VENTURE BUILDER OPERATING MODEL

A Venture Builder is an entity whose business model is based on the systematic production and development of startups. It operates as a hub that possesses capital, technological, and human resources (know-how). These resources are engaged in building fully dependent portfolio companies from scratch.

The operational process of a Venture Builder is usually closed. It generates internal business ideas that it then designs and implements, using its own administrative, marketing, sales, and technological teams. Its operational structure resembles a holding company. A Venture Builder can also absorb and develop ideas sourced from the market using its infrastructure.

The revenue model is based on investing its own resources in the created entities. The Venture Builder holds 100% of shares or stocks in them. Profit is realized through the liquidation of these assets, meaning the sale of a developed and mature company.

SWEAT EQUITY OPERATING MODEL

Sweat equity is a form of non-financial contribution made to an enterprise. This contribution takes the form of labor, specialized skills, or dedicated time. In return for this contribution, the entity making it receives shares or stock in an external project.

The sweat equity-based model is open in nature and involves investment in existing or newly emerging third-party ventures. It does not involve creating companies from scratch, but rather joining them and supporting their development by providing specific skills.

This mechanism is used both by individuals (e.g., partners with complementary skills) and by specialized firms offering services in exchange for equity (services for equity). Profit, similarly to other investment models, is generated through the increase in value of the held shares and their future sale (exit).

COMPARISON OF MODELS

Both models are based on converting resources (labor, knowledge) into equity capital in other entities. Both the Venture Builder and the entity contributing sweat equity strive to increase the value of their investment portfolios.

Key operational differences manifest in the following areas:

• Project Genesis: The Venture Builder creates projects internally. The sweat equity model relies solely on external projects.

• Assets: The Venture Builder ultimately holds 100% of shares in the created company. Sweat equity contributions result in holding a minority or partial stake.

• Resources: The Venture Builder has a full spectrum of resources to build a business. The entity operating under the sweat equity model contributes specialized, concentrated skills in a chosen area (e.g., marketing, finance, technology).

• Financial Capital: The Venture Builder finances the companies it creates. Sweat equity contributions by definition do not include financial capital.

The involvement of the Venture Builder in an external idea means implementing a complete, ready operational system. This process leads to taking full control over the project's development. Sweat equity contributions support the existing team and its founders, enhancing the project with specific, missing skills.

PROFITOVA GROUP AS AN EXTERNAL MARKETING VENTURE BUILDER

A Venture Builder is a well-defined term that refers to a company that builds other companies from scratch, possessing all the resources to do so independently.

Profitova Group focuses on marketing and external business ideas. That is why, if we clarify the term to the form “External Marketing Venture Builder”, it becomes completely correct.

This is because the added descriptors — “External” and “Marketing” — explicitly indicate a conscious exclusion of two fundamental features of a typical Venture Builder: closure and having all the resources to build an entire business.

The rest of the differences are not as significant.