Mach49 is a growth accelerator headquartered in Silicon Valley, California. The firm has about 180 employees worldwide and was founded in 2014, working with its first client in 2015. It partners with global businesses to build pipelines and portfolios of new ventures, helping to drive disruptive growth.
As part of our ongoing venture studios initiative, we spoke with Mark Simoncelli, Chief Revenue Officer, to learn more about the firm’s successful ventures, collaboration processes, financial models, and more.
Who They Work With
Mach49 works with a variety of large corporations to help them build what the firm calls, “venture factories.” It can also help corporate partners establish or expand their corporate venture capital units. Simoncelli said size and revenue are each factors in Mach49’s decision on whether to work with a corporation, but what’s more important is a corporation’s appetite for venture building.
“[Companies] have to really have a growth mindset, because if they don’t have that, they’re not going to meet preconditions for success when it comes to venture building,” he said.
Simoncelli also made it clear that understanding the concept of building out a portfolio of new ventures is an important characteristic of a Mach49 corporate partner.
Mach49 has partnered with Schneider Electric, Goodyear, Intel, Hitachi, Hines (real estate), and TDK Ventures, among others.
Outcomes
Mach49 aims to help global companies disrupt themselves and their industries — whether internally, by building ventures, or externally, using corporate venture investing.
Mach49 partners with corporations to build internal ventures, which can later be spun out or sold, if the corporate partner sees an opportunity to do so. Simoncelli said Mach49 aims to help corporates become independent with those ventures by the end of the process.
“We want to create capability; we don’t want to create dependency,” he said. “We want to teach you to fish, and we want you to fish alongside you, because we’re very execution focused. Then, once you get your sea legs, we will back away.”
Mach49 has worked with Stanley Black & Decker to create DADO, a construction workflow management company, and has built various ventures with Schneider Electric, like Clipsal Solar, which is a solar-as-a-service provider, and eIQ Mobility, a software provider for fleet electrification.
Collaboration Model
For its venture building, Mach49 uses a four-step process. Not every venture is built in the same way, though — some corporations come to Mach49 able to skip the first step, ideation. Others can come in at later stages. Others need all four steps to build a venture successfully.
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Ideation — in this stage, Mach49 works with the partner to form ideas.
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Incubate — during this 12-week process, Mach49 works with the corporate partner to form a new venture team, conduct interviews, and collect data.
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Accelerate — Mach49 has three different options for acceleration — build to automate, build to validate, or build to grow.
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Scale — At this point, the venture needs to grow at a rate that will allow it to put a product or service into the market at scale for its prospective customers and uses.
Funding
Mach49 uses a fee-for-service model for the ventures it builds with corporate partners, because the corporation owns 100 percent of the ventures at the end of the process. The firm does not take equity in the ventures, nor does it co-invest.
“We deliver great value, and companies own these ventures 100 percent. So when they get big, juicy offers … they get 100 percent of the money. Most of them want to hang on to them, because they are unicorns in the making,” Simoncelli said.
He said that in the past, companies have asked Mach49 to help them find external funding, but that those cases are few and far between.
Team
The team that builds the ventures is most often a combination of internal employees of the corporate partner and Mach49 team members.
The new venture’s team includes a general manager, as well as a few other positions, like subject matter experts, which come from the client or are brought in by Mach49. The firm surrounds that team with an entrepreneur-in-residence, industry specialists, and other team members.
Simoncelli said many of the clients’ team members come from inside the partner corporation.
“You’re changing hearts and minds. When you put a day job person on [a new venture] for 12 weeks, they’re going to come out transformed, because they’re learning to think like a startup and to operate with speed. It’s like an MBA on steroids,” he said. “Outside of them contributing to the success of the venture, they themselves are going through this personal journey of self discovery and enablement.”
What’s the Key Question Corporate Leaders Should Ask Before Partnering with a Venture Studio?
Simoncelli said leaders should ask themselves, “What do I need to do internally to get ready for venture building?”
He said corporations have the resources to successfully stand up an internal venture, but only if they remove barriers for that venture to succeed.
“Venture building works for companies where they’ve got the mothership advantage. They’ve got a brand, customer channel, revenue, and talent. They’ve got all the oxygen that they can give a startup. They need to give it oxygen; they need to remove the friction,” Simoncelli said.
