How to set up a corporate venturing unit: 7 tips for success.

What is a corporate venturing unit? 

Corporate venturing units are spaces within an organisation dedicated to exploring new growth opportunities and creating the products and services to meet them. They enable corporations to do what they do best: Bring the offering to the market, focus on building revenue and keep the ship running smoothly.

While all this is happening, the innovation unit is constantly studying the market, testing out new offerings and quietly cooking up the next big industry innovation. The consequence of these actions is the gathering of valuable insights to keep your company in touch with the newest industry trends, customer demands and innovations. 

Think of them as corporate-venture-building machines, tasked with systematically creating a steady pipeline of new ventures. Within this setting, new ventures are rapidly developed using a variety of corporate venturing tools (e.g. CVC, incubation, acceleration etc.) and validated using lean experimentation techniques. 

The goal? To quickly scale what works and weed out what doesn’t, gaining valuable industry insights throughout the entire process. 

Now that we covered the basics, let’s get into the tips...

Tip 1. Set clear objectives for your corporate venturing unit

Establishing a clear mission for your corporate venturing unit early on will provide a solid base for further development. Knowing this will help you set solid growth milestones, choose your team efficiently, and decide what resources you’ll need to get things done. Some common corporate venturing unit missions include:

• Accelerating your company’s digital transformation
• Expansion beyond the core business
• Rejuvenating the corporate image
• Creating a culture of entrepreneurship 
• The creation of new revenue streams
  

No matter what the objectives are, it’s important to define them early on, make sure they align with greater corporate goals and get the team on board and working towards those same objectives.   

Tip 2. Create a detailed corporate venturing strategy

Once you’ve set up clear goals and objectives for your corporate venturing unit, you’ll have the information you need to create a strategy to make them a reality. Here are a few of the key questions that can help you get started:

• What will your team look like?
• What parts of your strategy will happen internally vs externally?
• What kind of startups will you work with?
• What corporate assets will you leverage to make it all happen? 
• What areas in your business are vulnerable to disruption?
• What areas in your industry present the most growth potential?
  

A good resource to help in this area is our 8 essential actions to define your innovation strategy deck. Although it’s not specifically aimed at creating a corporate venturing unit, it provides a myriad of resources to help you define your overall strategy. 

Tip 3. Know your corporate venturing tools

There are many ways to tackle corporate venturing as a strategy, with 16 different tools you can use to reach the growth goals we explained in tip one. Some of the most commonly used tools in corporate venturing units include:

Incubation 

Corporate incubators provide mentoring and value-added services to support entrepreneurs in building viable, market-ready products and services. Programs of this nature usually provide seed funding and residence programs to help develop new concepts. Check out our blog for incubator examples from some of the world's leading corporations. 

Acceleration

Corporate accelerators offer highly structured programs that typically last no more than three months. These programs provide startups that do not yet have proven products or services with the facilities, resources, and expertise needed to speed their product development and time to market.

Corporate venture capital (CVC)

This is when corporations use direct equity investments to target startups of strategic interest.

Mergers & Acquisitions (M&A)

Established firms purchase startups or young companies and their commercial-ready products in order to access new technologies or markets.

You can use one or a combination of these tools to make your corporate venture unit strategy come to life. 

Tip 4. Make the most of your corporate assets 

Corporate assets give you an unfair advantage over the competition, help you reach your growth milestones quicker and enable you to use existing resources to power your operation. Some good examples of corporate assets you might want to leverage include:

Infrastructure

This can be anything from the headquarters where your corporate venturing unit will be housed to the systems and facilities that can be used to support your ventures (e.g. office space, manufacturing facilities, labs, etc.). 

Industry know-how and talent

Most corporations house vast amounts of industry expertise, know-how and talent; it’s part of the reason they’re as big as they are today. These profiles have years of experience and know the market like the back of their hand, giving them a good instinct for what works, what doesn’t and how to overcome impending challenges. 

These characteristics make them a great source of invaluable insights and advice to help get your new ventures off the ground. Make sure you know who they are, so you can tap into their prowess when you need it.  

A strong brand name

When launching a new venture, having a strong brand name to back it provides added traction:

• Creating trust among potential customers 
• Increasing awareness of the new product or service
• Making potential customers more likely to make a purchase
  

A good example of this was the Nike Adventure Club, a D2C sneaker subscription service for kids. Although the venture was discontinued, its initial success and learnings would probably not have been possible without the Nike name to back it.  

Networks and partnerships

Networks and partnerships are a crucial part of getting new ventures up and running, and it’s a resource most corporations are rich in. For example, suppose your venture offers a new food item, and your corporation has established partnerships with a national supermarket chain. In that case, it’ll be that much easier to get your product on shelves all over the country. 

An existing customer base  

Testing and validation is a fundamental part of building ventures, and the best way to get the insights you need is through real customer data. Corporations have enormous existing customer segments, many of whom are happy to share their feedback on what they think of a new product or service. This is one of the most valuable assets you’ll have at each stage of the venture development process, so make sure to use it. 

Tip 5. Define your operations model and process

Now that you’ve covered most of your bases, it’s time to define the operations model and process that will enable you and your team to reach the goals you’ve set. Start by visualising what your innovation funnel will look like, factoring in different stages like:

• Opportunity research
• Problem, solution, and business model identification
• Validation phases
• Development
• Launch
• Spin-in vs spin-out
• Scale
  

This will be the fundamental framework and process you’ll follow to bring new value propositions to life. Here are just a few things you should take into account: 

• Have you clearly defined the different phases in your process?
• What timelines will you set to reach each milestone?
• What KPIs will you be looking at throughout the process?
• What metrics of success will you be looking at with your team?

Tip 6. Define your innovation horizons.

Innovation can go from incremental to radical depending on what your goals and ambitions are - and knowing where you want to operate will help you define the types of initiatives your corporate venturing unit will eventually pursue. 

McKinsey’s three horizons model is a useful tool to help you figure out what your short and long term growth goals are:

• Horizon 1 focuses on ideas that propel a company’s core business.
• Horizon 2 focuses on expanding core capabilities to tap into new markets.
• Horizon 3 focuses on creating all-new capabilities meant to disrupt existing markets.  
  

Choosing which horizon to pursue is dependent on your organisational realities (e.g. bottlenecks, budgets, time constraints, etc.).

Tip 7. Make sure you have c-level support

In order to make your corporate venturing unit a success, you’ll need to unlock the necessary funding, resources and support to make big moves - that means support from corporate leadership. Most successful corporate venturing units don’t only get c-level buy-in; they make them an integral part of the process.  

Having a good relationship with corporate leadership will ensure that your goals are aligned, make it more likely that your initiatives will be greenlit and give you the room you need to go the distance.  

Is a corporate venturing unit right for you? 

Corporate venturing units are a great way to fuel innovation, leverage corporate assets and create a culture where entrepreneurship thrives - but like any new approach, all angles must be taken into consideration. 

Making a corporate venturing unit work requires steadfast commitment, and a high level of organisational change, which can be a tall order for many corporations. Having said that, any level of meaningful growth takes work and effort, right? 

If your company is relatively new to corporate venturing, starting small is a good idea, perhaps by first testing the water with one or two corporate ventures. Once you get your feet wet and are more experienced, you can build up to becoming a thriving corporate venture unit. 

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Are you interested in learning more about corporate venturing units? We’ll be discussing the topics from this article and many others live at our next Bundl Venture Club roundtable. Join us on the 25 of Nov. from 4:30-6:00 pm (CET), for a virtual, in-depth conversation with fellow corporate innovation experts. Seating is limited so make sure to reserve your place today.