Venture Builders – Changing the Start Up Model

Venture Builders are changing the Start Up Model. If you haven’t yet heard of venture-builders — also called tech studios, startup factories, or venture production studios — let me introduce them to you: They’re organizations that build companies using their own ideas and resources.

Unlike incubators and accelerators, venture builders don’t take any applications, nor do they run any sort of competitive program that culminates in a Demo Day. Instead, they pull business ideas from within their own network of resources and assign internal teams to develop them (engineers, advisors, business developers, sales managers, etc.).

You’ll want to get used to the idea because we’re going to see a lot more venture-building organizations emerging.

Venture builders develop many systems, models, or projects at once and then build separate companies around the most promising ones by assigning operational resources and capital to those portfolio companies.

In its most basic form, the venture-building company is a holding company that owns a greater amount of equity in the various corporate entities it helped created. The most successful venture builders are, however, much more operational and hands-on than holding companies: They raise capital, staff resources, host internal coding sessions, design business models, work with legal teams, build MVPs (minimum viable products), hire business development managers, and run very effective marketing campaigns during their ventures’ pre- and post-launch phases. Venture Builders are not Incubators per sea that exist in today’s Venture Capital world.

Technology futurist, serial entrepreneur, and angel investor Nova Spivack is part of the early technologists who pioneered the venture production studio model. He wrote about the model in 2011 at a time when most of the elements that make it up were still in gestation. Nova actually invented the Venture Production Studio term, calling it a “new approach to building startups.” This new approach certainly paid off, as his own venture production studio enjoyed multiple exits three years later.

A Rising Movement
The venture-building philosophy is a rising movement in the tech and startup industries. These Venture Builders are not the typical Equity managers of a typical Venture Capital Fund that is managing companies like a stock picker. The most notable venture builders include Rokk3rFuel, Obvious Corp, which spun off Twitter and Medium; Mark Levin’s HVF (Hard Valuable Fun), which produced Affirm.com and Glow.com; Betaworks, whose portfolio includes Instapaper and Blend, and Germany’s Rocket Internet. Although these highly successful companies have obvious differences in their business models, they also have significant characteristics in common. They use shared resources (capital, deal flow, connections, etc.) to launch solutions that then operate as fully-operational companies. But Venture Builders see the process from Seed, Early Stage to Rounds A & B with Equity Positions along the way.

The venture-building movement is starting to become more popular outside of the United States as well: The Netherlands gave us StarterSquad, the self-proclaimed “European version of Betaworks”; and the South African team at Springlab had made the entire African continent proud with their innovative joint-venture business model.

There is a rising star in Venture Builders in Miami called Rokk3rFuel. Rokk3rFuel recently exited by their 1st Fund with a 80x Return. Rokk3rFuel took a $20mm Investment in 40 Tech companies and recently sold it for $150mm + 25% of the IPO! Rokk3rFuel is now working on Fund 2 and they are rapidly approaching the close of that fund. Rokk3rFuel is different than most Venture Builders because they have relationships with many Universities such as Harvard, Yale, MIT as well as Universities on the West Coast – USC, Cal Tech and in Canada plus offices in London and Latin America in Columbia, to take companies from a Linear growth model to a Exponential growth model thus changing Tech companies to succeed faster with target returns to their LP’s of a projected 10x or more. Rokk3rFuel believes that over the next 10 years that 40% of companies in the S&P 500 will no longer exist because of this exponential growth. Rokk3rFuel takes large equity positions from the Seed stage to Rounds A & B and plans on changing over 60 Tech companies growth over the next 8 years in Fund 2. Rokk3rFuel is able to substantially mitigate the Risks involved in Venture Capital by taking these equity positions throughout the various stages. Take a closer look at Rokk3rFuel by going to their website at invest.rokk3rfuel dot com.

As you probably noticed, the Venture Builder model is different than that of the venture capital firm: It funds ventures, builds a portfolio, and looks for successful exits. However, it is also much more involved in the operational aspect of its ventures than a traditional VC. In some cases, it goes as far as pulling all the necessary resources from its vast connection network to crush its competition and scale extremely fast. This “Damn the torpedoes, full speed ahead” operational technique, which is highly reminiscent of Uber’s business strategy, proves that venture builders are first and foremost gifted entrepreneurs and savvy business developers who don’t simply pour money into ventures and watch them grow. They implement aggressive business management techniques that benefit all the ventures that are part of their network.

Venture Builders

Venture Builders

Posted in Blog, News and tagged , , .