Why Do We Need Venture Builders?

Venture builders stem from a radically simple yet profound idea: people need each other to achieve the greatest goals. An entrepreneur embarking on a startup journey immensely benefits from the resources, experience, and influence of established companies. However, historically, there has been a gap between entrepreneurs and corporations. Entrepreneurs and corporations lack a common language for effective communication and mutual trust.

Recalling my first startup experience, when it reached its initial success milestones, I was approached by experienced entrepreneurs offering help or partnership. Yet, I perceived their approach more as a threat than an opportunity. I was naive. But I was also right to be cautious.

The issue is that, in the absence of a standardized model of agreement, collaboration is difficult to pull of. For an entrepreneur, their startup is not just a business, but a culmination of years of hard work and emotional investment. Thus, the idea of sharing equity with someone who hasn't been part of this journey can seem inconceivable. A clear agreement model, delineating contributions, roles, and commitments of each party would facilitate collaborations that might otherwise seem impossible.

Moreover, the challenge has been to create a shared space where corporations and entrepreneurs can collaborate without overstepping boundaries. As a startup founder, my first office was a garage - a symbol of freedom and autonomy. The prospect of cohabiting with an established corporation, with its rigid schedules and protocols, was unappealing. A dedicated space, designed for and by entrepreneurs, offering independence yet the benefits of proximity to a corporation, would have been a perfect solution.

In time, my team and I discovered solutions to these challenges. These solutions can be summed up in two words: venture building. It is an idea that existed decades before we paid atention to it. This solution emerged as the ideal framework, language, agreement model, and space for established corporations and independent entrepreneurs to innovate successfully. Moreover, it seemed a concept that started to take off and gain attention.

Venture building has demonstrated its potential to be the most competitive way of business creation, reducing the risks and inefficiencies commonly associated with entrepreneurship.

As a nascent model, determining the success rate of venture builders is challenging. Often, there's confusion between venture builders and startup incubators or accelerators. However, venture building is distinct. It combines the resources, the experience, and the entrepreneurial talent of different parties in a uniquely competitive way. It fosters innovation with higher sustainability and efficiency.

Venture building minimizes entrepreneurial risks while maximizing synergies towards a common goal. It deploys systems knowledge transfer, not only from corporations to startups but also among the various portfolio companies within the same builder. These companies, though independent, share a language, framework, and workspace, enabling synergy. And at the same time, the venture builder, being a common majority partner, prevents competition and promotes harmony and collaboration between startups.

Furthermore, venture builders offer a range of services at different startup stages, addressing problems that may be trivial for corporations but are significant for new entrepreneurs. Delegating tasks like accounting, taxation, or payroll allows innovators to concentrate on essential activities like product development and sales.

In summary, venture builders are organizations dedicated to systematically creating new companies and generating high-value synergies. They have transformed the art of startup creation into a more systematic science, enabling productive collaborations between novice and experienced teams.

What are Venture Builders Used For?

Venture builders primarily function as conduits, channeling the resources and expertise of seasoned teams and established companies to entrepreneurs — the real drivers of innovation and creative decision-making. This symbiosis between entrepreneurial spirit and corporate robustness amplifies the strengths of both, propelling them further than if they were working independently.

Moreover, venture builders play a crucial role in mitigating the risks associated with investing in startups. The core philosophy of this model is that the builder's experienced management team significantly boosts the success probabilities of entrepreneurial ventures. This added layer of stability and certainty is attractive to investors and governments, fostering a willingness to finance high-risk initiatives and opening doors to new forms of both private and institutional support.

However, it's important to note that the true value of a venture builder lies not just in experience but in its methodological approach. Experience, while invaluable, is not foolproof; even seasoned entrepreneurs are prone to errors. The real strength of a venture builder is unleashed through a systematic, methodological approach that forms the backbone of all management activities.

In a way, venture builders are demystifying the creative process of entrepreneurship. What was once considered anecdotal in the era of disruption has now evolved into a set of core competencies, indispensable for any organization. Venture builders have honed these competencies, employing standardized methodologies and processes. These not only summon the muses of innovation but also harness the accumulated experience and wisdom of management to steer multiple companies towards success simultaneously.

Why is the Time Right?

The venture building model's rise can be attributed to several key factors. We've identified seven pivotal elements that have significantly contributed to the recent proliferation of venture builders.

1. Entrepreneurs are More Ambitious

The act of creating companies has undergone a radical transformation in the new century. A significant cultural shift in entrepreneurship has taken place, with public and private institutions, political parties across the spectrum, and individuals of all ages viewing business creation as an almost heroic endeavor.

This change is driven by inspirational success stories like Facebook and Google. The idea that anyone could establish the next billion-dollar company - a "unicorn" - has become widespread. This mindset has particularly resonated with entrepreneurs themselves, who now think and operate more like large corporations. They harbor global ambitions, focus on the scalability of their ideas, and seek to professionalize their activities.

To grasp the extent of this shift, compare the entrepreneurial mindset of the last century with today's digital age. Previously, an entrepreneur might have opted to open a local store or factory, ventures that, while potentially profitable, lacked scalability and were burdened with high fixed costs and limited opportunities for rapid international expansion. In contrast, the 21st century has seen the influence of large international corporations and tech companies permeate all societal levels.

Presently, anyone with business aspirations and internet access can conceive ideas more akin to a P&G executive than a neighborhood store owner. Entrepreneurs today have access to an array of resources, from comprehensive blog summaries of complex concepts to TED talks by leading technologists, entrepreneurs, and influential figures. As a result, we can conclude that today's entrepreneurs are more ambitious and capable than ever before.

2. Startups are a More Attractive Investment

Traditionally, investors have gravitated towards low-risk assets, with real estate being a prime focus for many. This conservative investment approach favors security over high returns, essentially seeking to avoid the uncertainties that startups typically represent.

However, the 2006 real estate bubble burst challenged the notion of real estate as a foolproof investment. Concurrently, the same decade witnessed the rise of highly profitable business models - the renowned unicorns. These companies, as Tom Goodwin insightfully points out, leverage not just economies of scale but also software models with negligible variable costs:

"Uber, the world's largest taxi company, owns no vehicles. Facebook, the world's most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodation provider, owns no real estate."

Venture builders offer investors an entryway into the startup world, mitigating the typical headaches associated with such investments. They present an appealing blend of startup investment benefits while reducing the inherent risks.

3. The Innovator's Dilemma: Large Companies' Need and Struggle to Innovate

For every inspiring Instagram or Apple, there's a cautionary tale of Kodak or Nokia, underscoring the struggles of large corporations to adapt and innovate. Established companies are often perceived as sluggish in seizing opportunities and rigid in their innovation approach, risking obsolescence.

The crux of the issue lies in the dilemma of disrupting a successful existing model - akin to abandoning a lucrative gold mine for an uncertain venture. Large corporations, preoccupied with their proven markets, find it challenging to pivot towards disruptive technologies that cater to new needs or market segments.

This predicament is extensively analyzed by Clayton M. Christensen in "The Innovator's Dilemma" (2016). Christensen suggests that corporations could acquire companies aligned with the new market's values and processes. However, venture builders offer a more viable alternative. They provide a cost-effective, less risky approach to addressing the innovator's dilemma.

Moreover, the current business landscape is dominated by digital models, prompting many corporations to adopt a platform strategy and create a portfolio of digital startups. This shift has led to management teams becoming more youthful in spirit and operationally flexible. In essence, corporations are increasingly adopting an entrepreneurial ethos in both spirit and practice.

4. Venture Building Has Success Stories All Over the World

Venture building is not just a theory; it's a proven approach with success stories spanning the globe. In Europe alone, my experience includes collaboration with several notable venture builders, each exemplifying the model's effectiveness in different settings.

• Antai (Barcelona, Spain): A pioneer in the Spanish market, Antai has been instrumental in launching successful ventures, demonstrating how localized knowledge combined with a global outlook can create impactful startups.
• We Are Builders (Rotterdam, Netherlands): Known for their hands-on approach, they have successfully nurtured numerous startups, showcasing the Dutch entrepreneurial spirit and innovation.
• Byld (Madrid, Spain): Byld has carved a niche in Madrid's startup ecosystem, bridging the gap between traditional business practices and modern entrepreneurial methodologies.
• Founders Factory (London, United Kingdom): Based in the heart of London, Founders Factory has become a beacon of innovation, fostering a diverse range of startups and providing them with the tools and connections necessary for global success.
• Mamazen (Torino, Italy): Italy's Mamazen stands out for its unique approach to startup incubation, blending Italian creativity with pragmatic business strategies to build successful enterprises.
• UNIQ (La Massana, Andorra): Operating from the picturesque setting of La Massana, UNIQ has demonstrated how even smaller communities can be hubs of entrepreneurial activity and innovation.

These examples underscore the versatility and adaptability of the venture building model. Regardless of geographical or cultural context, these builders have managed to create thriving businesses, proving that the venture building approach is universally applicable and successful.

5. We Live in More Diverse and Inclusive Societies

Today's corporate culture, especially in urban areas worldwide, has become increasingly inclusive. This shift is partly due to the globalization of companies and the dismantling of stereotypes, along with the rise of alternative social movements. While there's still progress to be made, today's corporate offices are more heterogeneous than ever before in terms of gender, geographical origin, lifestyle, and thought processes.

Creative individuals often thrive less in homogenous and strictly regulated environments. Fortunately, the growing openness in corporate mentality has allowed people with diverse attributes to coexist within traditionally normative structures. This diversity fosters innovation and leads to improved collaboration models, such as venture building.

6. The Traditional Concept of Employment is Less Attractive to Talent

Increasingly, individuals seek professional careers that resonate with their personal values and beliefs and offer psychological rewards alongside financial compensation. This desire for meaningful work is particularly prevalent among millennials, driving many to start their own businesses. Traditional motivations for entrepreneurship, such as autonomy, the satisfaction of being one's own boss, and the potential for wealth, also play a role.

This shift poses a challenge for traditional companies in attracting and retaining top talent. The reality is that no job as an employee can offer the same personal fulfillment as running one's own business. However, being an employee also has significant advantages, such as no financial risk and less leadership burden.

Venture builders somewhat bridge this gap, offering the stability and guidance of an experienced leader, combined with the self-determination and personal fulfillment of creating one's own business. They provide an appealing middle ground, blending the best of both worlds.

7. Entrepreneurs and Corporations Share a Common Language

The convergence of the entrepreneurial spirit in executives and corporate-like structuring among entrepreneurs has led to a shared language between these two profiles. It's increasingly common for a CEO of a multinational and an entrepreneur without corporate experience to have read the same books and watched the same YouTube videos.

We believe this cultural convergence is crucial in facilitating the necessary agreements for venture building to succeed. This shared language creates a new platform for collaboration. Without it, aligning people with vastly different life experiences to join forces in founding a company and agreeing on task distribution and common goals would be considerably challenging.

This commonality has spurred an evolution in the entrepreneur's role, culminating in the widespread adoption of venture builders. Just as early humans descended from the trees, entrepreneurs are now stepping onto the platform of venture builders, marking a significant shift in the business landscape.