In order to identify the origin of venture builders, we have to place them in the context of the United States more than 10 years ago.
There, within a seasoned and open business framework, relationships arose between one team that detected a need and had funding available, and another (recruited) team that provided the talent required to make the startup a reality. Although the concept emerged on the West Coast, it soon extended eastward, becoming especially popular in New York. In light of this history, we consider these words from Vicent Ferrer, co-founder of Mas Vinyoles Venture Factory, in this article in La Vanguardia, very appropriate: “Venture builders are called upon to play an important role as catalysts for change in a dynamic city, where you increasingly get the exciting sense that any conversation could yield a good business idea.”
But let’s break it down. What is a venture builder?
A venture builder observes the environment, detects a need and provides a business idea in order to create a startup that responds to it. After this first identification phase, it’s time to seek out the right people to bring the idea to fruition and select which projects to convert into startups. The process involves finding people whose particular skill sets and knowledge complement each other and exponentially increase their value.
The resulting new team will receive expert mentoring during the first steps, guaranteeing a smooth beginning for the startup. In addition, the venture builder provides funding for the new startup and offers top-quality knowledge sources to support the new team.
How does it work?
The venture builder provides 100% of the funding and a workspace; supports the project strategy; provides software, communications and public relations services; and offers legal support and opportunities for networking. In return, they receive a share of the profits that varies depending on each case. The company that fosters the future startup progressively cedes autonomy to them, gradually retreating from the decision-making process until full responsibility falls on the team. Once the startup is operating on its own, it searches for another workspace, and the connection with the venture builder will either conclude or continue as a shareholder relationship.
What are the advantages for the entrepreneur and the intellectual team?
Professionals who decide to join a startup created through a venture builder develop their careers by leading a business that they themselves have created, without taking economic risks. In addition, they don’t need to deal with bureaucratic tasks such as incorporation, paying taxes, payroll, workspace, corporate image and communication strategy. They need only concern themselves with work related directly to the startup.
What’s the difference between an accelerator or incubator and a venture builder?
The venture builder was an important innovation, as founding a startup used to work in reverse: first came the idea, then you’d search for a team and later the funding to carry out the project.
In the case of an accelerator, a fully formed startup approaches it with an idea, with the aim of obtaining help to grow and requesting resources from third parties, whether they be public institutions, equity or hedge funds, or another type of investor.
Creating a startup with a venture builder doesn’t necessarily mean you’ll never have to work with an accelerator. Venture builders use 100% of their resources to develop a solution and implement it in a fully operational way.