The trend that’s shaking up the startup ecosystem: venture builders
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Photo Credit: Shutterstock/ Vector concept of business start up and optimization. Business management

10 venture builders turning technologies and teams into awesome companies

A trend begun by a small selection of tech superstars is slowly becoming a fixture in the startup world.

What is it? Still new enough that it goes by several names (startup factory, venture builder, startup studio, venture lab), but old enough that a loose definition is emerging: a venture builder is a team of startup veterans who take multiple ideas from scratch or startups in their infancy and simultaneously turn them into independent companies using shared expertise and resources.

Why is this trend taking hold now? Because serial business creators have been at it a while and now they want more. More than just investing. More than just one project. Hey, they’re easily bored, and they’ll admit it.

What began organically is coalescing into a model with some fixed tenets. First, they take an active role in building several companies at the same time. In some cases they are generating the ideas for startups internally, while in others they partner with entrepreneurs and act as second co-founders or acquire promising startups in need of their expertise. Regardless, there’s an emphasis on intensively servicing multiple ventures simultaneously.

Second, there’s a mandate to build a strong, experienced team that can service all of the ventures they build from within. It starts with the founder, who frequently has a history of successful investments and exits, and has the wherewithal to provide seed funding. Joining the founder comes managers, engineers, programmers, and marketers who can capably maneuver between startups. This setup saves startups from having to raise money and build teams sequentially, if at all, effectively shortening time to market.

Third, the startups built internally share resources beyond talent: processes, connections, funds – those things every startup struggles to create and every startup needs. Whereas accelerators or incubators offer access to these resources, at venture builders they’re hands-on by definition, and there is less of a sense of competing for these resources. Venture builders are templating the startup model as much as their various startups will allow.

Fourth, the goal of venture builders is for their startups to eventually become independent entities. After the initial launch, they work to create standalone teams and set the foundation for the startup to scale effectively and rapidly.  In fact, many venture builders insist that once launched, the startups get their own office space as soon as possible and only approach the core team when there are notable challenges. If the startups can’t operate by themselves, the venture builder has failed.

Here we look at 10 venture builders who are driving the model forward. For everything these builders share, the model still resists strict categorization.

1. HitFox Group

With a focus on adtech, fintech, and big data, HitFox Group calls itself a “platform for entrepreneurship.” They identify high-growth markets and then build a cluster of companies focusing in them. It turns out that diversifying your investment is a maxim that can also apply to a venture builder’s own startup profile. HitFox Group steadily starts 2-4 ventures each year and provides each of them with €.5-2M. As of 2013, they made around €15M in profits from a roster of companies that includes AppLift, Appiris, and Finleap.

2. Rocket Internet

Rocket Internet is a behemoth that has found itself in the venture builder camp unintentionally. Founded in 2007 with a mission to take successful models and transfer them to new, underserved, or untapped markets, Rocket Internet has become a consummate startup studio. With three funding rounds totaling $452M, they’ve invested in and built companies like ride-sharing platform Tripda, interior design showcase WestWing, and online shopping mall Lazada Group.

3. Science Inc.

Science Inc., led by former MySpace CEO Mike Jones, sees itself as a portfolio company that “creates, invests, acquires, and scales successful digital businesses.” With 2 funding rounds totaling $40M, Science Inc. has in its 3 years of operation built 14 operating companies and 12 portfolio companies in the mobile content, growth, and consumer spaces. Their startups include grooming product deliverer DollarShaveClub, pet boarding marketplace DogVacay, and social bookmarker Delicious.

4. eFounders

eFounders is a startup studio which exclusively builds SaaS companies. They’re also one of the bigger advocates of the startup studio model and outright declare, “eFounders is not an investment fund nor an incubator nor a group of mentors, but rather real builders of products…” Their projects include mention, Pressking, Mailjet, Textmaster, Aircall, and Front. Founded in 2011 by Thibaud Elziere and Quentin Nickmans, eFounders now aims to launch 3-4 projects per year with an undisclosed amount of funding.

5. VentureLab Partners

VentureLab Partners, similar to HitFox Group, identifies high-growth markets and builds startups in verticals they call “clusters.” They act as a “smaller co-founder,” according to Founding Partner Mike Prasad, and do hands-on product development and startup operations up until the stage of product launch and follow-up funding. “The end goal is to gain efficiency in consolidating expertise and relationships through the clusters and get them to the maturity of a pre-series A company.” VentureLab ventures include AdCoin, Tinysponsor, TapHeaven, and Fanmouth.

6. Neverbland

Neverbland call themselves a startup studio or a “company that builds companies.” Those companies include: Slate, a workflow tool for creative agencies, Conjure, a design feedback platform, and, a daily awards platform for video. Founded by Sam Matthews, Neverbland seems to be cornering tools by and for the creative professionals that inhabit their offices in London, NYC, and Warsaw. However, they’re also variously described as an incubator and design and build agency – so the verdict is still out.

7. Betaworks

Betaworks is a hyperactive startup studio that builds and invests widely. Founded in 2008 by serial entrepreneur John Borthwick, Betaworks describes its own business model quite simply as, “a single company that owns larger pieces of the things it has built and smaller pieces of the things it has invested in.” Their roster of things they have built (or rebuilt) includes, Digg, Giphy, Dots, and Instapaper. With three funding rounds totaling $47.5M, Betaworks was recently in the news when Giphy, a GIF discovery tool, raised a nice sum of $17M.

8. Expa

Expa – In March, 2004, Expa became a household name in the category when it raised $50M in their first funding round from the likes of Richard Branson, Meg Whitman, and Li Ka-shing.  That feat is easier when you’re Garrett Camp and you’re a co-founder of Uber and the founding CEO of Expa is a textbook startup studio. As they describe themselves, they “develop products, systems and services, and then form teams to scale them as independent entities.” Though, for all the hubbub, we haven’t seen a product emerge yet.

9. The Monkey Inferno

The Monkey Inferno – Thanks to personal funding from founders Michael Birch and Xochi Birch, who sold Bebo to AOL in 2008 for $850M, they have the wherewithal to “dream up cool internet projects, develop them, then nurture them into successful businesses.”  Like Expa, their “monkey magic” has yet to brew anything up yet, though in July, 2013 Michael bought back Bebo for a paltry sum of $1M with a plan to “re-invent” it.

10. Obvious Corp.

Obvious Corp. is a startup studio with a bipolar but storied history. Blogger founder Ev Williams ramped it up until he came up with the idea of Twitter and then rolled it back down. After stepping down as CEO of Twitter, he’s ramped Obvious up and then down again already, after founding blogging hit Medium.  Already Obvious Corp fans are wondering about Chapter 3 in what’s expected to be a startup success trilogy.

These ten venture builders are early to the game and may become household names as the model grows in popularity to the level of today’s incubators and accelerators. As the startup ecosystem matures, it makes sense that veterans will find new and improved ways to maximize their resources. At the same time, venture builders represent a fresh route for ideators and inventors.

Why sell an idea when you can partner with seasoned entrepreneurs and become a co-founder? For all the challenges they face (prioritization, focus, and communication to name a few), venture builders may represent the next step forward in entrepreneurship.

The views expressed are of the author.

Geektime invites global tech and startup professionals to share their opinions and expertise with our readers. If you would like to share your point of view, please contact us at [email protected]

Photo Credit: Shutterstock/ Vector concept of business start up and optimization. Business management

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Natalie Edwards

About Natalie Edwards

Natalie is a Marketing Manager at Israel’s first venture builder sFBI. A recent graduate of Tel Aviv University’s Recanati School of Business, she’s into everything marketing, technology, and entrepreneurship. Natalie tweets at @natalieanneink.

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