Digital Venture Firms vs. Search Labs For Finding Market Fit
Creating a digital venture agency provides the technical, business, and management teams to transform product ideas into startup businesses.
If you hope to transform a great business idea into a digital venture, an informed approach provides the best chance of success. Unfortunately, some organizations just jump into the deep end without first determining the right market for their mobile app or website. Not surprisingly, flying blind in this manner typically leads to a failed project and wasted resources.
In the startup world, there are several innovative new approaches being used to validate the target market for your product while gaining the critical knowledge to design and build the right feature set for a successful release. Since startups can’t afford to look before leaping and don’t have the capital to fail over and over, they often present innovative models that larger organizations can co-opt.
First, creating a digital venture agency provides the technical, business, and management teams to transform product ideas into startup businesses. Another strategy involves starting a dedicated search lab to vet target markets for compelling business ideas. Let’s look at both approaches.
A Closer Look at Search Labs
Search labs are organizations with a singular focus on finding the right target market for a certain business idea. In fact, some entrepreneurs form a search lab as an incubator for their own idea. For example, tech entrepreneur Roger Dickey created his first startup lab specifically for building games targeting the Facebook platform, back when their internal gaming portal seemed like a growing market. This initial lab ended up being bought out by Zynga, with Dickey joining that company as an employee.
After leaving Zynga, Roger became involved with other tech startups. He formed another search lab in 2019, with a business model aimed at vetting business ideas in a variety of modern tech niches, like social networking and travel. After identifying the idea with the highest potential for success, the team builds a long-lasting company around that concept. Notably, this vetting process generally includes launching a startup to fully test the business idea and its target market.
Ultimately, search labs offer an opportunity to greatly lower the risk when forming a startup. Following this strategy fully tests your business idea against its potential target market. If a mismatch exists, your team figures that out before spending (and wasting) seed funding and startup capital. However, search labs do require starting with enough seed capital to launch multiple ventures with the goals of learning from their success or failure.
The Digital Venture Agency Approach to Find Market Fit
Forming your own digital venture agency also provides the framework of an organization with the skills and experience to accurately determine the best market fit for a digital venture. However, following this approach offers significant benefits beyond that one basic function. Forming a digital agency able to perform additional work for clients serves as a valuable source of funding.
Of course, a thriving digital venture agency relies on building teams filled with talented software engineers, business analysts, and project managers. These same teams hone their skills on external client projects and put that knowledge and experience to work turning compelling business ideas into successful digital ventures.
Most exceptional software development organizations thrive on continuous improvement. So successfully completing projects for both outside clients and internally funded ventures provides significant synergies to help programmers and other team members continually improve their skills. Ultimately, this becomes a fortuitous approach when the digital agency also incubates technology startups.
The Digital Venture Playbook and Search Labs
As a digital venture agency expands, powered by both client project successes and profitable new startups, adding a team to function as a search lab makes perfect sense. After all, both approaches remain highly compatible with each other. Combining each under one business umbrella offers significant advantages, including improving the profit potential for the entire organization as it continues to scale. Any bench time for software engineers and business professionals is limited in an environment where new projects are a regular occurrence.
Curious about learning more about everything involved with forming a digital venture studio? Check out our digital venture studio playbook covering the topic in detail. You learn strategies for building the technical teams necessary to craft the apps and websites needed for both client projects and startup ideas. Among other relevant topics, we also cover modern software development methodologies, project management tools, and the best ways to truly vet a product idea before it launches. This information can be leveraged to start your own digital agency or to launch new ventures within your organization.
If you have questions about search labs and digital venture agencies, don’t hesitate to contact our team. We boast the technical know-how and business acumen to provide the insights you need before starting on your journey. We look forward to hearing from you!