This is the fourth article in our series on corporate venturing.

The ‘Lean Startup’ book was published more than a decade ago. By now, many people know how to get through the first stages of exploring new corporate venture ideas. The “MVP” terminology has been used and abused and many corporates have added ventures to their innovation portfolio – and if they haven’t, they can rely on the support of the many venture builders and growth hackers out there to help them do so. Great – you now have your MVP with some first customers, and your idea shows initial commercial traction. What then? How do you turn your tiny venture into a multi-million lean and mean profit machine? How do you accelerate and scale?

The four phases of building a venture – Accelerate & scale is the final stage (and most overlooked)

Successfully scaling your corporate venture takes time, grit, synergies, and data. Where the previous phases take weeks or months, the scale-up phase is theoretically infinite. Additionally, you will (again) need to leverage all the corporate synergies you possibly can while avoiding the venture getting smothered. And in this phase, more than ever, you will need to rigorously optimize all parts of the business model by staying right on top of your data. New (digital) businesses have to be 10x better than existing alternatives to stand a chance. Deploying feedback loops based on all the data available to you will help you get there.

Again, those corporate synergies

Keep the corporate close…

Corporate ventures should always have a different value lever than regular startups. At any point in time, five other innovators are developing the same idea as you. So you need to build a sustainable competitive advantage, and your corporate assets are one of the most logical sources for that. Corporate ventures get this advantage through (synergistic) value to the mothership. To effectively bank on this lever, you need to develop a perspective on how your venture will add direct and indirect value to the corporate. This way, there will be sufficient willingness from corporate to support the venture with funds, experience, connections, bargaining power, et cetera along the way. At the same time, you want to use the corporate’s assets to create unique advantages. How can the company’s industry network, buying power, expertise, or simply deep pockets help accelerate the venture and beat competition?

For one of our corporate clients, we arrived at the stage where the MVP was validated, with positive unit economics and the first customers generating actual business value. To scale the venture further, we needed to expand, either by going into new countries or adding categories. Any other start-up would have to painstakingly acquire all the contacts to do so. Not us – the corporate had a massive international partner network that we could right away leverage to expand and scale. We made a few phone calls and mobilized the corporate’s industry network of partners to create a PR, endorsement, and affiliation scheme. Within months, the international business had taken off. That’s the power of corporate synergies.

… but not too close

Having said all that – it’s important to not let the corporate get too close. Ventures get killed because they get managed like corporates. That is, the core business exploits existing business models instead of exploring new ones, trying to squeeze out profits while the vulnerable young venture is not yet even viable.

To avoid getting smothered, you need to give the venture sufficient freedom from the corporate to first create a self-sustaining business before pushing to monetize it. You need to manage the corporate-venture interaction, keeping the corporate at a distance, but using its power whenever possible. This means setting up the right governance framework, KPIs, and external board members considering this dynamic. Creating synergies does not mean integration.

Most corporate managers are inclined to try to monetize a new venture right away. When we validated our MVP with one of our clients, the first thing they said was “Great! Now we can start making money,” looking at us eagerly. “Not quite yet,” was our reply, as their plan to start bombarding the customer with product offers from the corporate was quite premature and would certainly drive said customer into the arms of our competitor. Instead, we kept the focus on bringing value to the customer, optimizing the business model, and building scale. In tandem, we communicated to all stakeholders in the corporate the timelines of when to expect returns – making them comfortable staying in it for the long run.

Polish the diamond based on data

This is the time to make a somewhat clunky MVP into a fully-fledged, effective business model. To do so, you need to build high-speed test-and-learn cycles to keep learning. The organization that is built should support that goal, together with a solid tech foundation that is ready for scale.

Keep learning

Keep focusing on learning quickly. Define what knowledge advantages you can deploy over your competition to better serve and adapt to your customers. Ensure speed to make decisions faster and more often than others. This is what eventually drives up your KPIs such as your retention rate, profitability, and user growth, while optimizing costs for, e.g., acquisition. You can only do this by staying agile and not falling for the temptation of now using your time to build that beautiful app, product, or website. While perfection is a virtue, you should always remain focused on learning, and should only perfect those elements of your proposition that your data shows need to be perfected.

Optimize, expand, and diversify commercially

Besides optimizing the existing marketing and sales channels, you want to build a whole array of growth strategies. As the innovators and early adopters become saturated with your original and smaller scale, you need to spread out and create that ‘buzz’. This goes beyond your original (narrow) focus on one growth engine (paid, sticky, or viral), and requires you to develop multiple growth strategies on top of each other. It’s not just digital marketing that is effective at this stage: now is the time to start building the brand – which has the added benefit of also giving a boost to your venture’s culture. And to reach the majority of customers, you will want to somewhat broaden your proposition, e.g. by adding features, expanding the assortment, and inserting a different price tier.

Build that team!

One of the largest misconceptions is that digital companies scale without people. Start building a professional organization. You want to scale your organization in tandem with your growth. As your revenues increase, more people can be hired. A balanced team of 10-15 FTE’s, with functional experts across departments (commercial, digital, operations) and support functions, is typical after 1-2 years. As you scale, ensure you have a good mix of industry expertise (perhaps from the corporate) and young ‘digital/start-up’ blood. Invest in serious HR, Finance, and Legal experts to support the growth. Insource wherever possible to keep the pace, save costs, and maintain continuity. And hire top-down, i.e., start with leadership that paves the way by first building the processes and ways of working, and then transferring the roles and responsibilities to new hires. 

Example venture team set-up after 1-2 years

Avoid too much technical debt: set up a scale-able tech foundation

While you build your organization, along with growth, also ensure your tech stack is ready to enable the future growth you’re pursuing. Don’t be shy about re-platforming if that’s necessary. Now is the time to think ahead and invest in a solid foundation for the years to come, e.g. for data and analytics. Of course, you should remain modular and agile, so probably don’t invest in giant best-of-suite solutions just yet. Instead, build modules step-by-step as the needs arise and connect them to a scalable modern backbone of your growing scale-up. Needless to say, a strong architect is key to setting this up.

Need help scaling your venture? Why not get in touch with our dedicated ventures team! Or check out our other articles on corporate venturing below.

The Venture Article Series 

We have learned a lot through helping our clients over the years, and we’ll be sharing our key insights with you in a number of publications. The topics we cover are: 

• Introduction to corporate venturing: This article is the first in our new series of articles on ventures and scale-ups in a corporate setting.
• When to build (and when not to): Exploring further that ventures aren’t for everyone, as strategy dictates approach  
• How to build a venture: Drawing the journey of venture building with activities, deliverables, and team set-up for each phase 

• How to scale: Taking the right steps from start-up to a successfully scaled organization  
• Common pitfalls: What can go wrong and how to make sure to avoid it 
• Governance – set-up: How to govern ventures correctly with the right targets, reporting lines, financing, etc. 
• Governance – freedom balance: Finding the right balance between giving a venture freedom versus ensuring a strategic match 
• Manage (KPIs): Looking at the right KPIs based on the de-risking funnel, performance analytics, and reporting to corporate 

• Team: Solving key questions on venture teams and the importance of a great venture lead 
• Venture tooling: How to make the key choices and available options for MVP landscape tools, growth hacking tools, and collaboration tools 
• Customer validation best reads: Sharing our top picks in the literature on customer validation 

Stay tuned!

We hope you’re as excited as we are and please let us know if you have specific topics or questions you would like us to share with you. 

Have you ever felt that your business is ready to build a venture but lacks the systematic skills & mindset to successfully reach your goal? Then you might want to keep reading.

This is the third article in our series on corporate venturing.

Building a venture is something you do based on gut feeling and instinct, right? Wrong! It’s much better to describe venture building as a very systematic process. And with the right leadership, it’s not that hard to successfully replicate. In this article, we want to take you through the journey of venture building. We’ll describe for each phase its objective and milestones & KPIs to determine progress.

The core idea is to “de-risk” your future investments one step at a time. As your level of certainty grows, so does your willingness to invest and make bigger commitments, all while not changing the fundamental ‘test & learn’ approach. An often-used approach to de-risk future investments is by developing a stage-gated funding approach where certain proof points or measures of success must be met in each stage before new (often larger) funds are released for the next stage.

The four phases of launching a venture

Launching a venture can typically be divided into four phases, namely:

1. Ideate & Strategize
2. Test & Validate (PoC)
3. Build & Launch (MVP)
4. Accelerate & Scale

Let’s have a look at each of the phases in a bit more detail.

Ideate & Strategize

Corporates are not venture capitalist firms. This means you’re not purely investing based on financial considerations, but also on strategic ones. With the ‘innovation odds’ stacked against you, it is paramount to invest not just in ideas with a strong standalone potential, but more importantly in ideas that tie in with your corporate strategy. The key to corporate investing through ‘ventures’ is that the idea should focus on truly innovating the business (i.e. building something new) as opposed to focusing on optimizing or transforming the business as it stands. In summary, the perfect idea is a great innovative idea that fits your strategy.

For more information, check out this article in our series on corporate venturing: When to build a corporate venture (and when not to)

This phase is about exploring a wide set of potential opportunity spaces to ensure you diverge before you converge. But it’s also – and arguably at least as important – about setting the strategic intent and formulating hypotheses about where your company specifically has a ‘right to win’. A case example of a clear right-to-win is Leaseplan, a large vehicle leasing company, setting up CarNext to sell its post-lease inventory and resulting in CarNext ultimately becoming the biggest pan-EU platform for used cars.

Once you have developed a clear strategic rationale and have determined the investment focus, the next step is to start testing & validating your ideas to establish a proof-of-concept.

Test & Validate (PoC)

So you have one or multiple high-potential ideas that fit your strategy. Before taking on a huge investment, you want to make sure you thoroughly understand the customer problem you’re trying to solve and that your solution direction is in line with what people want.

Nowadays, it doesn’t have to be expensive to make a proof of concept. You don’t need a fully-fledged and 100% operational business to collect valuable data and feedback. Often, the solution people want isn’t what you had in mind anyway, so you ideally want to find the cheapest & fastest method.

An example of an inexpensive method to determine proof-of-concept is to create a ‘mock-up’ or ‘smoke test’ to validate customer demand. Commonly in a smoke test, a simple 1-page website is created describing the product (or service) and website visitors are given the opportunity to sign up to the product before it is actually launched on the market. For one of our clients, we developed a low-cost smoke test (see example website page below) to be validated with customers. This enabled the core team to quickly pinpoint the customer preference for a portal that focuses on simplicity, no-nonsense, boldness & clarity.

Popular thinking is that your only focus during this phase should be on validating “desirability”. This is true if you’re a 100% bootstrapped entrepreneur. But as a corporate innovator, you would do well to also look at “viability”. If this idea flies, how much money can we make out of it? If your core business is in the billions, then you’re probably not that interested if your new startup has a total potential of five million per year. How big can it be – and is that enough for it to be interesting for your company? And if the direct benefits are insufficient, what is the indirect value potential?

Having a confirmed problem-solution fit by repeatedly bouncing ideas off customers clears the path to start building and launching your Minimum Viable Proposition (MVP).

Build & Launch (MVP)

This is it. You have empirically validated that your idea is sound (customers have a problem and your solution fixes it in a way that people seem willing to pay for it) and could make sense economically (if everything goes right). Time to go to market and learn whether you’re right or wrong. “Many ideas solve a problem, but not necessarily a problem worth paying for.”

Don’t forget, the goal of a minimum viable product (MVP) is not the product or service itself. Your real goal lies beyond that: building a sustainable business model. Your MVP serves as a vehicle to learn what customers really want, and how you can build a business model on top of that.

The most effective and efficient way to do that is by learning quickly and adapting. You’re not yet ready to go for big money, so don’t overinvest in a big launch. Each customer is probably still costing you, so you’ll end up mostly giving money to Facebook.

A key insight in such cases is that capabilities & way of working are often undervalued, while technology is overvalued (i.e. don’t just build a website/app). A startup’s real asset is its people and its way of working, which means that besides building your MVP and cracking the commercial funnel, it’s time to start building the team for real. This is the moment you’re going to start shifting from doing a PROJECT to building a BUSINESS.

Key questions to answer in this phase:

• Have we developed the right product, features, and functionalities to attract users & keep them around?
• Were our assumptions on consumer needs & potential solutions, correct?
• Can we attract, acquire, and retain consumers at the right cost level?
• What improves conversion and customer lifetime value? (€ per order, # orders, % retention, etc.)
• What (insights / data / activities / partners) do we need to continuously improve?
• What does the path towards long-term sustainable model look like? (proposition, organization, tech)

This phase is critical to get right, because as Peter Thiel famously said: “a startup messed up at its foundation can’t be fixed”. If you manage to successfully complete the build & launch of your minimum viable proposition by proving a product-market fit and business model, the next step is to focus on developing a winning model and achieving growth potential by accelerating and scaling your business.

Accelerate & Scale

The process for finding product-market fit (PMF) is an art rather than a science. PMF emerges from experiments conducted by the entrepreneurs. Through a series of build-measure-learn iterations, PMF is discovered and developed during a process rather than a single Eureka moment. A-ha moments of inspiration do happen, but PMF is not created that way.” – Reid Hoffman (a.o. founder LinkedIn)

The main objective in this phase is to learn fast, validate consumer needs & barriers, and thus get closer towards product-market fit. The first goal for this phase is to improve your proposition and the business model in such as way that you realize LTV > CAC. This means that for each additional customer you acquire, you earn more money over their lifetime than it costs you to acquire them.

With positive unit economics sorted, you can really start scaling. We can write a whole book on that topic alone. And we’ll delve a little deeper in our upcoming article on Scaling. Typical challenges / goals include international expansion (both localizing your proposition, as well as adapting the organizational model), product variations/extensions, expanding your customer target group(s), and managing the challenges that come with a rapidly growing scale-up rather than a start-up.

A note on governance

We often tell our clients that the hardest part of building a corporate venture is not building the venture, but rather managing the corporate.

Whilst not entirely true (building a successful venture is no easy feat!), there’s some legitimacy to this joke.

Thanks for bearing with us up to this point! If you’d like to learn more on venture building, you can explore our article series below.

NEXT UP IN THIS ARTICLE SERIES 

We have learned a lot through helping our clients over the years, and we’ll be sharing our key insights with you in a number of publications – see below the list of topics we will cover: 

• Introduction to corporate venturing: This article is the first in our new series of articles on ventures and scale-ups in a corporate setting.
• When to build (and when not to): Exploring further that ventures aren’t for everyone, as strategy dictates approach  
• How to build a venture: Drawing the journey of venture building with activities, deliverables, and team set-up for each phase 

• How to scale: Taking the right steps from start-up to a successfully scaled organization  
• Common pitfalls: What can go wrong and how to make sure to avoid it 
• Governance – set-up: How to govern ventures correctly with the right targets, reporting lines, financing, etc. 
• Governance – freedom balance: Finding the right balance between giving a venture freedom versus ensuring a strategic match 
• Manage (KPIs): Looking at the right KPIs based on the de-risking funnel, performance analytics, and reporting to corporate 

• Team: Solving key questions on venture teams and the importance of a great venture lead 
• Venture tooling: How to make the key choices and available options for MVP landscape tools, growth hacking tools, and collaboration tools 
• Customer validation best reads: Sharing our top picks in the literature on customer validation 

Stay tuned!

We hope you’re as excited as we are and please let us know if you have specific topics or questions you would like us to share with you. 

This is the second article in our series on corporate venturing.

As a C-level executive or head of strategy, you are continuously on the look-out for disruptive trends and want to understand how to effectively tap into an environment that is continuously changing. You may already have specific ideas in mind on how to do this, perhaps through a corporate venture or some transformative innovation. But you only have so many hours in a day and may not be fully up to speed on the latest best-practices on corporate venturing. What are the conditions to build a corporate venture? And will corporate ventures work for you at all? In other words: when should you build a corporate venture, and when shouldn’t you?  

Although some believe corporates aren’t suited to venture into the agile, fast-paced world of building a start-up themselves, our experience tells otherwise. Contrary to popular belief, corporates can and do beat start-ups at their own game when building ventures from scratch. If built properly, corporate ventures can enjoy all the advantages start-ups have, while leveraging typical corporate assets, and thus build lasting competitive advantages and create long-term value. 

Synergies: Beat start-ups at their own game by exploiting synergies between corporate & venture 

However, corporate ventures aren’t for everyone. They should only be built in certain situations, under a strict set of circumstances. Starting a venture with the wrong idea, or not setting it up for success, will typically result in pulling the plug a few months/years down the line – and lots of investments wasted in the process. To make sure you invest wisely, here are three ‘checks’ we believe you need to pass before going full steam ahead and building a venture. 

Check #1: does building a venture fit well in your overarching corporate strategy? 

Optimize, transform and disrupt 

It only makes sense to build a venture if it fits in well with your overarching corporate strategy. That is, if doing so maintains the right balance across the three horizons that we discussed in our SparkOptimus Ventures Introduction: ‘Optimization’, ‘Transformation’, and ‘Disruption’. Developing new business models (i.e. ventures) is only one of the three horizons, and to achieve smooth growth, you need to spread initiatives and management time across these horizons in a way that upholds the equilibrium.  

Emesa (VakantieVeilingen.nl) had been growing at a tremendous pace when they approached us. Leaving the start-up years behind, the shareholder and its management felt a new level of strategic focus was key to igniting the next phase of significant growth. We agreed and concluded that instead of focusing on new disruptive initiatives, Emesa needed to re-balance management time it spent more towards the first two horizons. We helped Emesa compile and prioritise growth ideas across the three horizons into a coherent and focused growth strategy, balancing innovative high-risk/high-growth ideas with low-risk operational excellence and expansion initiatives. This approach solidified the operation and delivered immediate EBITDA growth to fuel the next phase of entrepreneurship. 

Not all ‘ventures’ are ventures 

When determining your innovation portfolio across the horizons, first make sure the ideas you consider “disruptive” actually belong in that category. Although certain ideas may feel very disruptive, they may not be ventures at all and shouldn’t be treated as such. The goal of a venture is to explore new (digital) propositions or invent new products that reach further outside a company’s core. They generally aren’t expected to become a core activity for the next 5-10 years. What’s more, they often cause friction with existing business and may even cannibalize on it.  

For example, we worked with HEINEKEN to develop a B2B platform, which felt quite disruptive to their industry. But it was in fact very much intertwined with their existing business and mainly allowed them to serve their current clients better, faster, and cheaper. After initial pilot testing, the platform became part of the core business within a few years. HEINEKEN’s digital B2C venture Beerwulf, on the other hand, was a disruptive idea that extended far beyond the company’s core. It caused natural friction with existing business (e.g. by also offering non-HEINEKEN partner products), and therefore was set up as an independent legal entity, had a separate P&L, and should not be expected anytime soon to be integrated with HEINEKEN’s core activities.  

Three horizons: Not all ‘ventures’ are ventures 

Another example is KRAMP, a supplier of parts and technical services for the agricultural sector. We supported them in setting up an online direct-to-customer channel. This was transformative to their business but not disruptive, and it was fully capable of running inside the existing organization. As such, we don’t consider this channel a venture. 

But we also built a disruptive platform with KRAMP that goes beyond their current categories and which we would consider a venture. On this platform, farmers can find everything they need; not only parts and technical services, but also farm feed, seeds, and even financing. Also see our interview with KRAMP’s CEO, Eddie Perdok, where he explains how they “incorporated all of the stakeholders and parties in the agricultural ecosystem in order to offer the farmer a good value proposition”. Again, this causes natural friction with the existing business and perhaps even cannibalization thereof, and needs to be managed separately – at least for the foreseeable future.  

Check #2: is building a venture the best option versus buying or partnering? 

You don’t always need to build a venture yourself – depending on your strategy, buying or partnering may be a smarter option. If there are interesting disruptive players in your industry, it often makes sense to first better understand if they could be potential acquisition targets for you. Building a venture is great if you want to develop internal capabilities for digital business, achieve 100% strategic fit from day one, and don’t want to pay the premium you otherwise would in M&A. But there are times when buying a venture is the better choice, especially when there are already scaled players in the market. Key risks with this strategy are a lack of long-term strategic fit between the venture and your corporate strategy, and critical staff leaving straight after buying it. Partnering to (further) develop a venture mixes elements of the first two approaches and is a great choice if you feel you need to learn from best-practices and adopt new ways of working, while keeping investments manageable. 

Instead of building or buying their own venture, supermarket chain Jumbo created a partnership with grocery delivery company Gorillas. This allowed Gorillas to leverage synergies from Jumbo’s immensely broad product range and strong bargaining power, while Jumbo gained access to both speed and (digital) capabilities that would have been difficult to acquire themselves. 

Check #3: can you set the venture up for success from the start? 

So you have a great disruptive idea that fits your strategy and you’ve decided that building it yourself is the best option. As you know, success it not guaranteed for a venture because it’s a high-risk endeavor. So to have any chance of achieving your goal, you must be prepared for success from day one. This depends on two key factors, which we’ll discuss below. 

Are there synergies with the ‘mothership’ you can leverage? 

This touches on ‘Check #1’ above, as there needs to be a real strategic match with current overarching corporate.  

Synergies: Car2Go and Vipps were set up for success with clear synergies between corporate & venture 

Take Daimler, for example, which started Car2Go. It offers the obvious benefit for the venture that they can supply the (capital intensive) vehicle fleet, while the mothership also benefits from acquiring a whole new consumer group for their product. Another example is Vipps, the payment app by Norwegian financial services provider DNB. These ventures could leverage synergies with the corporate ‘mothership’, giving them a much larger chance of succeeding. 

LeasePlan had hundreds of thousands of used cars coming back from lease every year. This offered them a good starting point for establishing CarNext: a sales platform for used cars that effectively leveraged synergies with the parent organization. CarNext sells LeasePlan’s post-lease inventory and is now the biggest pan-EU platform for the second-hand car market. It‘s built on LeasePlan’s funds, tooling, processes, networks and people. 

Are you ready and willing to do what it takes? 

In the venturing space, you need to be willing to make unconventional decisions and act under uncertainty. You need to test, learn and adapt quickly, and fail fast to eventually find a sustainable model to create customer value and succeed. 

This requires a different way of working than most corporates are accustomed to. In order to thrive in the venturing space as a corporate, you need to build a separate venture team and give that team all the freedom it needs with a reporting line to a senior stakeholder within the corporate – and the right mandate to make exceptions to the rule.  

Different mindset: Ventures can flourish when they are not managed like corporate projects

Furthermore, investments will be significant – once a venture gains traction you often need to invest more, not less. It’s vital to employ stage-gated funding, where you invest more as the venture shows progress and results. You can only pull this off if you are absolutely ready and willing from the start to do what it takes.  

In conclusion, deciding when to build a venture is by no means a simple task. However, with the right checks in place, you can significantly mitigate risk and move ahead with confidence. It’s certainly not a luxury to do your homework first in order to understand whether a venture fits well into your corporate strategy, and whether building, buying, or partnering is the best option. And that whenever you do decide to build a venture, you are set up for success. 

NEXT UP IN THIS ARTICLE SERIES 

We have learned a lot through helping our clients over the years, and we’ll be sharing our key insights with you in a number of publications – see below the list of topics we will cover: 

• Introduction to corporate venturing: This article is the first in our new series of articles on ventures and scale-ups in a corporate setting.
• When to build (and when not to): Exploring further that ventures aren’t for everyone, as strategy dictates approach  
• How to build a venture: Drawing the journey of venture building with activities, deliverables, and team set-up for each phase 

• How to scale: Taking the right steps from start-up to a successfully scaled organization  
• Common pitfalls: What can go wrong and how to make sure to avoid it 
• Governance – set-up: How to govern ventures correctly with the right targets, reporting lines, financing, etc. 
• Governance – freedom balance: Finding the right balance between giving a venture freedom versus ensuring a strategic match 
• Manage (KPIs): Looking at the right KPIs based on the de-risking funnel, performance analytics, and reporting to corporate 

• Team: Solving key questions on venture teams and the importance of a great venture lead 
• Venture tooling: How to make the key choices and available options for MVP landscape tools, growth hacking tools, and collaboration tools 
• Customer validation best reads: Sharing our top picks in the literature on customer validation 

Stay tuned!

We hope you’re as excited as we are and please let us know if you have specific topics or questions you would like us to share with you. 

This is the first article in our series on corporate venturing, see the full series below.

This article is the first in our new series of articles on ventures and scale-ups in a corporate setting. In this series, we will share our insights from working with clients around the world to build new disruptive ventures, and help scale successful ones. We aim to educate and inspire CEOs, CCOs, innovation directors, and other business leaders interested in corporate entrepreneurship. In this introductory piece, we will give you a preview of the topics we’ll be covering throughout the series. 

What is a corporate venture?  

We call it corporate venturing when a (large) established organization pursues innovation by either building, partnering with or investing in a start-up. The goal is usually to explore new (digital) business models or invent new products that are further outside a company’s core and often not expected to become a core activity for the next 5-10 years. Such opportunities typically lie in addressing completely new customer groups (e.g. a B2C proposition for a traditionally B2B-focused company) or in significantly different business & operating models (e.g. a digital service offer for a CPG company, or a B2B ecommerce business).  

 

One example of a venture that is exploring a radically new space is HEINEKEN’s Beerwulf. Together with the international brewery, we built, operated, and scaled a new digital-first start-up for craft and variety beer. Before HEINEKEN started this project, digital retail had not been part of the company’s business at all. Today, Beerwulf is one of the largest European digital beer platforms where beer lovers and enthusiasts can discover and buy the best beers from the best brewers in the world. We helped HEINEKEN get from idea to go live in <9 months and built an independent venture team that still runs the company today. Through Beerwulf, HEINEKEN is establishing a direct relationship with its end consumers. The data generated by the platform enables the team to improve continuously and achieve growth quickly.  

 

Why build a corporate venture? 

While many companies are booking great successes with their corporate start-ups, not every idea warrants building a venture. There are multiple factors and alternatives you should consider.

We typically define three kinds of digital initiatives: 

• those that optimise current operations (optimisation); 
• those that transform the way you sell to your customers within the existing business model (transformation); and 
• those that create new business models and disrupt the old (disruption). 

To achieve sustainable long-term growth, you need to have active initiatives on all three horizons because they generate value on different timelines. Skilled management requires a careful division of time across the horizons.  

To illustrate this, let’s have a look at Hely. Together with the Dutch Railways (NS) we designed and built a one-stop-shop for all public transportation and shared mobility (e.g. bikes and cars), called Hely. At Hely you can hire cars, e-bikes and cargo bikes on one handy app. While the new venture offers mobility – like NS’s core business – it explores a completely separate service that has nothing to do with the core business; it could even have a cannibalising effect on it. Hely can therefore be classified as a “third horizon” initiative. But while building Hely, NS has not stopped concentrating on activities closer to their core. Instead, while working on Hely, NS is continuously improving its (digital) core services of train travel with optimization and transformation initiatives, e.g. through the digital train travel app.

Three horizons: Ventures live in the third of three ‘horizons’ across which you need active initiatives

Can’t we just buy it? 

Building a new venture from scratch is not always what you want. What if the innovation has already been launched elsewhere – and your company comes in a little too late? Then you might not have the patience and resources to build a corporate venture and will need to look into other options. Depending on your strategy, investing in or partnering with an existing player may actually be a better choice. A great example is Henkel Beauty Care, who, rather than creating their own competitor, invested in the successful scale-up eSalon. Just keep in mind that acquisition comes at a price – and we’re not only talking about the money. Next to the market price, you may have to settle for a less-than-optimal strategic fit and the cost of integration after the acquisition.

Building a corporate venture, on the other hand, ensures 100% strategic fit. It’s also a great way to develop internal capabilities. Considering that a start-up’s value is often largely built on its people & technology, building these capabilities from the ground up can be extremely valuable. As an example, we built and successfully launched WeDrinkwell, a subscription for healthy (novelty) drinks. Already in the first weeks after the launch of the D2C platform, we were able to gather data-driven insights for the mother company Pepsi Lipton on consumer preferences, assortment, and new drink formats from hundreds of paying customers. Moreover, the venture gave PepsiLipton critical experience in a new set of digital skills such as building a product recommendation engine.  

 

Want to know more? Don’t hesitate to reach out!

This was the first introduction article in our series on corporate venturing. In our next article, we’ll delve deeper into when to build a venture (and when not to).

Also, keep an eye out for the upcoming articles in this series. 

Next up in this article series 

We have learned a lot through helping our clients over the years, and we’ll be sharing our key insights with you in a number of publications – see below the list of topics we will cover: 

• When to build (and when not to): Exploring further that ventures aren’t for everyone, as strategy dictates approach  
• How to build: Drawing the journey of venture building with activities, deliverables, and team set-up for each phase 

• How to scale: Taking the right steps from start-up to a successfully scaled organization 
• Common pitfalls: What can go wrong and how to make sure to avoid it  
• Governance – set-up: How to govern ventures correctly with the right targets, reporting lines, financing, etc. 
• Governance – freedom balance: Finding the right balance between giving a venture freedom versus ensuring a strategic match 
• Manage (KPIs): Looking at the right KPIs based on the de-risking funnel, performance analytics, and reporting to corporate 

• Team: Solving key questions on venture teams and the importance of a great venture lead 
• Venture tooling: How to make the key choices and available options for MVP landscape tools, growth hacking tools, and collaboration tools 
• Customer validation best reads: Sharing our top picks in the literature on customer validation 

Stay tuned!

We hope you’re as excited as we are and please let us know if you have specific topics or questions you would like us to share with you. 

 

Let’s get in touch!