What are the most important success factors when operating a corporate venture studio? While this is not an "easy-answer" type of question, our Partner Johannes Simon gladly shed some light on the topic by providing his own top 3 most important success factors and indicators!
Below are his insights:
Success Factor 1: Get the Governance right from day one
Taking the necessary time to discuss, align and decide on the ideal setup and governance for the venture studio in the beginning will avoid harmful friction and discussions during the operations. Make sure to get the right expertise in-house or select the right partner, with lots of experience in venture building and strong ties into the startup ecosystem, to avoid expensive mistakes.
From our experience a few key points that need to be ensured before starting any venture building process are the following:
- Place the venture studio entity as close to top management as possible to keep decision processes short, reduce internal interest conflicts and display leadership support across the own organization.
- Ensure that the necessary degree of organizational independence of the venture studio from the core organization is given, so that venture studio activities do not have to comply with legal, IT and documentation standards of the core organization.
- Formulate a clearly defined yet flexible Investment, Thesis, and attractive Founder Terms to become a relevant partner for high-potential founders and external investors.
- Accept the rules of the VC market if you want to build long-term successful independent ventures. Every “If”, “When” and “But” compared to market standards, will decrease the chances of the ventures to scale and succeed - and by that, your efforts and ideas will stay fruitless. No matter how good the idea or setup around it.
Success Factor 2: Stay lean and agile in the venture building process
The process to get from a venture idea to an up-and-running startup is almost never linear, involves a high degree of uncertainty and includes much more failed attempts than successes.
To avoid spending enormous budgets on the wrong ideas, venture studio processes need to encourage a fail-fast and don’t fall-in-love with your ideas mentality. Striving for perfection, covering edge-cases and planning decades ahead is a prerequisite for large-scale enterprise projects but deadly to the concept of fast prototyping and MVPs. Create awareness for that in top management - teach how pre-seed cases need to be assessed compared to the usual decision making regarding new products, entering new markets etc. in Corporate C-Levels. This enables you to create an “appetite for taking risks” that is paramount to build a successful Startup Portfolio efficiently.
Success Factor 3: Make use of your corporate unfair advantages
Don’t let your unfair advantages stay a benefit on your founders' hiring ads - make use of them in reality. If used right, they can be a real unfair advantage. They are a lever to increase the chances of success for your ventures that most investors do not have in this scale. Keeping the view of enabling a financial investment is crucial though, if your interest turns strategic on venture level it will most likely be toxic for it. In our experience unfolding unfair advantages in practice is heavily dependent on the awareness and buy-in of the middle- and lower management in the core organization who are the gate-keepers for:
- The enablement of ad-hoc support from domain experts of the core organization
- The encouragement and incentivisation to involve clients and partners
- The promotion of early prototype testings and adoptions of MVPs in the own organization
Keep them informed throughout the organization, keep explaining how their involvement is crucial to build a successful future for your ventures and give them a central channel for communication within the organization.
And lastly...
Would you like to learn more about our unique venture building approach? Are you in need of support building a product - or a whole Startup? Don't be shy - schedule a quick discovery chat with us! We'll love to hear from you.