10 Benefits of Outsourcing Startup Creation in the Corporate Venturing Model

Corporate Venturing Feb 27, 2020

More and more companies are choosing to outsource their Corporate Venturing processes, especially for the phases of creation, validation, and launching of internal startups or new business lines.

At the same time, the number of development service companies is also increasing. In such a competitive scenario, finding the right partner with the necessary talent and experience to execute this very specific type of project becomes a difficult task.

So, what does define the perfect partner?

In this type of outsourcing, the contracted company must carry out impeccable execution during the whole process, including conceptualisation actions, understanding the business model, creating usable design, and developing a high quality code with the appropriate team(s). The confluence of these factors becomes a fundamental pillar to build a solid, competent, and durable team around the startup or new business line, ensuring a stable and successful future.

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Although there are many ways and reasons to implement the Corporate Venture Builder model, in this article, we will focus on the creation and launch of our own startups, while leaving topics of co-investment, solution scouting, creation of accelerators, etc. for later.

Many companies are now starting to develop these Corporate Venturing processes, mainly because of the need to maintain current competitive advantages and improve their products and processes. It is surprising how corporations are becoming aware of the threats and challenges they face, competing not only with others of the same size, but also with the new players in the market: startups.

This makes it essential to have a deep knowledge of the market and analyse how these startups could fit into the business; although, generally, large corporations need to develop ad hoc solutions framed within their particular operations. That is why, at Acid Tango, we see that outsourcing this service by companies is crucial, with benefits as clear as:

1) Reduced Launch Time

There are many cases in which the Corporate Venturing or Strategy area has already designed the transformation/digitalisation/strategic plan, but is not able to act due to daily operations, as the attention of the teams is focused on the core business.

But it’s possible to not lose focus on your business, all while reducing the time of creation, validation, development, and launch, by implementing an external specialist team to help you throughout the process. Your competitors are already doing this.

2) Reduction of Recruitment Time and, therefore, Costs

So, what's the first step? Hiring technical and product teams, product managers...? These processes can easily take 2-3 months, or even longer. With a specialised company, this time is reduced to zero.

At Acid Tango, we have a multidisciplinary team that responds to all your needs and helps you with starting your business from the first day. Following a very detailed calendar of the product, strategically planned according to the milestones of the launch, we help you with the process of hiring and knowledge transference. This means great savings for you by not having to keep a vacancy open, which results in increased recruitment time and effort, as well as loss of business productivity.

However, a strong culture, integrated from the beginning of the product by a specialist company like Acid Tango, helps to improve the quality of the recruitment process and makes it more aligned with the cultural trends of the market. This leads to staff turnover costs that are also often lower.

3) Absolute Flexibility of the Team

During the whole work process, equipment is completely configured and customised according to the client's needs. A multidisciplinary squad of 3-5 people is organised, balancing the specific weight of each of these profiles, according to the evolution of the project.

4) Technology Stack

The shortage of technological talent has become one of the industry's major concerns. Attracting and retaining highly-qualified profiles costs time, effort, and money. If you also try to hire professionals with skills outside the main technological trends, it is even more difficult.

Therefore, it is important to follow and keep updated on the latest technologies provided by the Open Source community, in which Acid Tango actively participates. This community sets the technical direction of the industry, which makes it easier for us to hire a technology stack.

5) Improves Process Efficiency

There are corporations that are still looking for agile work teams, scrums masters. When these are already intrinsic skills for the new generations of developers (skills that cannot be conceptualised currently), combining the internal culture of the company with a completely agile team that is expert in facilitating cultural transformation becomes a format that is not often seen today.

Daily or weekly meetings are already known practices in some companies, as well as collaborative tools such as Slack, Trello, Google Drive, Zeplin, Github, etc. However, when we talk about development, another world of possibilities arises. This is where Acid Tango has become specialised in helping with the dynamisation, training, and complete integration of processes, along with pair programming actions or cross-commitment validations, among others.

6) Specialists for each Process

As in other everyday activities, the best results are achieved when you rely on specialists in each discipline. It is important to delegate to professionals who are experts in the creation and launch of technological startups, and who, thanks to their specialisation in each of the areas, can develop all phases of the process. Because of this, there is no room left for randomness, remaining attentive to details throughout the development.

This photo was taken when our remote design team was together here at HQ last fall. We were working on an internal app idea together and needed to brainstorm a name for it. We also explored UX and UI options to see what would be the best solution based on our assumptions. Then we would get it in front of potential users to validate our ideas and iterate based on how users experienced it for the first time.

7) Reduction of the Company's Risk

The configuration of a new startup or strategic line, which can potentially be incorporated as an integral part of the overall business, entails a high risk.

The internal development of these initiatives involves targeting both human and economic resources, without guaranteed success. If the project is eventually discarded, this may mean not only the loss of the investment made, but also a serious risk to the company's reputation.

External development, on the other hand, reduces risks, while allowing for the advancement and experimentation of different aspects of the new business line, without necessarily being aligned with the company's current image.

8) Strategic Advisory Capacity

An external partner, specialised in this type of process, is able to offer guidance during the entire development and to anticipate possible problems that have already occurred on other occasions. Through his/her suggestions, he/she can help define key aspects of the development and design of a strategy that is focused on solving the challenges that the company may face.

9) Improves Cash Flow and Replaces Fixed Costs with Variable Costs

This type of work implies, implicitly, a high level of uncertainty for the company that undertakes it. That's why, at Acid Tango, we never enter into closed projects, but rather work within a team extension format where a monthly fee is charged for the cost of the squad.

From a financial point-of-view, it is advisable to link a company's revenues with its costs. Therefore, a decrease in fixed staff expenses at certain times of development and validation allows a company to have greater capacity and flexibility to succeed in crisis situations.

10) The Success of the Project is the Success of Everyone

Commitment is a key value necessary for the success of a project. Depending on the format and objectives of the work, while maintaining fixed structural costs of the team, we enter into shared risk models, where Acid Tango's commitment to its clients is evident.

Some of these types of participation include: the creation and launch of spin-offs within corporations, revenue share formats based on the definition of business KPIs, and tech for equity, among others.

Choosing Acid Tango as your Venture Builder partner

We take pride knowing that every day, more venture builders are choosing us to become their technology partner in the creation of their startups and spin-offs.

Our work includes software development, UX/UI product design, prototyping, and developing a minimum valuable product (MVP). We help our clients validate their product or keep pivoting ideas until we hit product-market fit.

Would you like to get even more information? In case you haven't yet, check our Venture Builder Services portfolio and feel free to drop us a line if you feel like you could benefit from our services.

We're always on the lookout for new great ideas!