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21.5.2024

The Modern External Venture-Building Approach, Explained

Matthew Bushery

The reasons for venture building vary from one organization to the next. But, at a high level, the approach aims to solve four types of challenges:

  1. Customer problems. Find a way to provide a new form of value to existing customers, as their wants and needs change over time.
  2. Business problems. Give new tools to teams across your company so they can deliver greater value in a quick and efficient manner.
  3. Market problems. Keep a close eye on changing business environments and within certain industries to identify emerging opportunities.
  4. Strategy problems. Develop entirely new options for future growth, learning, and exploration into new, potentially lucrative verticals.

Whether you want to tackle one or more of these issues to create offshoot ventures completely separate from the core business, just know that attempting to do so wholly in-house isn't always an ideal avenue.

Rather, your best bet to turn a minimum viable product into a transformative startup business — and ensure its chances of success long term are sky high — is by working with a dedicated venture-building partner.

Understanding the new venture-building process: Working with a proven, outside venture builder

"The modern venture-building process is a fast-paced, yet structured and methodical endeavor," 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, per Rob.

It also necessitates the optimal outside partner who can act as a committed collaborator to 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 ideas out of the constraints of the core where their speed and likelihood of success is greatly improved."

Large-scale companies, in particular, must recognize the importance of allocating sufficient capital toward external venture building to realize their desired results, according to Rob:

The creation of new startups that attract outside venture capital interest by penetrating new markets, disrupting existing (and ineffective) business models, and scaling rapidly

"One of the central hypotheses at the core of High Alpha Innovation is that existing large companies and institutions are missing out on enormous value by dramatically under-investing in their opportunity to create new, independent businesses," said Rob.

Translation? Liaising with an external venture-building team to turn your high-level business ideas into early-stage startups — through a mix of concept exploration, product-market fit analysis, idea validation, and business planning — is how your organization can attract top talent and VC firm investment.

With that in mind, here are three reasons to work with a reputable venture-building team separate from your organization to co-design new companies (and prevent your business from engaging in the illusion of innovation).

1) You have aggressive business goals to meet that prevent a focus on transformative innovation

More than half of CEOs worldwide polled by McKinsey at the end of 2023 cited new-venture building as one of their top-three priorities.

Yet many C-suites 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 execs and board members are all too willing to pull the plug on innovation programs 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 and, in turn, appease stakeholders and investors with tendencies to question (and shut down) business initiatives separate from the core products and services.

2) You get a forcing function who can keep your venture-building process on the rails/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 venture ideas.

But outside venture-building partners can act as a hard-line forcing function to ensure agreed-upon, potentially high-growth concepts swiftly advance from one stage to the next and, in time, 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 institution can see real-time progress in relation to the overarching venture-building strategy and ensure you avoid hitting roadblocks that can cause red flags in the eyes of your corporation or university leadership.

3) You get go-to-market guidance, exposure to a broader partner ecosystem, and a replicable venture-building playbook

Venture building is often seen as a one-off, standalone process in which any partners that aid with developing NewCos with them hand off the figurative baton and leave them to hire departmental leaders, secure funding from VCs, and navigate legal processes, among other items.

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 to source and helping with operational logistics are just some tasks High Alpha Innovation tackles 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 works with these leaders to acquire their first customers, and prepare them to engage in potential VC opportunities.
  • Offers a blueprint for repeatable venture creation: For corporations and universities that want to scale venture building, 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 High Alpha Innovation, that means weeks of exploration, dozens of customer interviews, 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 them and us to discover how we can collectively create optimal solutions (i.e., advantaged startups) to solve them.

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