Key takeaways
- Inside the parent, ventures are often held back by core business processes, approval loops, incentives and withdrawn resources.
- Whether an internal unit, a separate company or a partnership fits depends on how much independence the venture needs.
- Lean governance links the budget to milestones and sets out the decision rights of the venture lead in writing.
- In the early phase, milestones reached and customer feedback matter more than revenue, which only becomes the lead metric later.
Contents
A proof of concept shows that an idea can work. A corporate venture has to prove that it can become a business – with its own customers, its own team and its own pace. In our experience, ventures rarely fail because of the idea, but because of their connection to the parent company.
01Why ventures get held back inside the parent
A venture needs to learn, test and decide quickly. The parent company, by contrast, is built for stability, efficiency and risk control. Both are right – but they do not automatically fit together. Typical brakes:
Purchasing, IT approvals or contract review are built for large volumes. For a venture that thinks in weeks rather than quarters, they are often too slow.
Every decision needs several signatures. By the time they are in, the question in the market has often already changed.
In the core business, avoiding mistakes is rewarded. A venture needs people who can live with uncertainty and learn quickly from setbacks.
Employees from the core business help out “on the side” – and are pulled back as soon as there is a fire to fight there.
The venture is measured on revenue and returns too early, before it is clear whether the offering holds up in the market.
02Structural options: internal, spun off or with a partner
No structure fits every case. What matters is how much independence the venture needs and how closely it should remain tied to the core business.
The venture remains part of the existing organisation, with its own budget, its own team and clearly defined special rules. This gives short paths to the parent’s customers, data and know-how, but requires consistent protection from its routines.
A spin-off creates clear boundaries, its own decision paths and the option of bringing in partners or investors. In return, the need for coordination at the interfaces increases.
With a partner, missing capabilities, technology or market access can be tapped more quickly. Clear agreements on roles, contributions and decision rights are decisive.
Note
Legal form and ownership structure have legal and tax consequences. This guide is not legal or tax advice – agree the specific set-up with your advisers.
03Governance: who decides what?
A venture needs freedom, but not a space without rules. Lean governance provides both:
- A small steering committee with decision-making authority instead of many participants without a mandate.
- Decision rights of the venture lead set out in writing: budget, staff, partners, prices.
- Budget released in tranches, linked to milestones rather than the calendar year.
- Clear agreements on the use of IT, legal, purchasing and other central functions of the parent.
- Criteria agreed in advance for when the venture is continued, adjusted or stopped.
Practical tip
Link the budget to milestones rather than the calendar year, and agree in advance when the venture will be continued, adjusted or stopped.
04From proof of concept to market entry
The road to market rarely follows a straight plan. Even so, a clear sequence of milestones helps to make progress visible and to decide at the right time:
- Review the PoCReview the proof of concept soberly: what is proven, and what is only assumed?
- Sharpen the offeringSharpen target customers and the offering and test them with real customers.
- Set up organisationSet up the organisation: roles, processes, steering and connection to the parent.
- Team & productBuild the core team and develop the product or platform to market readiness.
- Market entryEnter the market with first customers, a clear positioning and a brand of its own.
- Prepare to scalePrepare to scale: sales, operations and financing for the next stage.
05The team and the role of the venture lead
A venture needs a core team that focuses on it fully – not employees who help out on the side. A mix of people who know the parent company and people with experience in building new businesses has proved its worth.
The venture lead is the key role. They have to think entrepreneurially, live with uncertainty and at the same time speak the language of the group – towards the executive board, business units and committees. If this combination is not available internally, an interim lead with an entrepreneurial background can speed up the build-up and set the venture up so that an internal team can later carry it on independently.
06Measuring progress
In the early phase, revenue figures say little. More meaningful are key figures that show whether the venture is learning and moving forward:
- Milestones reached compared with the plan.
- Feedback and willingness to pay from real customers.
- Time from open question to decision.
- Spend in relation to progress.
- Later: revenue, customer retention and contribution margin.
07In practice
At WBS Group, Jens Schneiders led a corporate venture in education as Head of Innovative Training Concepts. An acquired proof of concept became an independent unit: organisation, app and cloud platform, brand and core team were built from scratch, and market entry was achieved in six months. The handover was an integrated, scalable venture – independently steerable and cleanly connected to the group.
Jens Schneiders
Interim CEO for mid-sized companies, scale-ups and corporate ventures. Transformation. Restructuring. Stabilization. Handover.