Ruslan Tymofieiev is a Ukrainian entrepreneur, founder, and managing partner of the venture fund Adventures Lab, and the founder of the venture builder CLUST. Tymofieiev Ruslan told us about what venture builders are, how their activities contribute to the prosperity of startups, and the services provided by CLUST.
The statistics of startups that overcome the ‘valley of death’ can be demotivating for young entrepreneurs, as only 10% of all startups become profitable. However, there is a business model that allows avoiding stereotypical mistakes and increasing the chances of success. This is a partnership with a venture builder. Next, we will discuss the principles of interacting with a venture builder and the services it provides.
What Venture Builders Are
Venture builders are a relatively new and effective approach to the development of startups and innovative projects. They are organizations or companies specializing in the creation and development of new ventures, providing comprehensive support, investment, and expertise.
The essence of venture building is to create startups ‘from scratch’ and help them grow and thrive successfully. This process involves collaborating with innovators, entrepreneurs, or even internal teams of companies to develop and implement new business ideas. Venture builders provide not only funding but also mentorship, expert support, as well as access to infrastructure and resources.
How Venture Builders Originated
The history of startup factories is commonly traced back to 1996 when Bill and Larry Gross founded the startup studio IdeaLab. The brothers independently generated business ideas and assembled teams for their realization. However, the precursors to companies with a similar business model can be observed earlier.
For example, in the early 20th century, Pierre DuPont invested money in a small automotive startup called General Motors. The investment was quite risky, but by the period of World War I, the value of GM’s stocks increased sevenfold, and over time, the company became one of the largest technological giants in the world.
GM and similar companies began investing their “free funds” in developing new directions and businesses within their ecosystem. They actively developed internal ventures and invested in ideas that could strengthen their core business and introduce new technology.
Venture builders operate on a similar model. The era of corporate building received a second wind with the advent of the internet. Companies like IdeaLab began generating startups, taking them public through IPOs, and profiting from their sales.
The real boom of startup studios happened in 2011–2013 when both technologies and the business market matured.
Currently, venture builders are mostly focused on mobile technologies.
How Venture Builders Work (Venture Builder Model)
The process of venture builders typically involves several stages:
- Idea analysis – the venture builder team evaluates business ideas presented by innovators or teams based on their potential for growth, competitiveness, and innovation.
- Selection and Development – after selecting the most promising ideas, the venture builder begins developing business models, researching the market, and creating development plans.
- Funding – one of the key aspects of venture building is providing financial support to startups. Venture builders can attract investments from both their own sources and external investors.
- Support and Mentorship – venture builders‘ provide startups with experienced mentors and consultants who assist in overcoming challenges related to business development, strategic planning, marketing, and management.
- Development and Scaling – venture builders‘ actively participate in the implementation of business plans, helping startups achieve sustainable growth and scale their operations.
“The main goal of a venture builder is to create an MVP as quickly as possible and test the product for viability“, comments Ruslan Tymofieiev.
What’s The Difference Between Accelerator, Incubator, Venture Fund And Venture Builder?
There are indeed many terms, which often leads to confusion. But let’s figure it out together.
Accelerators are organizations or programs that assist startups during a period of intense growth. Typically, collaboration with them is limited (for example, not more than 3-6 months). During this time, startups receive funding, mentorship, training, and access to expertise. The main goal of an accelerator is to prepare the startup for investment attraction.
Incubators also provide support to startups, but their focus is more on the early stages of development. Incubators work with young companies at the early stages and help them grow to a level worthy of attracting investments or establishing stable operations in the market.
Venture funds are organizations that raise money from investors and invest it in startups and companies with high growth potential. Funds may specialize in various industries but often collaborate with established startups that have achieved positive interim results.
Venture builders differ from the listed formats in that they provide not only financial but also intellectual resources, mentorship, and are willing to start collaboration at the idea stage.
“Venture builder is a full-fledged partner of a startup”, comments Ruslan Tymofieiev.
How Venture Builder Clust Works
CLUST is an ecosystem for launching and developing IT products. We help young entrepreneurs bring bold ideas to life and adapt to the world of big business.
We also assist existing Ukrainian IT businesses in entering the markets of Europe, Asia, Latin America, and the USA. We assess risks, help find a local team, and streamline processes.
In short, we become partners with founders, providing them with legal, operational, and resource support, allowing them to focus on product development and sales rather than managerial routine.
This collaboration is a win-win, where the founder gains our experience and resources, allowing them to avoid common mistakes, and their business to grow exponentially. Meanwhile, we receive a project that strengthens our ecosystem.
Benefits Of Collaboration With A Venture Builder
Collaboration with a venture builder can provide startups with a number of significant advantages:
- Funding and Resources – venture builders provide funding and access to resources that startups can use to develop their products or services.
- Expertise – startups have the opportunity to work with experienced professionals and gain valuable knowledge and advice, which increases their chances of success.
- Speed – with the support of venture builders, startups can reduce the time needed to develop and bring their products to market.
- Networking – participation in a venture building program provides startups with access to an extensive network of contacts, which can be beneficial for future business development.
In his article, Ruslan Tymofieiev tells in details how his venture builder CLUST, collaborates with startups and assists them in their development.
Venture builders represent an innovative model for startup development, which combines funding, expertise, and mentorship in one package. This approach opens new possibilities for entrepreneurs and innovators, enabling them to successfully bring their business ideas to life. Venture building programs are becoming increasingly popular in the world of business and investments, and are likely to continue exerting significant influence on the development of innovation and startups in the future.