Fast Venturing: The Quick Way to Start Web Businesses
In the New Economy, speed is everything, as both start-ups and traditional businesses attempting new ventures have experienced. Three Andersen Consulting researchers assess a new approach, fast venturing, which taps operational partners -- incubators or professional-services firms -- as well as outside investors. Operational partners, called in at various stages of the venture's development, can offer support with whatever specific skills are needed at any given time.
The author's e-mail and telephone surveys of companies that have launched ventures quickly suggest that new ventures should (1) set up a distinct equity structure, (2) get participation from financial partners, and (3) call on a network of operational partners to help build the business quickly by designing and implementing strategies and processes to access markets at scale. Using outside partners is more promising, say the authors, than creating new ventures inside an established company, where too often, strong incentives are lacking and company traditions or politics get in the way. Although internal venturing might work in a few companies, the strategy is probably too difficult and too slow for most.
The authors describe a three-stage model: developing ideas, lining up support and scaling up quickly. They suggest choosing a lead partner by assessing both existing relationships and the venture's needs at its particular stage of development. At a pre-funded stage, the venture requires investment partners. If the venture is farther along, it might need a lead partner that can provide temporary managers, experienced in setting up warehouses, or a multitude of other critical functions.
The authors provide managers with a list of questions that can help identify the critical capabilities needed to ensure speed to market and help them decide if they should fast venture. Then a step-by-step process helps companies define the venture's most urgent requirements; select appropriate, committed partners; clarify roles and responsibilities; and tap strong, independent leaders.
Whether the fast venturing company chooses to partner with an incubator that provides most needs under one roof or a venture network with geographically dispersed support functions, the best chance of success lies with nimble outside partners that have a stake in the profits.