Introduction to corporate venturing

What is a corporate venture?

We call it corporate venturing when a (large) established organization pursues innovation by either building, partnering with or investing in a start-up. The goal is usually to explore new (digital) business models or invent new products that are further outside a company’s core and often not expected to become a core activity for the next 5-10 years. Such opportunities typically lie in addressing completely new customer groups (e.g. a B2C proposition for a traditionally B2B-focused company) or in significantly different business & operating models (e.g. a digital service offer for a CPG company, or a B2B ecommerce business).  

One example of a venture that is exploring a radically new space is HEINEKEN’s Beerwulf. Together with the international brewery, we built, operated, and scaled a new digital-first start-up for craft and variety beer. Before HEINEKEN started this project, digital retail had not been part of the company’s business at all. Today, Beerwulf is one of the largest European digital beer platforms where beer lovers and enthusiasts can discover and buy the best beers from the best brewers in the world. We helped HEINEKEN get from idea to go live in <9 months and built an independent venture team that still runs the company today. Through Beerwulf, HEINEKEN is establishing a direct relationship with its end consumers. The data generated by the platform enables the team to improve continuously and achieve growth quickly.  

Why build a corporate venture?

While many companies are booking great successes with their corporate start-ups, not every idea warrants building a venture. There are multiple factors and alternatives you should consider.

We typically define three kinds of digital initiatives:

• those that optimise current operations (optimisation);
• those that transform the way you sell to your customers within the existing business model (transformation); and
• those that create new business models and disrupt the old (disruption).

To achieve sustainable long-term growth, you need to have active initiatives on all three horizons because they generate value on different timelines. Skilled management requires a careful division of time across the horizons.  

To illustrate this, let’s have a look at Hely. Together with the Dutch Railways (NS) we designed and built a one-stop-shop for all public transportation and shared mobility (e.g. bikes and cars), called Hely. At Hely you can hire cars, e-bikes and cargo bikes on one handy app. While the new venture offers mobility – like NS’s core business – it explores a completely separate service that has nothing to do with the core business; it could even have a cannibalising effect on it. Hely can therefore be classified as a “third horizon” initiative. But while building Hely, NS has not stopped concentrating on activities closer to their core. Instead, while working on Hely, NS is continuously improving its (digital) core services of train travel with optimization and transformation initiatives, e.g. through the digital train travel app.

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Can't we just buy it?

Building a new venture from scratch is not always what you want. What if the innovation has already been launched elsewhere – and your company comes in a little too late? Then you might not have the patience and resources to build a corporate venture and will need to look into other options. Depending on your strategy, investing in or partnering with an existing player may actually be a better choice. A great example is Henkel Beauty Care, who, rather than creating their own competitor, invested in the successful scale-up eSalon. Just keep in mind that acquisition comes at a price – and we’re not only talking about the money. Next to the market price, you may have to settle for a less-than-optimal strategic fit and the cost of integration after the acquisition.

Building a corporate venture, on the other hand, ensures 100% strategic fit. It’s also a great way to develop internal capabilities. Considering that a start-up’s value is often largely built on its people & technology, building these capabilities from the ground up can be extremely valuable. As an example, we built and successfully launched WeDrinkwell, a subscription for healthy (novelty) drinks. Already in the first weeks after the launch of the D2C platform, we were able to gather data-driven insights for the mother company Pepsi Lipton on consumer preferences, assortment, and new drink formats from hundreds of paying customers. Moreover, the venture gave PepsiLipton critical experience in a new set of digital skills such as building a product recommendation engine.  

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Want to know more? Don’t hesitate to reach out!

This was the first introduction article in our series on corporate venturing. In our next article, we’ll delve deeper into when to build a venture (and when not to).

Also, keep an eye out for the upcoming articles in this series.

Next up in this article series

We have learned a lot through helping our clients over the years, and we’ll be sharing our key insights with you in a number of publications – see below the list of topics we will cover:

• Introduction to corporate venturing: This article is the first in our new series of articles on ventures and scale-ups in a corporate setting.
• When to build (and when not to): Exploring further that ventures aren’t for everyone, as strategy dictates approach  
• How to build: Drawing the journey of venture building with activities, deliverables, and team set-up for each phase

• How to scale: Taking the right steps from start-up to a successfully scaled organization
• Common pitfalls: What can go wrong and how to make sure to avoid it  
• Governance – set-up: How to govern ventures correctly with the right targets, reporting lines, financing, etc.
• Team: Solving key questions on venture teams and the importance of a great venture lead
• Governance – freedom balance: Finding the right balance between giving a venture freedom versus ensuring a strategic match
• Manage (KPIs): Looking at the right KPIs based on the de-risking funnel, performance analytics, and reporting to corporate
• Venture tooling: How to make the key choices and available options for MVP landscape tools, growth hacking tools, and collaboration tools
• Customer validation best reads: Sharing our top picks in the literature on customer validation

Stay tuned!

We hope you’re as excited as we are and please let us know if you have specific topics or questions you would like us to share with you.