Growth & Scale
Written by Joel Sunnehall
August 31, 2022

Conversations with an AI part #3: scaling and achieving value out of corporate venturing

Desifer’s new friend Alice the AI has over the past few weeks been telling us about the benefits of corporate venturing and the key success factors for setting up a venture building unit. Now it’s time to start building a pipeline of new ventures to continue growing your business.

But turning a promising idea into a scalable and profitable venture is easier said than done. What should you think about when scaling a corporate startup? And how can the parent company capture the value of the new business that it has built? Thankfully, Alice is here to help us make sense of it all.

A conversation between the AI Alice and Joel Sunnehall

Joel: Good day Alice! How has your summer been so far?

Alice: It has been great, thank you for asking!

Joel: It’s been a while since our last chat, so let’s dive right into it.

Alice: That sounds good!

Joel: Super. So, last time we discussed key success factors to setting up a venturing unit, and today I thought we should follow up with how to scale and profit from corporate venturing. How does that sound?

Alice: Sounds great. Let’s do it.

Joel: First of all, what is meant with “scaling a venture”?

Alice: So, a venture can be pretty straight forward, or very complex. It can consist of a single project or even a full new business, serving a specific customer segment. But most of the time, a corporate venturing unit manages a portfolio of ventures. That’s why it’s important to think about scaling a venture in systems terms.

Joel: Interesting, can you please elaborate on how to think in such system terms?

Alice: Sure. Every new venture is a system in itself, and they are interconnected in multiple ways. For example, ventures can influence each other, and engage in joint projects. And if one venture is successful, other ventures can benefit from that success and increase their chances of success.

Joel: Okay I see, so to scale one venture it is beneficial to consider other ventures in one’s portfolio and the synergies that might exist?

Alice: Exactly, and that’s why it is so important to think about ventures as interconnected systems.

Joel: Once a venture has successfully scaled and grown into a full-fledged, new business, how can the parent company capture the value and monetise from the business?

Alice: There are two main ways. One option is that the parent company acquires the venture, or decides to take it over. And the other option is that the parent company decides to partner with the venture and either gets equity, or some kind of financial benefit.

Joel: Alright, so there will essentially be either an integration or an exit. How should one go about deciding on this? Are there any upsides to determine which path to take even before building the venture, or is it better to wait until later when you know what capabilities the venture has?

Alice: It depends on what type of venture we are talking about. Both options should be evaluated early, because both options come with different risks, and different benefits. Take for example a venture that is developing an innovative new product that could serve as an enabler for new products in the core business. It is more likely that the parent company will want to acquire the venture than to simply partner with it. On the other hand, if the venture is developing an entirely new value proposition, for example, a new technology that the parent company is not active in, it will likely make more sense to partner with the venture.

Joel: It is safe to assume that not all ideas that spring out of a venture building unit will become a huge success. But if you could say in round numbers, what are the chances that a corporate startup becomes a large-scaled business, if compared to startups without corporate support?

Alice: That’s a great question, and hard to answer. But in my experience, corporate startups have a 1-in-8 chance of becoming a viable, large-scaled new business, versus a 1-in-500 chance of startups that start from scratch.

Joel: Very interesting discussion with you today Alice. Thank you once again for sharing your valuable time and expertise, we appreciate it a lot. Until next time!

Alice: Thank you Joel, and looking forward to our next chat!

 

The AI cleverly recognised the importance of structuring a corporate venture as its own individual entity. But full autonomy is only one of six success factors that are critical to your new venture’s success. Learn about the remaining five success factors in our report:

Download the report New Corporate Ventures: Six Success Factors

 

Continued learnings from Alice

This is the third and final piece in this series of talks with corporate innovation expert Alice the AI. Does that mean that this was the last time we spoke with our newfound friend? Likely not. But in the meantime, have a look at the preceding conversations between the people of Desifer and Alice here and here.

To produce the above conversation, we used the platform and technology developed by AI21 Studio™. The prompt used to give the language model the right context was based on content that Desifer has created and owns. A few iterations to find the optimal level of creativity and personality for the AI were rendered, but other than that, there has been no modifications to the AI’s answers.

 

Growth & Scale
Written by Joel Sunnehall
August 31, 2022