Each startup has its strengths and specialties, but rarely do they have every aspect they need to succeed, without help, across the board.
At some point, whether it’s down to particular skill sets, networking opportunities, or plain old funding, a startup will likely engage with at least one set of partners. Today, we talk about who that partner might be and why a venture builder could be your best chance for success.
All investors are not created equal
Depending on what you need, who you need, or how much you need, your partnership will most likely be dictated by where you sit in your growth journey. A startup is still a startup from concept and idea well into production and delivery. Pushing to get investment for a startup takes research and application, and you have to know who you’re dealing with.
We believe that venture building is the best investor type you can find. However, before deep-diving into reasons why venture building, let’s see what other types of investors are.
Here’s how each entrepreneur or founder can find assistance throughout each stage of their process:
Incubator investor
Timing: Very early stages, developing an idea into a program.
Term: Mid-term: from several months to several years.
Characteristics: Access to infrastructure and resource support, creating a package capable of scaling on its own terms.
Objective: Growth.
An incubator is usually a legal institution focussing on startups, using its staff and resources to build business activity.
Incubator investors structure and support development at very early stages to develop promising concepts into MVP (minimum viable product) and to perfect the business model. Then, with an actionable MVP, the product’s viability and demand are tested, and the product is ready to scale and grow.
Resources typically cater to infrastructure and support and rarely include funding.
You may also like: How to Find Product-Market Fit?
Accelerator investor
Timing: When a startup is established and proved worthy of support.
Term: Short term: typically 3 to 6 months.
Characteristics: Acceleration of growth through infrastructure at any stage.
Objective: Growth and positive ROI.
Accelerators speed up development and growth in their chosen market to achieve each ‘next level’ goal. With an existing MVP and client purchases proving there’s a market, the accelerator has a fixed timeframe to grow each venture stage rapidly.
They use existing methods and tools-and occasionally funding-to actively nurture the build process, structure, and finances to stabilize the project during its early challenge phase.
Venture fund/venture capital investor
Timing: When a product has reached MVP.
Term: Long term: up to and beyond 10 years.
Characteristics: Financial investment only.
Objective: To provide capital so entrepreneurs can reach their potential.
Venture funds or venture capital funding is mostly financial, although can cover the expenses of the companies at any stage. At times, their services also include providing technical or managerial expertise. They can be used as part of an accelerator package or through specialist investors. They consider the most likely project successes with an appropriate ROI and provide the finances required for each to reach their potential.
Venture builder investor
Timing: Co-founding a project from the beginning.
Term: Mid-term: 2 to 5 years.
Characteristics: Investing in everything it takes to deliver the highest possible return, acting as a hands-on partner in every aspect.
Objective: To set up a high-value operation with a positive sales value ROI.
What is a venture builder? A venture builder brings almost everything the founder or entrepreneur needs to the table for a stake in the company. They leverage their own or external business expertise, offer technical development support, and deliver other services that affect the successful launch of the product - marketing, strategy, branding and communications. A venture builder will deliver proactive, hands-on service, covering every aspect of the business’s development and success.
However, that all comes at a price to the entrepreneur, with each venture builder becoming a major share partner.
The venture builder’s goal is to grow each project quickly and to scale while ensuring longevity, so when it comes to the returns, they achieve maximum profit, whether operational or, most usually, by selling their share of the operation.
"So, if venture builders are so perfect, why don't everyone just find one for themselves?" - you may ask. Well, like with everything in this world, there are the downsides of venture building, too. So, we'll introduce you to them in the next section so that you can get a full picture of this type of investor.
We also recommend reading: Magic Formula of Investing in Startups
The pros and cons of venture building
At some point, every entrepreneur will try to find funding for a startup, and the previously mentioned options will be on their radar. What each venture builder brings to the table is a wealth of experience in your chosen sector. They build a finely tuned team ready to develop your concept to a prototype MVP, then the complete product, and, finally, sales.
It doesn’t stop there; they keep working until your organization is an operational success, excelling in its field until it has a sale value for longer-term investors ready to become partners in a flourishing business.
The advantages? You’ll receive a professional investment of everything from time, teams, business ideas, money, and more at every stage of your project. You’ll even earn a steady wage while they develop each stage of your company to the next level.
They lower your risk, taking over as investors or investment managers. They also speed up the process significantly because, as far as their investment goes, the sooner they hit their targets, the sooner they achieve their goal.
The disadvantages? They take control of every aspect of your business, leaving you as an equal founder and CEO but with a smaller share of the company and profits. But then, could you achieve the figures they can without them?
Worth checking: Is Vertical SaaS right for your next project?
How to find investors for startups – The top 3 venture building companies in 2021
According to thestartupfounder.com, the top 3 venture builders in 2021 were Zyla Labs, Rocket Internet, and Betaworks. It’s hard to argue with them. Each investor has been involved in growing organizations into household names and valuations into the billions, ready for whatever next big thing they choose to pursue next.
Zyla Labs
A renowned B2B SaaS specialist and one of the most well-known in the industry, its website is a marketplace offering a range of APIs.
If you think you’ve got what it takes, or the next big idea and Zyla Labs agrees, they’ll help you get to market fast. They’ve got the teams, the know-how, and the venture-building process down to an art.
Zyla Labs’ portfolio includes Codery, GetWoord, GoFlightLabs, and Metals API, serving household names such as Zoom, Allianz, Costa Coffee, and intuitio labs.
Rocket Internet
Rocket Internet’s portfolio currently covers 200 companies on six continents with a total valuation of over €30 billion. In 2018, their projects employed 42,000 people. Current partners include Expertlead, Flash Coffee, Global Savings Group, Helpling, and Instafreight.
Betaworks
With over ten years of experience investing in early-stage startups, Betaworks has a fund of $50 million and a portfolio of truly household names: Giphy, Dots, Bitly, Tweetdeck, Tumblr, Kickstarter, Medium, and Venmo, to drop just a few of the names that that feature on their homepage. And with those successes under your belt, why wouldn’t you?
What can you expect when partnering with a venture builder?
As a designer, entrepreneur, startup, or developer, you may feel far more comfortable with the support of an experienced team behind you, looking for more than just how to get capital for your business.
As discussed, you should expect much more than the funding you'd receive through venture capitalists or angel investors. Instead, venture builders leverage their vast knowledge in the field to fill the gaps you can’t, and they hire in what they don’t know or can’t do.
Let's just take a moment to look at the stats: according to Shikhar Ghosh's research, the overall success rate for venture capital-backed companies won't ever bring a return to their investors' capital. Radically opposite is the situation with venture-building firms. Let's, for instance, take the real example of Stefan Gross-Selbeck, who, together with his team, has had more than 150 firms under his wings, 90% of which were "doomed" not only to survive but accelerate in their growth.
“Why such a huge difference?” - you may think. Well, the thing is, venture builders are actually looking to create stable businesses while venture capital firms aim to fund as many “unicorns” as possible.
And, the other way around, apart from just getting access to the expertise of accelerators or incubators, you’ll also get funding for your startup, which is often a blocker on one’s way to success.
You can expect things to move quickly, as the venture builder’s goal is to get you to market and grow as soon as possible. You can also expect more ideas to develop and push your product down avenues you might not yet have thought of.
They’ll also allow you to focus on what you’re good at, as your new team will manage all the admin, strategy, marketing, and communications.
It’s all designed to save time.
Read also: What every startup founder should know about exits?
How to get funding for your startup
If all of that sounds good to you and you’ve got the next big idea ready to go, venture building offers a streamlined and far less risky route to market and growth. Your next step is to research the best possible matches for you from those likely to invest in your technology and product and read up on their application process. Then all you need to do is perfect your pitch.
Looking to learn more about venture building and what does Apptension has to do with it?
Ping me via email (mdomanski@apptension.com) or LinkedIn, I’m always glad to chit chat.