Venture building made easy. Operational VC and Venture Builders
Back in my days, start-up incubators and accelerators were the rave within the entrepreneurship community. Schools and universities, private companies, and even research labs all ventured into incubators. Through several business plan competitions where ideas and plans were evaluated for novelty, feasibility, viability, and potential for profitability, project ideas become eligible for incubation, and training opportunities were provided to the participants in addition to some level of funding.
With one of the first programs that were provided by Metavallon, I had the opportunity to establish my startup, gain traction through unique pilot opportunities, and familiarize ourselves with external startup ecosystems (our Silicon Valley expedition has definitely changed my entrepreneurial mindset once and for all). When we needed to take the next step and open up a new market (the Netherlands), we selected to participate in a very challenging accelerator program by Startupbootcamp. There we had the opportunity to better understand the factors that impacted our market (commerce), polish our approach, and expand our network. Overall, both of the programs were very helpful for our company and made us speed up the venture development process.
Across the globe, there have been many success stories, however, making the next step and especially securing the necessary liquidity remains a growth challenge for many start-ups. The initial fund injection is usually not big enough to allow the business to navigate to the valley of death and this is where the problem starts. Only very few of the limited number of ideas that get accepted into acceleration can access necessary financial, technical, staffing, and management support to move to experience major breaks. Addressing this challenge has been the main reason why new alternative approaches are created in the last years.
Before analyzing a couple of those approaches, let’s take a step back and see the main components of any new venture. Based on our experience, for a startup to grow usually we need these three pieces of the puzzle to be in place:
- Team. A group of entrepreneurs, engineers, product, and business individuals that have an assumption and are willing to validate it. The ambition in this group is to build a sustainable business, learn, and have some fun during the way. They are what we say as the long term greedy ones (the term was inspired while reading Malcolm Gladwell’s book Outliers), they want it all.
- Support. The people that are willing to support the team by providing their expertise, network, time, etc, almost everything besides their money. What they get in return is usually a small stake in the company and/or some personal growth opportunities.
- Money. Individuals (angel investors) or corporations (Venture Capital, Private Equity, etc) whose job is to track down, invest, and support the most successful businesses in their area of focus. The goal is to maximize the return on their investment, (usually) within the soonest possible timeframe
As Mike Moyer is describing in his (extremely useful and to the point) book Slicing the Pie, there is a significant distinction between the cash contribution and the non-cash contribution through all the stages of growth of any new venture. I think the argument that he uses is pretty clear and explains how there is a significant distinction between saving money (that you can then use to invest) and earning money (that you need to support your lifestyle). Taking this into account, we should always consider the impact and the importance of the cash contribution versus the non-cash one.
So let’s get to the chase. These are two new approaches that are created as a result of the metamorphosis of the status quo:
A) Operational VC
As our partners in crime have pointed out (I am referring to the MoRo.Fund team), there has been a new generation of Venture Capital approaches created in the last years that is also called VC 3.0. The twist here is that the VC is not only providing financial and mentoring support but is in a position to offer hands-on support to their investments on their day to day challenges.
Imagine an investor that is not only providing funding but is also working with you as part of the team.
Everything started with Andreessen Horowitz back in April 2019 when he applied to become a Registered Investment Advisor (RIA). If you are asking yourself what does a VC (one of the most successful VCs in the world to be a bit more precise) has to do with financial advising, the answer is pretty simple. Andreessen Horowitz and the a16z team, desire more flexibility to be able to do more with their funds, such as investing in blockchain startups that can offer crypto in return.
B) Venture Builder
Venture Builder, also called startup studio, startup factory, or venture studio — is focused on building startups using their own resources based on their own ideas. They have (or find) the idea, they have (or find) the team, they have (or find) the money… But building a business isn’t just about founding the team and making the first step. Venture builders take care of other aspects needed to successfully launch and grow a venture including marketing, strategy, branding, and communications. Also, take care of operational management, e.g financial, legal advisory, human resources, administration, and more.
In brief, they do everything in house.
At Vesquad our vision is to make venture building easy for all because we believe the more ventures are created the more beautiful our life becomes. For that reason, our dedicated squad focusing exactly on this kind of challenge has created an end to end modular solution for a) the Managing Partners in a VC that will allow establishing the operational framework, speeding up their digital transformation activities, and providing day to day support to their startups, and b) the entrepreneurs or intrapreneurs of a technology venture that can support them on their product, software development, business and operation challenges across the idea, growth and scale stage of the venture.
If you are interested in getting involved and learning more about this metamorphosis you can get a 30 minutes free consultation (no strings attached) to provide hands-on support on the venture building challenges you are facing. It goes without saying that we are always eager to learn more and expand our horizons so do reach out. I am really curious to know what you think!