Unlock the secret to corporate venture building and discover your ideal approach to driving growth and unlocking value. Established companies can maximize their chances of success by aligning their efforts with one of four archetypes, each with its unique triggers and endowments.
Unlocking Growth through Corporate Venture Building
In today’s fast-paced business landscape, established companies face a daunting challenge: bridging the gap between their current market capitalization and the value they need to achieve first-tier total shareholder return growth. This $9 trillion deficit is a stark reminder of the imperative for corporate venture building.
Corporate venture building refers to a strategy where large corporations invest in and support startups through various means, such as funding, mentorship, and resources.
This approach allows companies to stay competitive by accessing innovative technologies and talent.
According to a report, 75% of Fortune 500 companies have invested in corporate venturing.
The goal is to create mutually beneficial partnerships, driving growth and innovation for both the corporation and the startup.
Understanding Your Corporate Venture Builder Type
Corporate venture builders have categorized new ventures into four archetypes, each with its unique triggers and endowments. By aligning their efforts with these archetypes, companies can maximize their chances of success and unlock growth opportunities.
The Four Archetypes of Corporate Venture Building
1. Corporate Launchpad: Solving Internal Problems
Trigger: Identifying an internal problem and using endowments to solve it—and create solutions that can be sold.
Endowments: Capabilities with commercial potential, such as talent, capital, and industry intelligence; a ready ‘first customer’ within the company; the ability to pilot and incubate the venture internally.
A corporate launchpad is an internal platform within a company that enables employees to develop and launch new business ideas, products, or services.
It provides resources, support, and infrastructure for innovation and entrepreneurship.
This model allows companies to foster a culture of 'innovation' , encourage employee engagement, and drive growth from within.
Benefit: Solving its own challenge and creating a new P&L to boost growth. By testing internally, it can release the solution in the market with more certainty of success and a quicker path to growth.
Example: An industrial company developed an insurance venture to address customer concerns about transparent pricing and high costs. The company leveraged its data inputs to assess insurance risk and generate accurate pricing, improving product bundles and increasing ‘stickiness.’
2. Tech Attacker: Disrupting New Markets
Trigger: Developing a disruptive tech-focused business that will lead legacy competitors.
Endowments: The ability to pilot and incubate in the core business; customer and other owned relationships.
Benefit: Using technology to disrupt a market where it has low market share. Example: A manufacturer of residential and commercial industrial equipment created smart connected product solutions, offering energy management, real-time monitoring, and fleet management.
3. IP Ignite: Monetizing Technology and IP
Trigger: Increasing market multiples by monetizing technology or intellectual property (IP) into a new business.
Endowments: Proprietary IP, research and development (R&D), products, pricing power, value chain expertise, and data; capabilities with commercial potential.
IP Ignite is a digital marketing platform that provides businesses with innovative solutions to boost their online presence.
It offers a range of tools and services, including website development, search engine optimization (SEO), pay-per-click advertising (PPC), and content creation.
With IP Ignite, companies can improve their website's visibility, drive more traffic, and increase conversions.
Benefit: Repurposing IP to create a business that can command a higher multiple than the core. Example: A global company turned its procurement function into a revenue-generating B2B marketplace, offering better pricing for contractors and committed volume for suppliers.
4. Customer X: Scaling Existing Relationships
Trigger: Signs of stagnation across current products.
Endowments: Deep customer and other owned relationships; channel and distribution partners.
Benefit: The ability to quickly scale new offerings by using existing customer and ecosystem relationships in new ways. Example: A consumer products company developed a retail services platform, providing independent brick-and-mortar retailers with analytical tools and value-added services.
Overlapping Archetypes
These archetypes are not mutually exclusive. Multiple archetypes can come into play for a new venture. Companies can start by determining their advantages and identifying the archetype that makes the most sense for them.
Conclusion
Corporate venture building is an essential avenue for established companies to increase P&L growth and market multiplier. By understanding their corporate venture builder type, companies can unlock growth opportunities and bridge the gap between their current market capitalization and the value they need to achieve first-tier total shareholder return growth.
