The reasons for venture building at scaled organizations vary. But the approach aims to solve four problems:
- Customer problems. Find a way to provide a new form of value to existing customers, as their wants and needs change over time.
- Business problems. Give new tools to teams across your company so they can deliver greater value in a quick and efficient manner.
- Market problems. Keep a close eye on changing business environments and within certain industries to identify emerging opportunities.
- Strategy problems. Develop new options for future growth (i.e., a new revenue stream), learning, and exploration into new verticals.
Whether you want to tackle one or more of these issues to create new companies separate from your core business, just know that attempting to do so in-house isn't always an ideal avenue.
Your organization's best bet to build a truly transformative startup — and ensure its chances of long-term success are high — is by working with a proven, external venture-building partner.
The (many) pros of working with an external venture-building partner
"The modern venture-building process is fast-paced, yet structured and methodical," said High Alpha Innovation Director Rob Kimball. "It requires taking a problem-first approach, moving quickly to uncover and deeply understand unmet needs or challenges before trying to identify solutions.”
However, that's not all it requires, Rob noted.
It also requires the right outside partner who can keep innovation programs moving full steam ahead and avoid engaging in innovation theater.
"Pursuing innovation efforts outside the core of the business from inside the structure of the organization is almost always impossible,” said Rob. "Outside partners with experience launching independent startups can help break business ideas out of the constraints of the core where their speed and likelihood of success is greatly improved."
Large-scale organizations must recognize the value of allocating money to external venture building to realize their desired results, per Rob. They can create new startups that attract outside venture capital interest by penetrating new markets, disrupting existing (and ineffective) business models, and scaling rapidly.
"One of our central hypotheses is that scaled organizations are missing out on enormous value by dramatically under-investing in their opportunity to create new, independent businesses," said Rob.
Translation?
Working with an external venture-building team to solve big problems through startup creation — a process that involves a mix of concept exploration, product-market fit analysis, idea validation, and business planning — is how you can attract top talent and VC investment.
(And prevent your business from engaging in the illusion of innovation).
As noted, the "why" behind scaled organizations' external venture-building aspirations vary. But there are a few common reasons our corporate, university, and state government partners often share with us.
1) You have aggressive business goals to meet that prevent a focus on any transformative innovation initiatives.
Half of CEOs worldwide polled by McKinsey in 2023 cited venture building as a top-three priority. Yet many renege on corporate innovation programs intended to launch new startups. (Often months after greenlighting them.)
Why? Because, in their minds, priorities tied to the core business operations supersede any perceived "bonus" transformative innovation activities that may not yield the desired fruits of their innovation team's labor.
Commitment is an underrated component of successful venture building today. Many investors "have the patience to see the real returns come through," McKinsey Sr. Partner Paul Jenkins noted.
However, some C-suite and board members are all too willing to pull the plug on innovation programs, including those around startup creation, before they've had the chance to execute on potentially game-changing ideas.
External venture builders can expedite this venture-building process to ensure that new startups launch quickly.
This fast turnaround, in turn, appeases high-level stakeholders and investors with tendencies to question (and shut down) business initiatives separate from the core products and services.
2) You want a 'forcing function' that can keep your venture-building process on the rails and on schedule.
Speaking of seeing new startups created from scratch in a matter of months, sticking to arbitrarily set timelines often proves difficult for in-house innovation labs. (Especially when there's no C-suite-mandated deadline for discovery.)
"When looking to launch lean startups that solve compelling problems, internal innovation teams tend to take their time, particularly when they're given free reign from leadership to examine multiple problems to solve and potentially dozens of ideas tied to those issues," said Rob.
There's nothing wrong with a meticulous, detail-oriented approach to evaluating, validating, and de-risking new startup ideas.
But outside venture-building partners can act as a hard-line forcing function.
In other words? They can ensure agreed-upon, potentially high-growth concepts swiftly advance from one stage to the next. What's more, they can make sure the best startup idea is moved into the business planning phase.
External venture-building teams guide their partners through the startup creation process — one that, at High Alpha Innovation, involves set-in-stone milestones and deadlines to ensure we stay on track with launching NewCos.
That means your organization can see real-time progress in relation to the overarching venture-building strategy and avoid hitting roadblocks that can cause red flags in the eyes of your corporation or university leadership.
3) You need GTM guidance, exposure to a broader partner ecosystem, and a repeatable venture-building playbook.
Venture building is often seen as a one-off, standalone process in which partners and co-founders are eventually left to hire team members, secure outside funding from VCs, and navigate legal processes on their won.
At High Alpha Innovation, that's not the case.
Our team not only defines customer and industry problems, shape value propositions for prospective companies, and drafts delivery and economic models to advantage startups and their founders from the get-go, but also:
- Works on go-to-market plans with founding teams. Creating the brand story and identity, aiding with finance and accounting needs, offering legal and administrative assistance, and helping with operational logistics are just some tasks we tackle for partners during GTM planning.
- Secure initial talent, customers, and investors. Our team sources, interviews, and hires top founding talent whose skill sets complement those of the CEOs. Then, we work with these leaders to acquire their first customers, and prepare them to engage in potential VC opportunities.
- Offers a blueprint for repeatable startup development. For corporations and universities that want to scale company creation, we can help them build venture studios. Learnings from the first startup launch can inform enhancements to subsequent venture programs. That means faster time to market with highly impactful NewCos.
"When you invest in startup creation via the venture studio model, you benefit from the experience and expertise of a studio team singularly focused on understanding problems and building companies to solve them," said Rob.
At our company, that means weeks of exploration, dozens of customer interviews to unlock audience insights, market-strategy validation, and solution engineering.
This work helps our venture-building partners sharpen their points of view on the problem at hand and enables us to discover how we can collectively create advantaged startups to solve them.
