Building new businesses is challenging but is there a replicable formula? Venture builders promise to industrialize the difficult art of venture creation.
Experts claim the Venture Builder model started in the late 1990s, with the foundation of Idealab (founded in 1996 by Bill Gross in Silicon Valley), considered the first true venture builder. Its focus was -and still is- on Internet companies. Some fast-growing startups that have come from studios are Giphy, Zylo, Aircall, or Safetrax.
Other early examples operating in the technology sector include Rocket Internet (Germany) and Betaworks (US), both founded in 2007. All together, these builders have launched and invested in tens of successful internet companies.
Internet Venture Builders gained success and traction in the early 2000s because back then cloud services were not so readily available and network infrastructure was very expensive. A venture builder could however build IT infrastructure and services and leverage economies of scale to attract promising founders looking for a small seed investment and IT support. Nowadays, according to AngelList Data, approximately only 1 out of 40 venture-backed startups (that is, 2.5%) may reach unicorn status. Are Venture Builders more successful than traditional VCs?
How do Venture Builders work?
Venture Builders (or Venture Studios) create companies from scratch. They control the entire process of company building, from ideation to launch, scaling, and even acquiring external capital and exit. They aim to control every step and optimize startups’ chances of success. According to Global Startup Studio Network (GSSN), Venture Studios are currently achieving a 30% increase in chances of success compared to traditional start-up models. GSSN explains that companies launched within venture studios are more likely to go onto Seed and Series A rounds since they can monitor every single step to ensure their companies succeed.
Figure 1. Accelerated Speed to Funding. Source: GSSN.
Venture Studios and Venture Builders do not only fund existing startups, instead, they create startups from their own ideas or their partners’. The studio’s internal team builds the Minimum Viable Product (MVP), then it validates the idea by finding product/market fit and early customers. A simple process graph depicting the Venture Builder process would include 1. Idea identification, 2. Building the POC or MVP, 3. Company foundation, 4. Capital acquisition and, finally, 5. Exit.
Figure 2. Venture Builder process.
What is the difference between Venture Builders and VCs?
Venture Builders and Venture Capital firms differ in a series of features:
|Venture Capital firms
|They create new businesses from scratch with their own teams
|They provide existing businesses with money to help them grow
|They are heavily involved with business decisions
|They are not directly involved, they act as an investment advisor
|They spread out investments to reduce risk
|They focus on a few companies that have high risk & growth potential
|Returns from individual investments & studio success
|Passive investment in startups, highest ROI at exit point
Types of Venture Builders
We can differentiate between different types of Venture Builders:
- Tech transfer studios: they work with companies or government labs to source ideas and intellectual property. When they have the IP, they transfer it and build the startup inside the venture studio. Examples include NLC Health in the Netherlands or Proto Ventures in the US, MIT’s Venture Studio.
- Corporate studios: they source ideas and intellectual property inside their own company. They then build the startup inside a separate corporate venture studio inside the company. For example: Wayra builder of Telefonica.
- Vertical studio: it is a venture studio that generates its own ideas and IP in a specific industry and domain. For example, Flagship Pioneering focusing on life sciences companies, founders of Moderna, among others.
Venture Builder Map
We have built a Venture Builder Map by putting together the most relevant Venture Builders according to Startups Studio Insider and Venture Studio Index. They have been classified according to their verticals and focus areas:
Figure 3. Venture Builder Market Map.
For further information, Enhance Ventures has designed a map containing all venture studios over the world.
Some examples of Venture Builders in the US
Some of the 2023 leading venture studios in the US include:
Founded in 2012 in San Francisco by Jack Abraham, Atomic combines innovative ideas, talented IT and business professionals, and capital, in addition to other critical resources to ensure startups success.
Normally, they work with 10-15 founders per year and, even though they are located in the US, they can create startup projects anywhere. However, they consider in-person collaboration is important the first 6 months, so founders should be able to travel.
Located in New York, Betaworks is a product-focused venture studio founded by John Borthwick in 2008. They focus on a variety of state of the art tech innovations, including web3, crypto media, NLP/CV, and applied machine learning.Betaworks has a strong portfolio that encompasses successful emerging businesses such as Streem, Unsplash, and Anchor.
Headquartered in Los Angeles, this venture studio was founded in 2013 by Jon Bradford.Colab has founded more than 100 companies and has raised more than $500M in capital. It assists startups with a three-pronged approach, including product development assistance, capital funding, and brand building. Through this assistance, entrepreneurs and startup founders can focus on executing their vision for success.
Some examples of Venture Studios in Europe
Some of the 2023 leading venture studios in Europe include:
Headquartered in Berlin by Marc Samwer, Oliver Samwer, Alexander Samwer, and Fabio Tran in 2007, Rocket Internet helps entrepreneurs by investing in their Internet and technology companies located all over the world.Their long portfolio include companies such as Everstox, Helpling, Katoo, Spenmo.
Located in Vienna, Austria, Itscalable is one of the leading corporate venture studios in Europe. They provide a deep understanding of new concepts and risky assumptions in the market, but they also provide their expertise and experience in building business strategies and idea generations to grow and scale existing companies.
Located in Amsterdam, the Netherlands, oneUp is a startup studio that builds ventures with emerging technology for big corporates. With a team composed of 30 innovators in three European cities it has tailored its methods to work with leading international companies in Japan, Germany and the Netherlands.
Located in Spain, Zubilabs is a venture builder that creates and finances companies seeking to generate a positive impact. The company works as an instrument to create social, environmental and economic value.Their portfolio includes companies such as Alteina or Woltea.
Headquartered in the Netherlands, NLC Health intends to bring your healthtech invention to the patient. They offer 100.000€ in startup funding from the beginning and collect valuable experience in overcoming obstacles by building startups at scale.
Some examples of Venture Studios in the UK
Some of the 2023 leading venture studios in the UK include:
Innovify is a venture studio with a special focus on Web3.0 product development that provides new product development and digital innovation. They have built several award-winning digital products for start-ups, scale-ups, and corporates across multiple industries using the latest technologies like Crypto, Blockchain, Machine Learning, IoT, and more.
Headquartered in London, Entrepreneur First selects individuals with a huge founder potential to help them build globally ambitious startups. They provide startups with access to a global network of founders, advisors and investors.
Headquartered in London, UK, Rainmaking is an international startup studio that focuses on Fintech, Insurtech, Smart Cities, Transport & Logistics, Digital Tech and SportsTech. They have raised over £1 billion in funding and have boasted 46 exits. 40% of their portfolio is female-led, including companies such as Relayr.
Successful entrepreneurs are also behind some of the most prominent venture builder, including Garret Camp (Uber co-founder) who founded the venture studio Expa; Mike Jones (Myspace CEO), who founded the venture studio Science; or Scott Dorsey (ExactTarget Co-Founder), who founded the venture studio High Alpha.
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