Q&A with Fred Schonenberg of VentureFuel on How Companies can Spark Innovation from External Sources

This includes finding ways to spark innovation from external sources. By looking outside the boundaries of their organization, companies can find new ideas and strategies to help them succeed. Fred Schonenberg is doing this with VentureFuel, a firm that brings startups and large enterprises together, to scale mutually. 

Here, Schonenberg discusses how companies can identify and use external sources to trigger innovative thinking and propel their business growth, while thriving on collaboration rather than competition.

TE: At first glance, VentureFuel can be seen as a firm that supports the growth and scale of startup companies. Could you please enlighten us more on this?

FS: Large organizations, whether government or large corporations, we help them work with startups, our focus is on helping both sides grow. So, there are opportunities to partner, build or invest in startups from the larger organization’s side. 

So it’s been a lot of time helping bigger organizations figure out how it’s going to work, it could be through investments or development and other ways large companies and startups can work together to drive mutual growth.

TE: While some startup founders say they would rather focus on revenue made from operations, than seek funding from investors for the first few early years, others are ready from the first few months or even before launch. What would you say about this? 

FS: Building VentureFuel, I came from the idea that there’s a better way to fuel your venture. What I mean by that is that it’s really important for startups to figure out what their value is and to work with a paying customer(s) first, to get revenue from operations.

For most startups, once you have a customer that’s paying you for what you do, you learn what the value is that you’re bringing in and then you could do a better valuation when you go to investors. You have something of value that an enterprise would pay for and investors are attracted because you have something that would swell and is going to grow.

Sometimes, in an ideal world, you’re able to get to that point without looking outside. Although it’s a little different for each startup as some require help from an investor; mentorship, finances, and other resources to get to that point. But I would encourage most startup founders to go find the customer, someone that’s going to pay you for what you do first. 

TE: A company’s solution might be innovative, but still unable to captivate investors. For those that are seeking to attract investment from external sources, how would you advise them? Both seed stages to established companies

FS: The first thing is really understanding what you want your company to be and then finding customers that can validate that, and show that they want to spend money with you. When you do that you’re going to find more investors because you’re going to have a proof point that investors can get excited about. 

Next, you’d need to find out who invests in this space, who are the investors that invest in the sector you’re in. There are lots of resources out there that can help you find those investors but you need a story on why they should invest in you and what the potential is for your organization; I think the best way to show that potential, to give them a reason to believe, is to show a partnership or a paying customer with a large enterprise or a large government organization. Oftentimes, those are a good place to start because they also have investment expectations. 

TE: How does VentureFuel support Female Entrepreneurs?

FS: My team is 70% women. Even though we are hiring internally at VentureFuel, we’re obviously looking for the best candidate and ensuring equality across. Gender, among others, are crucially important to us because different points of view is what make innovation happen.

It’s something that we believe in, it’s the core of our business. In fact,  four years ago, we co-launched something called the Road Women’s Conference. We partnered with venture capital funding, and we bring together women that are founders, investors and corporate innovations to get together and we’ve done six of these events. 

We have one coming up on Thursday, March 9, in New York and it’d also be on our podcast for people that are not in the location.

It’s an essential part of this, we think about the future, it’s what we do today and more than half of the founders we work with have some sort of gender diversity working for our clients. It’s really important to us and our clients.

TE: You have carried out 100+ programs resulting in over $12m in revenue for startups, what are your projections for 2023?

FS: We’ve delivered over $200 million in return on investment to our corporate partners and on top of that the startups that have gone through VentureFuel programme are now valued at over $2 billion.

So, what we are doing by merging large organizations with startups is helping both of them grow faster and deliver tangible results.

TE: How would you describe Africa’s startup ecosystem?

FS: It’s really improved more and more over the last two years. Most of the clients we work with are multinational, they are everywhere, they are huge organizations and when we look for startups, we look globally – Africa, Europe, North America and everywhere else.

But, there’s been a huge uptake in these multinationals looking into the African startups’ team. So I can say from a global perspective, it’s an area that has become really interesting to large organizations and I think that’s because of the growth and opportunities, amongst other things.

Also, funding is increasing with African startups as I think there are tremendous opportunities here to marry up large organizations with African startups. That’s something that is missing and will continue to evolve. There’s a really big opportunity because at the end of the day, all large organizations should be looking for startups offering solutions, new ways to thinking, they’re closer to the consumers and all other things that big organizations struggle with. That’s no different in the Maldives than it is in Miami or Nigeria.

I think what’s really exciting is there’s a lot more infrastructure and support for startups in Africa and obviously, there are innovators. They are better now at giving the tools and the road map to grow their business into something very substantial.

TE: Yes, there are lots of opportunities here in Africa but most young people still want to leave – ‘japa’ as it’s popularly called – what do you have to say about this?

FS: It’s not a problem that’s isolated to Africa. In the US, they call it the brain drain, people leave to go to Houston or New York because that’s where the core opportunities and big companies are.

I think as a government, it’s important to create programs that show the opportunity to stay home. The organisations that are successful in Africa need to make big efforts to retain that talent and give then an opportunity to thrive at home because what’s really interesting, especially with the startups, is if you can have a homegrown startup become successful, what that startup does is it also hires people from home and then, they also invest in the next generation of founders and startups because they’ve done it themselves and they appreciate what they are doing, it’s like paying back to society. That’s how ecosystems form and start to grow. 

It’s incredibly important for large organizations; government or enterprise companies, to create programs and also invest in local startups and make it attractive for the smartest brains to stay at home.

TE: In 2022, Nigeria enacted the Startup Act. Have you been able to review the Act, and what are your views?

FS: I think it should be applauded as an idea, in that, you have to support the startup ecosystem, create ways for companies to get through the early stages of growth and it’s hard. For every startup, success rate is challenging; which is okay, it should be challenging because then the best ones emerge. 

We have to support the readers and the people trying big things if you want to increase your economic output as a country overall, those are the people that are going to change the status quo. 

So I think it’s a great sign that the government is thinking about how to support this as an ecosystem and as an initiative. I’d say that any government should be supporting them more. This is the future, this is how you solve harder problems – incentivize smarter people to go solve those problems.

Startups are the way to change the world for a better future.

TE: By what percent do you estimate to increase your VC investment cheques this year?

FS: We are building innovation programs with large organizations, whether government or enterprise clients. So we are a little different; we’re not just cutting blank cheques. 

That said, we’re looking at 100% growth as an organization from last year to this year. The reason behind that is that large organizations are recognizing that innovation happens outside of their four walls. 

There used to be internal R&D (research and development) or they would acquire companies and that’s how they would grow. What they are realizing is that the innovators out there are startups, and they could partner with the same startups and get the same results as with other methods and efforts, and it’s great for the startups, it’s a completely win-win situation.

That collaboration is something that is really starting to become a global opportunity, a global phenomenon. We are extremely bullish on the future of startups and large organizations working together and we are seeing that grow exponentially.

Even if the economic markets are challenging, it’s okay, people still need to innovate, people want to grow, save money and big companies need to find new ways to attract new consumers. The economy needs to move forward and startups are offering new solutions. 

This idea of collaborations and deals for startups will continue to expand.

Advice to Startups

FS: Think about what you want your company to be in the future, five years down, what’s your dream? Then, write that dow, reverse engineer how you’re going to get there. 

If you think about scaling a mountain or running a marathon, it sounds terrible. If you have to run for a year, the first day, all you have to do is run for 10 minutes rather than thinking of how you’d run 26 miles. Then the next day 12 minutes, 15 minutes the third and so on. Afterwards, you build out a plan, and break it down into smaller achievable chunks of goals. 

A lot of founders try to achieve everything at once, they try to be everything to everyone, they don’t focus. If you know what your end goal is, you can create a plan on how to reach that, and then you just run the plan. You might make changes, but always know where to roll your boat, know the direction you’re meant to go; it might not be a straight line.

Go do deals, get revenue, get customers, worry about that and word about whatever the north star is for you. If you do those two things, the ups and downs of the economy won’t affect you that much. Know what you want and you’d be just fine.