What is a Venture Validation Sprint and how can you use it to de-risk your corporate startup failing?
What is a Venture Validation Sprint and how can you use it to de-risk your corporate startup failing?

Written by

Diana Florescu

-

6

min. read

Have you ever been involved in building a corporate startup or new business? It’s not easy and can take weeks or event months to align schedules, brainstorm, create specs and finally get the green light to execute your ideas.

In this article, we’ll explore the first phase of the venture building process - a 2-3 months venture validation sprint covering the building blocks of start-up creation: idea generation, validation and pre-launch execution. This process is designed to quickly identify, validate and test new concepts and de-risk the chances of failure when scaling the business further.


Our venture building model: 4 stages to venture building with us


So, what is a venture validation sprint? What are the key steps and how long does it take? And why consider running a venture validation sprint in the first place?

What is a Venture Validation Sprint?

A venture validation sprint is the first stage in the venture building process. The goal is to build a series of experiments that will confirm or reject the assumptions made about a product or service.

To decide whether or not to launch a venture, we run a Validation Sprint to explore and validate if an idea is a suitable investment opportunity answering key questions:

  • Is the market opportunity large enough?
  • Is the business model environment favorable?
  • Is there still room to play?
  • Is there a clear unmet need?
  • Is there an unfair advantage?

The studio team collects customer insights, tests the desirability of business concepts and determines the viability of business. This can last anywhere from two to three months.


How does it work?


Venture Validation Sprint - Key Phases

Step I - Scoping & Ideation (2-3 weeks)

We first look to understand the venture space and formalise initial hypotheses.

Sometimes, our corporate partners have a predefined brief, and our objective is to assess and conclude if it makes sense to further analyse a specific space and invest in the concept. During the analysis, we may provide the corporate partner with adjacent venture ideas or new business models.

Here’re some examples of what we can scope:

  • Opportunity Spaces e.g. new digital enabled business models in the finance industry
  • Industry Problem e.g. the adoption of decentralised renewable energy generation
  • Idea e.g. AI powered cyber security tool for SMEs
  • Business Model e.g. commercial real estate listings platform
  • Customer Segment e.g. 40% of millennials in Eastern Europe are not insured
  • Existing Project e.g. 7 months of internal research, scoping and solution specifications


The outcomes of this initial step are:

  • assessment of market landscape, attractiveness and competition
  • extensive customer insights, understanding of current customer pains and friction
  • detailed outline of target customer segments across SME size and industry

Step II - Validate concept (3-4 weeks)

We then start validating customer pain points and testing key assumptions. This stage includes:

  • Customer-tailored value proposition
  • User-test customer journey, UX and visual design incl. solution prototype
  • User-tested, fit-to-market product offering (a roadmap for product offering expansion)
  • Initial brand conceptualisation and positioning strategy

If done in collaboration with a corporate partner, we engage their internal team to see how and where the corporation assets could be translated to a competitive advantage.

We also look at the venture's future operating model to assess the optimal sales/distribution setup to drive customer onboarding as well as marketing strategy. At the same time, we follow a detailed assessment of technical feasibility as well as optimal IT architecture spanning across all relevant integration layers.

As we approach the end of this phase we start outlining the optimal team size and composition for the next phase: Build.

Step III - Prepare Investment Thesis

Refine business model and prepare detailed investment case outlining key assumptions.


Key outcomes & Next Steps

There are usually 1 in 2 ideas worthy of co-investment and that may progress into the Validation and commercialisation phase.

When the opportunity has been validated we begin with the building phase. The venture is spun out as a separate entity allowing for rapid scaling in the market. The corporation provides industry market expertise, data and invests time and capital. As a studio we put together a dedicated team of external founders, and invest resources.  

If the concept originated within the studio and we don’t partner with corporations, our focus is on recruiting a small founding team that will be in charge of running and shaping the vision of the new venture. We would start raising an initial round of funding from close investors giving the team a small runway of 12-18 months to launch and rapidly iterate towards a repeatable scalable business model.

Are you interested in running a Validation Sprint

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Why run a venture validation sprint?

Building a startup can be expensive, and has no guaranteed payoff. We know that 9 out of 10 startups fail and only one will outperform all of the others. To capture returns, we need to have a large enough portfolio to find those outliers. The same is true of ventures we develop internally or with corporations.

We use the same resources during the validation sprint to validate multiple concepts. At the end of the validation phase, we decide whether to move on just with one, multiple or none of them.

This short process of 2-3 months is designed to de-risk the chances of failure and save both the studio and the corporation time and resources (implicitly costs) as we progress through the next phases.

Here’s some of the most common examples of why scoped concepts may not progress to Validation Phase:

  • Market already has too many established startups competing for the same opportunity, where partnering with existing startups or scale-ups might be the better option for the corporate partner
  • Market opportunity is not attractive (e.g. too small or the customer pain point is not acute enough)
  • New venture would not have a strong enough point of differentiation

We also encountered situations where some of the ideas can address operational efficiency or could represent a new product line. These concepts don’t fit the external venture building model, in fact, a small number of ideas we generate fit this model. The majority of them are potential opportunities that companies should be doing internally or there are existing startups that they might partner with to execute those on.

If so, we may work with the partner to set up digital innovation labs and build a pipeline and portfolio of new solutions leveraging internal talent and resources.

Why Partner with us?

If you are just getting started with venture building, you may lack the required skilled team, proven process or anticipated access to opportunities. You may also find that the cost for building, testing and learning what is the right strategy may be too high.

Having a strong corporate venturing ecosystem with enablers can boost the company’s ability to compensate for these characteristics.

We know what it takes to build a business and how important the right partners are. Our work goes beyond consulting, design, and technology services – we act as a venture partner and co-invest in the outcomes together with our corporate partners.

Let's build something together.

Get in Touch

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