Needless to say that it is hard to predict the future of business incubation and venture funding. Nonetheless, we see a number of trends of breakthrough methodologies and innovations that are changing the venturing landscape dramatically. Interestingly, these innovations are taking place at the tail of the investment curve – the area of incubation and seed funding. Like, the in my blog ‘the five challenges of the venture economy’, I have summarised the main emerging innovations in venturing into five building blocks: democratised entrepreneurship, a broader definition of contribution & reward, explore the opportunity, building upon a vision, transparency and empowerment, and the corporation revised (platforms enabling venture ecosystems). These trends address to a large degree ‘the challenges of the venture economy’ described in the previous paragraph.
The challenges of the venture economy and the corresponding observations of the developments in the venturing practise today give us direction on how the future of business incubation and funding models will develop. Together, they might become the foundation for the development of the venture economy consisting of ecosystems of innovative microbusiness and platform driven corporations and institutions.
Whilst the VC blockbuster model is only suitable for a small number of potentially ultra successful start-ups, a number of venturing developments enable entrepreneurship for a much wider audience. I am very hopeful about the potential impact of dozens of successful micro-finance initiatives, micro-venture capital funds and crowd funding platforms. Moreover, most cloud services and (mobile) collaboration platforms are making entrepreneurship much more accessible and scalable than ever before. Cloud services reduce the up-front investments for start-ups and through API’s, ventures can integrate those cloud services into their own offering.
A broader definition of contribution & reward
A broader definition of the contribution and reward of the participants of a venture is entering the ‘cap tables’. This definition should go further than ‘exit driven’ return on investment (for the investors) or salary and stock options of the venture employees. In an open incubation model where participants collaborate to develop a product or solution, a transparent governance framework is needed to agree on the contribution and reward structure for all participants. Clearly, the contribution may vary not only in nature but also in time. Similarly, the reward structure may vary as well and could comprise of for example shares, cash compensation, salary, free products or access to IP (i.e. open source).
Explore the opportunity, building upon a vision
Eric Ries describes in his bestseller book ‘The Lean Start-up’ a radical different venture methodology. Instead of developing a detailed business plan, Eric Ries advocates short development sprints of the MVP (Minimum Viable Product) followed by the execution of a thorough testing plan focussed on obtaining customer feedback early in the development process.
Transparency and empowerment
Ventures that work remotely together in a network of partners and open-source development teams experienced that the traditional command & control management model does no longer work. Instead, new organisational models are emerging based in full transparency and empowerment of the venture teams.
The corporation revised: platforms: platforms enabling venture ecosystems
Over the last decades corporations and institutions have reinvented themselves several times. Vertically integrated industries transformed into supply chain driven networks driving efficiency whilst benefitting from flexible scalability. The next challenge for large corporations is to find an answer to shrinking PLC’s of their offerings, making products and solutions obsolete sooner than ever. Current thinking is that corporations and institutions need to adapt an agile organisational structure with an increased focus on innovation, partnerships and corporate venturing. I expect that corporations and institutions will transform into ecosystems of (cloud based) platform providers and innovative, customer focussed micro businesses operating through API’s on those platforms. Whilst this may sound futuristic, most large corporates have already established corporate venturing teams to invest in new business opportunities and to explore partnerships.