Building a new venture is a mix of art and science. It requires creative inspiration, astute problem-solving, market expertise, data analysis, design execution and hours of iteration, often running on a tight timetable. “It’s a set of highly developed, unique skills and processes that a company may not have as part of its core business,” points out Chris Smith, a McKinsey partner.
He is a leader in Leap, our venture building unit, which has established more than 700 businesses—including 20 unicorns—since it was founded in 2018.
Now Leap has launched a gen AI platform, including a suite of copilots, tools, and workflows, which combines proprietary client and McKinsey data to help our teams enhance and accelerate the process of building compelling business ventures, from the initial flash of inspiration to a fully functioning entity.
“New venture building isn’t easy: our analysis shows only about 20 percent of new businesses launched in the past ten years are viable large-scale enterprises today, while about 40 percent of failures are due to poor product–market fit,” says Chris. “With our new gen AI capabilities, we can widen the scope of ideation, create app prototypes for customer testing and develop investment cases, ultimately advancing the build, quality, and scale of the venture.”
In venture building, it’s essential to identify product-market fit as quickly as possible. This requires enhancing the quality of hypotheses, avoiding analysis paralysis, and moving quickly to validate or invalidate ideas. We are using gen AI to help us meet these goals through a simple model:
- Amplify skills in small venture teams by augmenting the expertise of product, design, marketing, operations, and engineering talent
- Access vast amounts of information to bring forth insights, mimicking capabilities traditionally associated with large corporations but with the agility of a new venture
- Act quickly on insights by being alert to data signals from all areas of the venture, including customer feedback, product usage trends, financials, and HR
“Across the ventures we build, we see these gen AI venture copilots adding value beyond the simple use cases, freeing up experts and executives to do more,” Chris explains. “With a copilot assisting product managers and designers in identifying and analyzing opportunities, value pools, ideas, and customer research, lengthy collaborative sessions can be shortened to focus on refining ideas and making critical decisions. Additionally, we’re combining gen AI with automated agent workflows to create venture canvases, first-draft pitch decks, or artifacts to test with customers, such as prototypes, landing pages, and surveys for different value propositions.”
The reaction from clients has been enthusiastic. “With gen AI, Leap has helped us focus, have the right conversations, and decrease dissent or contention to get to the right place,” says a client sponsor at a UK insurance company. Another client sponsor at a US healthcare company adds: “In a few hours, we were able to create high-potential venture concepts that would have required weeks of work. [We are] excited to see more gen AI copilots that can help us build ventures from start to finish.”
Diverse organizations are exploring this new future of venture building. Innovation labs are adopting gen AI platforms to expedite venture development from ideation to launch.1 Venture capital firms use signals from multiple businesses to find patterns and insights from their portfolios to help them make key investment decisions. Our own experience suggests a clear competitive advantage from iterating with a gen AI venture copilot to get better answers and a quicker path to product-market fit.
“It’s impressive. With gen AI capabilities, Leap is able to understand what we do well and suggest ideas that meet those strengths,” said a client leader at a Central American nongovernmental organization after a design thinking workshop. “I have been in countless ideation and pitch exercises like this, and I have to say, this was clearly the best.”
We are still experimenting and learning as we strive to be at the forefront of the gen AI revolution in venture building. Join the conversation with any of the authors of this article.
1Aleksandra Mrowczyk, “Gen AI’s transformative impact on venture building,” Pilot44, accessed September 5, 2024; Christina Maria Schmidt, “Impact of artificial intelligence on decision-making in venture capital firms,” Catholic University of Portugal, July 8, 2019.