It is safe to say that most new ventures rely heavily on digital and web technologies. That makes new businesses digital ventures that leverage digital technologies to address a novel or existing market demand. New digital ventures are a natural output of corporate venturing initiatives looking to propel existing companies into the next generation of business. Such initiatives are best handled by an experienced partner, namely a Corporate Venture Builder.
It is easy to use banking as a use case. Modern banks are essentially software as a service companies that provide financial services. Some got rid of branches and in-person banking and offer a purely digital experience. And as in most industries, legacy banks are still quite behind technologically when compared to challenger banks.
Corporations that rely on legacy technologies, processes, and business models are highly vulnerable to disruption and competition from start-ups. Legacy solutions come with high opportunity costs, as the underlying foundations are complex and inflexible.
We recently ran a small survey to identify why new start-ups selected a digital or neo-bank versus traditional big banks. The responses were mostly aligned around ease of onboarding, with fully online processes and no need for in-person visits at branches. One case explained that their preferred bank could not process two-word last names, and that the opening process would be manual and take 5 days – This illustrates the high opportunity costs imposed by legacy systems.
One of the best solutions for corporations to escape their legacy constraints is to create a new digital venture from the ground up. This approach enables corporations to build new digital ventures using the latest technologies, processes, and know-how, without affecting existing customers and revenue. The ability to abandon hard to maintain legacy technology also enables a key component for growth, the product.
Corporate Venture Building is difficult to achieve without the correct talent and know how. Many corporations make the mistake to create corporate venture builder or corporate venture capital initiatives as a marketing tool, rather than as a transformational tool.
A Corporate Venture Builder like Outroll will bring great expertise in the process of building a new venture. That includes discovery phases, prototypes, pilots, growth initiatives, and scalability in due time. Building a digital venture is all about creating the best product that addresses a need or solves a problem. That translates into a highly iterative process, where every new lesson and discovery is quickly integrated into the product itself.
Corporate Venture Builders also support the reduction of project risks and costs by relying on battle tested processes. Such processes enable agile and continuous improvement methodologies to generate growth, product adoption, and ultimately a successful digital venture. The in-house expertise will also prevent common pitfalls and fallacies chased by new founders. A common trait observed in the Corporate Venture Building space is for Corporations to wish new ventures to be fully fledged and featured. That leads to overly expensive first products, that may not have enough market traction and market fit.
An experienced firm like Outroll will also help guide the process to create a feasible Minimum Viable Product (MVP) with a lean approach. Once an MVP is launched, valuable data can be collected to continuously improve the product and add features.
Corporate boards also need to understand that start-ups fail more often than internal projects and initiatives. Start-ups should be given enough time and flexibility to validate the market, evolve, and if needed to pivot into new opportunities.
A Corporate Venture Builder is an efficient way for corporations to tap into talent across entrepreneurship, software development, and product design. An external venture builder is often also an investor in the process and will have skin in the game to ensure the best outcomes for corporations wishing to break free from legacy.