Corporate Venture Building: How Entrepreneurs Unlock the Hidden Potential of Corporate Assets
In today's rapidly evolving business landscape, a multi-billion dollar industry is quietly gaining momentum: Corporate Venture Building. This innovative approach allows entrepreneurs to unlock the hidden potential of corporate assets, creating game-changing digital businesses with a real market advantage. With a total addressable worldwide market of over $20 billion annually*, Corporate Venture Building has become a powerful asset class, experiencing exponential growth in recent years.
Words by Tomas Kolder and Stephanie Strobl
So, what exactly is Corporate Venture Building?
“At its core, it is a co-creation strategy that leverages a large corporation's strengths, resources, and backing, combining them with a startup's speed, flexibility, and agility. In this collaboration, entrepreneurs or venture builders work hand-in-hand with corporations to validate business ideas quickly, build new ventures, and recruit teams that will eventually take the lead”, says Nikola Likov, Director of Global Corporate Venture Building at Creative Dock, Forbes 30 Under 30 Honoree & Venture Builder
“Corporate Venture Building is like a big tanker forming an interdependent symbiosis with a fleet of small speedboats. The tanker embodies the large corporation that has vast resources and power. However, it lacks flexibility and agility. Meanwhile, the speedboats, representing startups, are smaller, faster and can quickly seize new opportunities. By working together, the tanker provides stability and support to the speedboats, while the speedboats help the tanker to be more agile and move faster. In this alliance, both entities thrive, conquering new waters and seizing untapped opportunities. Ultimately, the success of the new ventures brings new strategic value and new revenue back to the large corporation”, adds Nikola Likov, Director of Global Corporate Venture Building at Creative Dock, Forbes 30 Under 30 Honoree & Venture Builder
Why has Corporate Venture Building become increasingly popular
Owing to its distinctive advantages over other forms of corporate innovation, Corporate Venture Building has become an increasingly popular course of action for corporations looking to innovate in the face of disruption and uncertainty. Compared to Traditional Venture Capital or Corporate Venture Capital, it allows for higher strategic alignment with the existing strategic agendas of corporations, greater control during venture creation and a business model tailored to capitalise on corporations’ existing assets. Furthermore, studies have shown that it delivers at least 2x or better ROI than other corporate innovation options. Its success rate stands at an impressive 66%, far surpassing the success rates of traditional and corporate venture capitals, which range from 20% to 30%**.
Corporate Venture Building brings a reduced risk of failure
Additionally, startups of Corporate Venture Building have a reduced risk of failure and can be scaled faster than traditional startups. Leveraging alliances with corporations and following a clear methodology, Corporate Venture Building-born startups experience 44% better outcomes on average than traditional start-ups in terms of Average Internal Rate of Return (IRR), Time needed to move from project launch to Series A, Time needed from project launch to move to Seed and Time required to move from Seed to Series A***.
CVB-born startups also demonstrate impressive success rates in securing funding, with 72% advancing from seed to series A financing rounds. This agility and rapid growth offer a significant advantage over the industry average, where traditional investments take approximately 6.6 years to exit. In comparison, startups created in venture-building studios achieve exits at an average age of just 3.85 years***.
Corporations often lack the capability to strategically develop rapidly scaling new businesses on their own
While established corporations have immense potential for building successful new businesses, they often lack three essential qualities to create new digital growth predictably: execution experience, access to talents, and speed and culture. An estimated 10,000 established corporations**** are unsuitable for building strategically relevant, fast-scaling new businesses. This is where Corporate Venture Building steps in to bridge the gap.
How does corporate venture building differ from other corporate innovation vehicles?
Corporate Venture Building is the all-inclusive approach in the framework of corporate venturing. To distinguish Corporate Venture Building from other corporate innovation vehicles, we must highlight their active team involvement and the skills of autonomy venture builders enjoy during venture creation. Unlike the more passive roles taken by Accelerators, Incubators, Venture Capital and Corporate Venture Capital entities in venture development, Corporate Venture Builders actively participate in developing the start-up. They support corporations along the entire value chain of venture creation: from ideation, prototyping and early-stage venture design to validation and testing, product development and operational activities, including marketing, growth hacking, legal, operations and team set-up.
Corporate Venture Builders will take over the entire set-up of the new venture and hand over the new company to their corporate partner when suitable. The approach allows leveraging the teamwork between an entrepreneurial approach and significant corporate assets to de-risk and speed up discovering, launching and growing new business models. And as a result, corporations can unlock their full potential for innovation and growth.
Choosing the right approach for corporate innovation requires careful consideration of corporate objectives, goals, integration strategies, availability of internal experts for staffing, cultural fit, target markets, and financial and stakeholder support. By aligning these factors, corporations can determine whether Corporate Venture Building is the ideal vehicle for their innovation efforts.
Corporate Venture Building unlocks the hidden potential of corporate assets
In conclusion, Corporate Venture Building is an innovative approach that allows entrepreneurs to unlock the hidden potential of corporate assets. By collaborating with large corporations, venture builders can build game-changing digital businesses that combine the stability and resources of the corporate world with the speed and agility of startups. Corporate Venture Building has emerged as a powerful force in the corporate innovation landscape with its proven track record of high ROI and success rates. As more corporations recognise its potential, it is poised to revolutionise how businesses innovate globally.
*Figures are based on World Bank data and from estimation from CD insights with an annual 2m$ budget allocated to corporate innovation efforts
**BCG (2022); Success rate defined as returning capital for CVC, reaching acquisition or IPO for venture capital, and ‘on track or outperforming’ for BCG Digital Ventures
***GSSN: Disrupting the Venture Landscape
****Figures are based on World Bank data of total listed companies 43248, estimation from CD insights that 23% of listed companies have corporate innovation efforts
Find more specific examples of corporate venture building on the Creative Dock website. To enhance your own business, contact us directly at email@example.com. Depending on your industry, you'll hear from an expert in your specific industry vertical.
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