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Global management consulting firms, be warned. You have competition from unexpected quarters.

Venture building – a new model for corporate restructuring – is slowly but surely gaining traction with the corporate world in the Middle East.

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A new group of Venture Funds (VCs) is working with leading companies to create start-ups to identify and resolve various vulnerabilities in their business.

In contrast to the global consulting giants who work on management consulting projects for a fee, venture builders use their own money to partially finance, plan and grow the new startups that are later sold to the partner company – agreed price .

“We are moving away from very early start-ups and ecosystem seeding, scale-ups and returning to our roots, venture building. In two years we want to become the largest independent corporate venture builder in the Middle East, “said Lars Buch (picture below), CEO of Rainmaking at MENA & Russia, to Arabian Business.

“We will have at least 10 active projects between the UAE and Saudi Arabia in the next two years,” said Buch.

“All new projects are done in collaboration with the right corporate partner to solve the right problems, and we already have more than a dozen companies in dialogue about co-creation,” said Buch.

He declined to name any of the companies Rainmaking is currently discussing starting new businesses with.

According to the book, Rainmaking, known for its “Startupbootcamp” accelerators, has already set up several companies in the UK under the “Venture Builder” model.

“Outside the UK, the Middle East and North Africa (MENA) is the first region we will venture into for the venture building business as we believe this region has great potential for the success of this model.”

Buch said the new model will not only solve business problems through live ventures, but it will also help businesses financially.

“The venture builder’s cost of mapping, brainstorming, and starting a new business could be anywhere from 15 to 20 percent of what management consulting firms charge as fees,” he said.

Proving Grounds in the Middle East

Industry analysts said with the newfound focus of governments and corporations in the Middle East on building alternative businesses, especially in the new age sectors, in line with their strategy of reducing reliance on the oil and gas sector, the region could be the best his testing ground for the further development of the new “Venture Builder” model.

Buch added, “Our ‘venture builder’ concept is not really part of traditional venture capital … we are more likely to draw funding from R&D budgets for corporate venture and intend to sell back successful ventures to corporate partner triggers and with prearranged success Pricing models. ”

Investment experts said the “venture builder” model could prove to be a winning model for the corporate sector.

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“This trend is now catching up with companies and companies that want to build specific new initiatives and innovate, but are challenged by the old organization, hierarchy, structure and extreme processes to implement these initiatives quickly and with agility,” said Anvita Varshney. Managing Director of AV Capital Partners.

Varshney, who is also the former CEO of Rocket Internet, one of the largest venture builders in the world, also pointed out that VCs who have seen multiple business models and trends get an understanding of a particular opportunity rather than waiting for a start-up To achieve this, they can incubate the idea internally, orchestrate the capital and founding team, and thus act as a trailblazer for greater business expansion and restructuring.

Consulting focus

However, executives from leading consulting firms said they were not unduly concerned about the emerging competition from venture builders.

“Perhaps it could even complement our business as the new model could lead to further expansion of the market,” a PwC India executive, who did not want to be identified, told Arabian Business.

The PwC executive said that as competition increases, consulting firms may need to adjust their current fee model by breaking it down into a fixed fee and success fee model.