Why some founders shun venture builders

Once an obscure niche, venture builders (VB) – often confused with accelerators and incubators – feature prominently in many startup ecosystems today for their role in uplifting first-time entrepreneurs.

Every year, thousands of founder hopefuls sign up to VB programs on the promise of accessing a pool of committed and competent co-founders, funding, mentors, and generous monthly stipends.

But the proliferation of programs that feature unconventional approaches in recent years has diluted the original venture-building model and its purported benefits, some critics argue. While early VBs invested time, expertise, and resources on just a few founders, cohort-based programs – which distribute resources among a larger pool of entrepreneurs – are increasingly favored for their efficiency.

The result? Programs with watered-down content that are created to accommodate rushed schedules, a revolving door of mentors, and a lack of corporate commitment that cuts ventures short, say several program organizers and participants who spoke to Tech in Asia.

On the flipside, VBs still make excellent partners when expectations are aligned. Some of these firms are also experimenting with new approaches to engage with founders better.

The OG of venture builders

The concept of venture building first emerged in 1996 when American investor Bill Gross founded the world’s first venture builder Idealab.

Broadly speaking, VBs are companies that build in-house teams that ideate, create, and launch commercial ventures. VBs also pool together co-founders and provide coveted access to advisors, entrepreneurs-in-residence, and investors with industry expertise or entrepreneurial backgrounds.

These entities often retain a majority stake in their ventures and, just like VCs, make a profit when there’s a successful exit.

Unlike VCs, however, VBs tend to put in more time and resources in supporting their ventures. VBs typically invest above 100 man-hours in their ventures – the majority of VCs spend significantly less than that.

Many VBs also offer generous monthly stipends, which can range between US$1,150 to US$5,000 for the first few months of the program.

The one differentiator between venture builders and traditional VCs is how “actively” they add value, shares Greg Krasnov, co-founder and CEO of Philippine neobank Tonik. Krasnov is also the founder and chairman of Forum, a fintech venture builder based in Singapore.

Beyond supporting strategic business development, Forum also provides recruitment, public relations, and corporate legal support. Senior advisors gathered by Krasnov help founders in the program with finance, human resources, and other business functions as well.

Spreading it thin

Corporate tango or corporate tangle

The going’s good… for now