Don’t put all your eggs in one basket

Venturing is a risky business, since no one can predict the future. Creating new ventures often ends up being an incremental form of innovation (through a growing insight into product development or the adoption of services created). Indeed, very few innovations are truly disruptive, such as Apple’s iPod. And yet, all ventures still require financial investments, time, and lots of energy from the people involved—without any certainty that they will eventually bring in the revenues hoped for. Since a lack of success can lead to the abolishment of venture activities, it is important for venture CEOs to maximize possible options for profit, without losing focus on the venture’s goals: creating new strategic opportunities for the parent organization.

Over the past two years, we researched how eight large corporations organized their venture activities, with the participation of CbusineZ (health Insurance), Akzo Nobel, Unilever, Document Services Valley, Eindhoven University of Technology, Sanoma, Rabobank, and NRC (newspaper). Our findings are being published in a new book called Corporate Venturing: Organizing for Innovation, which describes the actual venturing experience of these firms. It provides interesting insight into the pitfalls and successes of corporate venturing, captured in ten best practices. In our blogs, we will share these best practices with you.

Similar to building a stock market portfolio, building a healthy venture portfolio requires finding a balance between risk and reward. Another challenge faced by venture CEOs is creating so-called quick wins, on the one hand, while investing in ventures that will take a longer period of time to (hopefully) become successful, on the other. Apart from that, building a healthy portfolio is also about remaining focused on the parent company’s strategy regarding its venture activities: creating a map of innovations that suit the parent.

To boost the percentage of successful ventures, some organizations decide not to invest in business ideas themselves, but rather in start-ups that need additional funding and support to grow into larger businesses. SanomaVentures is one of these organizations. Sanoma is a media company with a focus on not only magazines, but also television broadcasting, events, consumer media, e-commerce, sites, and apps. Over the past few years, they invested heavily in acquisitions, so they were seeking some more creative (and less expensive) ways of innovating. They started their venturing activities in 2012 with a twofold aim: firstly, to help entrepreneurs realize their growth ambitions; and secondly, to gain insight into, and access to, the innovations that can and will change the media industry in the next couple of years. In this venturing equation, both sides benefit from SanomaVentures’ sharing of its knowledge, network, and financial resources, so that they can realize their ambitions.

SanomaVentures decided to invest in six specific areas and, as said, only in companies with a live product and a few early adopters. In doing so, they reduce uncertainty; but they’re also convinced that their added value is more relevant at this stage. And by not investing in ownership of the start-ups, they also stay out of the business of the parent’s product development unit.

One of the best practices in our book, derived from the cases, is that it is important for venture units to measure, communicate, and celebrate their successes, in order to keep the parent aligned. Although not many ventures become financially successful, it’s good to know that even failures generate interesting knowledge about future directions for the parent. Venturing can be seen as a way of taking out an option on new technologies: if it doesn’t work, not much harm has been done. But if it does take off, the rewards will be high.

Jessica van den Bosch


Tilburg, September 9th, 2014



Jessica van den Bosch is managing director of the Tilburg Center of Entrepreneurship at Tilburg University and a fellow at the Corporate Entrepreneurship Research Center of Tilburg University. Together with Geert Duysters, she wrote Corporate Venturing: Organizing for Innovation, to be published in September 2014 by Edward Elgar.


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