By Akinpelu Babatola
Guest Writer, The Xpress Train

While the venture builder style of “Build, Launch & Grow” startups are quickly taking over the startup world, you have to take a step back to check if this business style is really for you. Don’t just be swept up in the wave of “Yay-sayers” and instead perform a thorough check on if this model of business really is for you.

But what am I talking about? Venture builders are great news for any aspiring startup. They help your innovation, they educate you and they will help you run your business even better than you ever could on your own. I know all these and more, in fact, I wrote an article on it, “Benefits of Venture Builders.” But there’s nothing with advantages that does not come with potential disadvantages. I find it best that you know about the possible negatives of venture builders so you can prepare yourself for them and possibly even avoid them altogether.

So what challenges do you have to worry about when you work with a venture builder?

  • If you are the kind of person who wants to be thoroughly involved in all aspects of the growth of your business, then working with venture builders could be hard on you. They take over all aspects that they believe that you do not have the skills or capacity to handle. This can include areas as important as product development, administration, or legal needs of the business. This is not necessarily a bad thing, seeing as they’d be bringing years of experience in these areas to the table. At most, I believe it would make you slightly uncomfortable and not necessarily become a full-blown headache.
  • When it comes to splitting profits and equity, venture builders take a larger share of the business. This is simply because they end up investing more than anyone into your idea. If you are comfortable with taking the lesser share of your own idea’s profits, then you can decide to work with a venture builder. This is somewhat reasonable as they’d be helping you break into the market faster than you’d on your own and it’s not going to last forever, once your idea has become self-sufficient, you get a larger share of profits. 
  • Venture builders come with much more pressure than venture capitalists. They expect more from you. Your idea is expected to grow in a much shorter time than it would normally take. This means you are tasked with hitting the ground running. A venture capitalist does not expect anything more than returns, as long as you keep giving returns on the investment, then you are free to take as much time as you want to grow. If you like being challenged and can handle pressure, you won’t fall into this trap.
  • Lastly, venture builders come with little sense of ownership. Think about it, once someone else has taken over all the major aspects of your business idea, then what’s left for you to do? You no longer feel like you own the business or even the innovation. This is something that you have to keep an eye out for always. I find that remembering that you brought this all together with your idea will help you avoid this feeling, afterall without your idea, the venture builder would have nothing to build.

As you can see it’s not all bad news, and in fact, Venture builders end up having more benefits than demerits, you might want to give “Benefits of Venture Builders” a read to find out more.

References

https://e27.co/venture-builder-model-vs-venture-capital-differences-advantages-20180524/

https://blog.daftcode.pl/what-is-a-venture-builder-dc49ea8b8f5c

https://medium.com/marventures/venture-builders-the-rise-of-synergetic-entrepreneurship-b9a3968a0fb2#:~:text=Raising%20capital%20%E2%80%94%20companies%20within%20a,alternatives%20is%20also%20quite%20common).