The Increasing Role for Company Building in Innovation Ecosystems
Company builders are a part of the engine room for vibrant technology ecosystems. Providing a unique early-stage space for entrepreneurs, capital, corporations, and ideas to come together to launch new companies, company builders are an important signal of a strengthening innovation ecosystem.
This is a growing and increasingly important segment of an innovation ecosystem fuelling new jobs, inflows of capital, ideas, and ultimately contributing to the larger ecosystem of growing technology companies.
Company builders, also called venture studios, are present in every regional tech ecosystem and increasingly tend to have a sector focus, much like the way R-LABS focuses on the real estate sector. This follows the venture capital ecosystem development pattern, which evolved from predominantly sector-agnostic and stage-focused funds (think seed vs later-stage funds) to sector-focused funds that invest across all stages with a thematic approach. A recent example, being the launch of 2150 in Europe, is one of the largest first-time funds with a cross stage sector focused approach to urban technology.
Company builders with sector focus have an important role to play, particularly in the real estate space.
Company Building in The Real Estate Sector
Real estate is a sector that is ideally placed to benefit from company building. There are several reasons for this, which have parallels and successful examples from other sectors, such as financial services and business-to-business software.
Real estate’s traditional business models are ones, particularly in Canada, that have been proven to be relatively robust. As such, the drive for innovation and short-term need to look for new approaches and business models is relatively low. However, there are significant mid- and long-term challenges in the sector driven by internal and external factors such as the impact of climate, affordability, and the future of work, that necessitate this level of thinking and investment. These challenges are also the fuel for opportunities to leverage innovation, technology, and business models to best approach the problems for the benefit of all stakeholders.
Company building within the real estate sector enables various integral stakeholders to come together, whether government, consumers, investors, builders, and others, to coalesce around a problem area and innovate. It is particularly challenging for one organization to tackle these large problems alone, however in an innovation-driven setting, these types of challenges can be broken down, addressed and ultimately solved by structured company building.
For example, the “missing middle” and building materials challenges are being uniquely addressed through the mass timber housing as a products at R-Hauz. Development and creation of new housing supply challenges are being tackled by RIOS. Both companies have strongly leveraged industry expertise and stakeholder input.
Unlocking Entrepreneurs Within Corporations
A further unique benefit of company builders is how they can unlock and unleash the entrepreneurial capabilities and talents that exist within large corporations and institutions. Large organizations are, for the most part, restricted by the constraints and demands of the core business in which they are set.
Large and established corporations are particularly well adept at minimizing threats to the core business model, even from within, which may result in significant opportunity loss. Company builders allow for this exploration to occur in a neutral, learning environment, where the outcome of the venture creation process is aligned to the long-term goals of the entrepreneurs and the organizations.
Bringing in New Talent
Jumping into the entrepreneurial pool is a challenging decision and a relatively risky proposition. This risk creates deterrence for entrepreneurs and the people who are outside of a sector but see a complementarity and a problem that they may be well equipped to tackle.
Sector-focused company builders are an ideal partner to both explore ideas and create with as the deep sector expertise and sector-wide relationships can be maximized along with the entrepreneurial vision and skills into a new venture.
This applies equally to the younger generation of entrepreneurs who, as first-time founders, may benefit from having access and insights into the sector and unlock best practices to enable their journey from the start.
The thinking that created today’s challenges is unlikely to be the thinking that solves tomorrow’s challenges and as such having multiple channels for bringing in new talent and new ideas into the sector is a key factor for success. Company builders can be an important channel for these bright individuals to flow into the sector.
Supporting Company Building Across the Canadian Innovation Ecosystem
Company builders are still a relatively new appearance across the Canadian innovation ecosystem landscape, despite being more well-established globally.
The development and support for sector-focused company builders will:
Lead to a healthier overall ecosystem;
Provide an important channel for corporations to unlock entrepreneurial talent from within;
Allow large institutions and multiple stakeholders to participate in the needed long-term sector innovation; and
Attract and develop new entrepreneurs from outside of the sector and from the younger generations of entrepreneurs.
Interested in company building in the real estate sector? Learn what it means to partner with R-LABS.