NEW RESEARCH | Venture builders: Startup factories that create the companies of the future

Starting a business is often associated with high risks and lonely work. But a fast-growing model could be about to change the rules of the game for how startups are built and grow.

Venture builders are organizations that generate business ideas, recruit entrepreneurs and build start-ups using an industrial and systematic approach. They differ from incubators and accelerators in that they start companies from scratch and give entrepreneurs a platform to build on.

– Venture builders work more like a factory for startups. Instead of waiting for an entrepreneur with a good idea, they develop business opportunities themselves, test the market and build teams, says researcher and entrepreneur John-Erik Hassel, who is doing his PhD on the phenomenon at the Center for Services Research, Karlstad University.

From uncertainty to structure

Traditionally, entrepreneurs have handled all aspects of building a company themselves, from product development to marketing and financing. This type of organization offers an alternative route where expertise, resources and networks are already in place.

– Building a business is a complex and labor-intensive process. Venture builders reduce the risk for entrepreneurs by giving them access to specialists, funding and operational support from day one, says John-Erik Hassel.

This model has become increasingly popular in recent years, particularly in the United States and Europe. Venture builders – also known as startup studios or venture studios – can be found today in several industries, with some emphasis on tech. 4-5 years ago, there were around 300-400 globally, today that figure is 1,200 and the number continues to grow.

A new type of entrepreneur

Start-up studios often attract a different type of entrepreneur than the classic ‘loner’ with a big idea. Many of those who join have experience in established businesses, but don’t want to take the full risk of starting their own business from scratch.

– Many of the people I interviewed see venture builders as a faster and more secure route into entrepreneurship. They get the opportunity to work with a proven idea and a team of experts, says John-Erik Hassel.

The advantages are clear: less risk and a faster path to a working business model. But there are also disadvantages. Entrepreneurs within a startup studio often get a smaller ownership stake in the company they build, and their control is more limited compared to if they had started on their own.

The future of entrepreneurship?

John-Erik Hassel believes that this form of entrepreneurship will become an increasingly important part of the entrepreneurial ecosystem in the future.

– We are already seeing more start-ups being built through venture builders. This gives entrepreneurs more pathways into entrepreneurship, which can lead to more successful businesses. At the same time, there will always be room for the traditional entrepreneur who wants to build from scratch, he says.

At a time when technology makes it easier to start a business, but competition is fiercer than ever, venture builders could become a key part of the future startup map – a bridge between idea and success.

Which entrepreneurs are attracted by venture builders?

– This type of organization offers an opportunity for entrepreneurs who want to work in a structured and resourceful environment, but it also involves compromises around ownership and control. The model may be particularly suitable for those with business experience who are looking for a faster and less risky route into entrepreneurship, explains John-Erik Hassel.

Contact john-erik.hassel@kau.se

More about the thesis
John-Erik Hassel defends his thesis on April 24 at Karlstad University Venture Builders. Organizing Strategic Entrepreneurship Support . Thesis available in the near future.