10 reasons why you should choose venture builder over venture capital model

How many of you feeling tired through all the way of traditional startup with venture capital (VC) model? In order to reach a successful business, normally you have to follow this path: one you have the skills, you start pitching your ideas, and you spend a lot of time fundraising. Pitching here and there, going to another VC to another VC, and end up with no or low probability of handshaking. If you really fed up of those cycles, why not consider the venture builder (VB) model?

Mostly, VB focuses more on experienced people who already have ideas and skills, as funding and sources are already in place. If you think you have that criteria, then you can try to enter VB and start focusing on growing your business. Normally, the likelihood of VB-backed companies to make return and to exit multiple is 60%, compared to 5-10% of those in startups with VC. No wonder, because they cut the time spent for fundraising (which sometime takes a VC-based companies struggling so long) for focusing more in building the company. Rocket Internet, eFounders, BrightBridge (for FinTech only) are examples of VBs. But, before going to those VBs you might want to check whether you suit with these 10 things.

You may fit with VB model if you:

1. Have excellent background and experiences.  In VB, they do not only care on your brilliant ideas but also on your capacity; like your background, skills, years of experience in entrepreneurship. VB cultivates your potential.
2. Desperate in raising money for your startup. You have been through all of those process and think that going to VCs are wasting time and painful.
3. Do not want to think about finding an office. VB will provide it.
4. Do not want to deal with the administration things. VB will offer the administration team that will help you controlling the payroll, tax, legal-thing, and IT infrastructure.
5. Do not want to bother in picking-up talents. You will have all the talents, software engineers, and developers – ready to execute your plan. Sources are there.
6. Do not like to be lonely. Imagine that when you first start your own startup, you are very lonely. Every day working on your very first product in home, on your own (or communicate with other members via online). In VB, you can have more access to more people, more networks, and more infrastructure, in the real world. So you do not have to feel so lonely anymore.
7. Wish to be paid in salary while building your company. So if you are a kind of entrepreneur who is not too risky (especially when dealing with family cash flow) but still dreaming of building a company, then VB is a good choice for you. The starting risk of VB route is lower compared to traditional VC route, where you can end up with no coin at all before launching your first product.
8. Do want to start your position directly as CEO or CTO as the anchor of the company (VB will assess your capacity on which position suits you). You just cannot resist to explore your leadership capability.
9. Want your company scale very quickly. As quick as possible grabbing the market and making high profit.
10. Do wish a faster route to market. Speed is very important for VB because it is all about executing! The time is NOW! Normally, in less than 6 months the company is ready (all components in the company is working) and start spreading on the market.

However, there are some cons of choosing VB.

First, the sense of ownership. Since you do not really start from scratch, do not go through all the way of painful fundraising stage or selecting new workers, you may feel a lower possession.

Second, team culture. As the focus in VB model is speed to market then the most important thing is to get products done rapidly. Developers may come from wherever-you-don’t-wanna-know and just doing their work. This can lead to a less company culture. Of course, when your (spinoff) company is big and stable enough, you can re-build the company culture through a selective hiring process.

Last thing, control. Because your company is built under VB, you are not working alone in making decision. You do not fully control your company, especially in first months of building, it seems like you work so hard for VB which can be stressful and so much pressure.

Despite all of those pros and cons, which route will you choose for your startup?