opportunities that I wanted to pursue and that I felt qualified to undertake successfully.
However, I didn't have time to pursue these opportunities, because the day-to-day running of my company captured all my attention. On the other hand, I didn't know which was the fairest and smartest way to create these new companies: whether the capital to finance the new businesses should come from my assets or from the company's cash flow. Furthermore, it was not clear how to compartmentalize the fruits of the activity of each business unit.
The solution I found in 2016 was the creation of independent teams, dedicated exclusively to pursuing new business opportunities. These teams were not employees of the existing partnership, but rather co-founders who would become partners in the future legal entity. In this way, I ensured that the focus of each team's attention was not distracted by the problems of my first company and that these people were as motivated as I was.
Following this scheme, while I was running my company as CEO, we co-founded another startup in 2016 with two entrepreneurs who had nothing to do with the first company. The following year, we founded a second team, with people who also did not belong to the initial company. Subsequently, we launched another venture with another independent team. In all cases, ownership of shares was distributed between a parent company that held the majority of the shares and the entrepreneurial partners who drove the day-to-day running of the project.
In this way, my partners and I did much more than invest in companies. Both my partners and I were co-founders of these new companies, along with the new entrepreneurs. That is the essence, in my opinion, of venture building: the venture builder is a co-founder in the startup, not an investor or an accelerator. The builder is a partner, like any other, who is involved in all areas of the business and who evolves with the company as it grows.
However, despite enjoying independence, these new companies draw on the legal and financial resources of the first company, as well as the clientele, technology and distribution channels gained over time. Thus, the new startups took advantage of our resources. They could also delegate menial tasks, such as accounting and payroll, which we handled centrally; while the independent team focused on the creation of the new product and the business development.
In the course of this process, I ran into all kinds of problems. On the one hand, I faced numerous legal headaches related to owning interests in many companies. Additionally, I had to resolve troubling situations related to the flow of money between the different companies. Additionally, it was necessary to protect and compartmentalize the intellectual property generated by these businesses. And of course, I wanted to establish mechanisms to maximize synergies between the new companies and the parent company, so that the group could benefit from the efficiencies.
This book is, to a large extent, a compendium of all the knowledge extracted during this process. It contains the solutions to all the dilemmas and challenges of venture building. However, I also want to thank the team of venture builders such as Antai (Barcelona, ​​Spain), We Are Builders (Rotterdam, Netherlands), Byld (Madrid, Spain), Founders Factory (London, United Kingdom), Mamazen (Torino, Italy), UNIQ (La Massana, Andorra) the experience they have shared with me to complement this guide. Each of these venture building cases has singularities of enormous interest that have allowed me to analyze the advantages and disadvantages of each model.
Additionally, I want to thank academic institutions such as Mondragon University, with whom I have collaborated since 2015, or incubators such as Demium Startups, in whose activity I have participated since 2017. Both entities provided valuable insights regarding the training and recruitment of entrepreneurs.