The Pros and Cons of Branding a Corporate Venture
If you're in charge of a whole host of corporate ventures, you're often balancing on a knife's edge: juggling the resources of the parent company and the autonomy of all of the ventures in your portfolio.
Have you figured out how to brand your startups? Stand-alone or under the corporate umbrella?
Serial entrepreneur Christopher Young breaks down the options for you.
The time to start is now. Enjoy.
By Elke Boogert , Mach49 Managing Editor
The Pros and Cons of Branding a Corporate Venture
By Christopher Young , Operating Partner at Mach49
Corporate ventures sit in that sweet spot of having access to large resources, yet innovating freely. But inevitably, you’ll have to decide how to “brand” the startup: as independent, or as part of the corporate mothership.?
Launching a new venture within a large corporation is an exciting yet challenging endeavour. As a senior executive sponsoring a new venture factory, you face the delicate task of using the corporation's strengths while fostering the venture's independence. Effective communication strategy in the early days of customer discovery and prototyping can significantly impact the venture's success.?
Drawing from my own experiences, I'll share insights on different communication approaches and scenarios for their optimal use.
Stealth Mode
Sometimes, the best approach is to operate in stealth mode, keeping the startup's activities, and sometimes even its existence, hidden until it is ready to launch. This strategy ensures confidentiality, protecting the startup’s innovative ideas and intellectual property from competitors.?
However, operating in stealth mode can limit the amount of market feedback the startup receives, which is crucial during the customer discovery and prototyping phases. The lack of visibility can also make it harder to attract early customers, partners, and talent who are unaware of the venture’s existence.
It’s also effective when the startup is developing a new break-through technology that could disrupt the market and thus needs protection from early exposure.
Independent Branding (with Behind-the-Scenes Support)
Another approach that has worked well for us in the past, is allowing the startup to operate under its own brand while receiving support behind the scenes from the parent corporation.
This method offers the benefit of autonomy, which can be crucial for fostering a culture of innovation and agility. In one of the recent ventures I worked on, we chose this route and it significantly boosted team morale and creativity.
However, this independence can come with challenges. Without the visible backing of the parent corporation, the startup might struggle to gain immediate credibility and trust in the market. I remember one project where we faced initial skepticism from potential clients who were unaware of our strong corporate backing. Additionally, the lack of an overt connection may limit the startup’s ability to openly leverage the parent company's resources.
This approach works best when the venture operates in a highly dynamic and innovative sector, where agility and a startup ethos are critical to attracting early adopters and talent.
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It's particularly effective during the customer discovery phase, where independence can signal flexibility and responsiveness to customer needs.
Co-Branding or Subsidiary Branding
Another effective strategy is co-branding or subsidiary branding, where the startup has its unique brand identity but is prominently supported by the parent company.
This method combines the strengths of both brands, creating a unified and powerful market presence.
An example of this is AndGo , where they use the reputation and credibility of Goodyear, but are setting the brand up to be an extension of the larger corporation. Distant enough, but closely affiliated.?While this is co-branding, the startup is given upfront guidelines. But then able to operate freely for the most part - and not subject to corporate mothership marketing needing to review every piece of material.
This approach can also present challenges. The startup might be perceived as less innovative or agile, potentially deterring some customers or partners who favor the nimbleness of smaller, independent companies. There’s also a risk that the startup's identity and culture is overshadowed by the larger corporation, stifling the entrepreneurial spirit.
This strategy is ideal for ventures that need to build trust quickly, such as those in industries with high entry barriers or where the parent company's reputation can provide a significant competitive edge.
It’s particularly useful during early prototyping when the parent company’s resources and credibility can facilitate faster development and market acceptance. Personally, I favor this approach as it strikes a balance between maintaining the venture’s unique identity and leveraging the immense resources and credibility of the parent company.
Aligning with your objectives
As a senior executive sponsoring a new venture factory, choosing the right communication strategy is pivotal in the early days of customer discovery and prototyping.
Stealth mode ensures confidentiality and a controlled launch for highly sensitive or very disruptive innovations but often comes at the expense of getting valuable customer insights.?Independent branding with behind-the-scenes support fosters innovation and attracts early adopters by positioning the venture as agile and independent. Co-branding or subsidiary branding leverages the parent company’s credibility and resources, providing immediate trust and support necessary while allowing the startup to rapidly develop and gain market acceptance.
Based on my experience, I lean towards co-branding or subsidiary branding. This approach balances maintaining the venture’s unique identity with leveraging the immense resources and credibility of the parent company.
By carefully considering these factors, you can position your new venture for success from the outset.
Disagree? Have additional ideas? Let me know!
CHRISTOPHER YOUNG 'S contagious entrepreneurial spirit inspires and motivates teams as he lends expertise developed through a decade of experience both launching and growing ventures in which tech is a key player.?Chris is well-versed in all the ins and outs of startups, having started his career by founding Async Interview, a SaaS technology that reduced employers’ time-to-hire through video interviewing and interview scheduling systems. Chris managed every facet of the business, from conducting customer interviews to designing and building the technology, developing the go-to-market strategy, and overseeing marketing and sales. Chris has an MBA and a BS in finance and entrepreneurship from Drexel University, where he occasionally returns to teach courses in entrepreneurship, technology, and innovation.
In a perfect balance with his fast-paced work life, Chris leads a quiet, fulfilling personal life with his wife on a hobby farm near a river town. There, you can find him enjoying long bike rides, playing soccer, making maple syrup, tending to his hive of 6000 bees or watching English Premier League games.?He also continually explores new technologies and software applications, having recently co-designed a game with AI.