Venture Building As Metamorphosis

By Salvatore Minetti

This article is the first of a series on all matters Venture Building, being the use of a proven methodology to transform ideas regularly and rapidly into commercially successful businesses.

It may prove useful to first-time and serial entrepreneurs looking for very early stage support, to academics looking to commercialise their idea and to the investor community looking for a more creatively dynamic and de-risked home for their capital.

Metamorphosis of a idea into a startup
|Stages Of Metamorphosis of An Idea|

The journey from a simple idea to a fledgling start-up and beyond is fascinating and I have often thought of it as a form of metamorphosis. Looking for a useful framework for this article, I have taken this analogous approach to its logical next step by mapping a typical venture building process using the most well-known metamorphosis of them all, the four stages of transformation from butterfly egg into an adult butterfly.

If an idea is no more than a promise of what may be, then thinking of it as an egg is not such a leap of imagination. Ideas, like butterfly eggs, have the potential to transform into something more, are full of promise, and come in all shapes and colours. However, only the egg has the genetically pre-programmed need to progress further. All too often, the idea will remain just an idea unless external forces intervene.

What nature provides; nature takes away. Butterfly eggs are the size of pinheads and are laid in their hundreds but only a handful survive to become adult butterflies — survival of the fittest more important than merely surviving.

With close to 2 million research papers being published and countless would-be and established founders entering the market with their ideas every year, the supply of ideas is not the issue in our world either. But not all ideas are equal, and effective venture building for us calls for culling in the shape of vigorous screening, which should aim to identify only those ideas that look to innovate using science and in turn reinvent their market.

: Ideas are a defining feature of humanity. However, if they remain abstract concepts, they do not solve problems. Creating a business is about solving a problem, so this is where good venture building should start, exploration beyond the initial idea.

As the supply of ideas will always outpace the market’s ability to explore them all, having the relevant domain expertise to identify the stars of the future amongst the thousands of opportunities is key to a successful venture building approach.

We are beyond the idea and in the land of the early stage start-up. The next challenge looms large; what exactly is the problem being solved, why, how, and to whom? These, amongst hundreds of other considerations, are all options to be explored and resolved. Therefore, the more technical, commercial, and people-based knowledge this start-up gains the better. This constant feeding enables it to quickly grow, not necessarily in size but in intellectual capital, and to jettison anything and everything that it does not support its value proposition — in other words, the maturing from idea to a start-up and being de-risked of its more obvious failings from the outset.

Just like our friend the caterpillar, as from the egg emerges the larva. This second stage triggers a feeding frenzy that drives dramatic growth and, along the way, the shedding of unwanted skin, resulting in a more mature and further developed organism in a resource-light process.

: Early stage start-ups carry high risks due to their immaturity, their numerous blindsides, and limited shelf life before the market moves on. Therefore, for any venture building to be effective, a rapid assessment of what’s missing, an equally rapid deployment of solutions in the form of advice, guidance, structure, people resources, and some early cash for the all-important PoC are required. Without this “feeding” of intellectual capital the start-up does not shed all the more obvious issues and challenges that emerged from the initial idea — and all the associated risks they contain.

Venture building is much more than typical incubation, but incubation done right delivers the next stage of the journey — the consolidation and validation of all the recently applied intellectual capital. Under-wraps and from the outside, it may appear that not much is going on, with no frantic press releases or investor calls; with good venture building comes methodical refining and redeveloping of the product, testing of the go-to-market, and validation of the value proposition with early adopters.

The chrysalis, or pupa, is not much to look at; simply a bundle of stuff hanging from a branch, sitting in the fold of a leaf, or even buried underground. Again, looks can be deceiving as this stage introduces those elements that we would recognise as a butterfly, with special cells that are present in the larva, multiplying rapidly to become compound eyes, or wings, or legs. This stage can last two weeks or up to two years, with many of the original larva cells producing the energy for these growing adult cells.

: Putting in the hard months and years is not easy and it’s not the glamorous side of entrepreneurship, but it is critical to the success of any start-up. Effective venture building delivers not only the intellectual support the founders require but also the structures and frameworks that make the unbundling of complex problems that much easier. Done well, incubating rapidly adds not only resilience and maturity to the start-up but also considerably de-risks all key elements of the business-to-be, which in turn dramatically increases its value well beyond the levels typically seen in the wider start-up ecosystem.

A ready-to-go business is what most people think of when they think start-up. The reality is that most start-ups are strong on vision and product ideas but light on providing a full user solution and lighter still on their go-to-market and ongoing commercialisation. With some justification, founders will tell you that they’ve focused on the important stuff and the rest will fall into shape, which is the outcome for some. Unfortunately, for the majority, carrying these fundamental shortcomings results in the business running at less than its full potential, and for investors, it represents more risk than is necessary.

Venture building done well will not only accelerate the time from idea to launch but also comprehensively identify and rectify many if not all the fundamental issues within the business, thereby de-risking the opportunity for the founders and investors alike. Come the time of the launch, a start-up that’s born via a venture building model should be able to demonstrate a strong market fit and clear value proposition and consequently benefit from a far higher valuation than any of its peers.

Now at the final stage of its metamorphosis, the adult butterfly emerges, appearing as what most people think of when they think of butterflies. Long gone are the curious look of the caterpillar with its stubby legs slowly pushing it along its restricted world, to be replaced with a beautiful and graceful creature with long legs, colourful wings, and the ability to range far beyond.

: This article does not look to paint venture building as magic or a sure-fire way to deliver 100% portfolio success. However, it does advocate the application of additional and meaningful resources across all key elements of the start-up and at the earliest possible stage of its life cycle until the point the business is sufficiently mature to graduate, typically at Series A in our world. I would accept that the proposition of delivering above industry-standard success whilst also accelerating the time to market and at a far lower risk of failure would appear a paradox for many. However, based on our experience, it should be a common measure of success for a venture building model.

Salvatore Minetti is the CEO of Fountech.Ventures, which acts as venture builder and investor for deep tech and AI startups in Austin & London.

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