DEFINITION of 'Value Network'

A value network is a set of connections between organizations and/or individuals interacting with each other to benefit the entire group. A value network allows members to buy and sell products as well as share information. These networks can be visualized with a simple mapping tool showing nodes (members) and connectors (relationships).

BREAKING DOWN 'Value Network'

In business and commerce, value networks are an example of an economic ecosystem. Each member relies on the others to foster growth and increase value. Value network members can consist of external members such as customers or internal members such as research and development teams. Weakness in one node can affect the entire network. For example, if a development team is weak, the production team has a harder time creating the product which, in turn, can leave a buyer waiting for their shipment.

How Value Networks Benefit a Company

The advantage a value network provides comes from the way a business or individual applies the resources, influence, and insight of others to whom they are connected. A startup, for example, may look to its external connections, such as its investors and mentors, to provide experienced guidance on how to approach the development and growth of the business. While many founders have a deep understanding of the product or service they are developing, bringing that service to market, finding customers and scaling up the business may be unfamiliar to them. To make up for this shortcoming on their part, they may seek the advice of trusted stakeholders, which is considered an intangible benefit of their relationship, who have experience with such matters. They might also look to groups that specialize in assisting startups, such as incubators and accelerators, to increase their exposure to potential mentors and investors.

Value Networks and Startups

An investor typically provides their guidance to the startup they are backing because by helping the leadership grow their ideas into a tangible company, shareholders stand to benefit from the startup’s development. That guidance can take the form of expertise the investor possesses. The investor might foster introductions between the founders of the startup and other businesses they can work with to further their plans. For example, if the company needs to produce a prototype of its product, an investor might be able to direct them to another company that creates made-to-order prototypes. Likewise, if the startup is looking for a mass manufacturer or a distributor, the guidance they receive may benefit all involved as it can mean increased business for each organization and individual.

RELATED TERMS
  1. Value Network Analysis

    Value network analysis is the assessment of the members and resources ...
  2. Networking

    Networking is a process that fosters the exchange of information ...
  3. Social Networking

    Social networking is the use of internet-based social media programs ...
  4. Full Node

    Full Nodes are computers on a blockchain that maintain the core ...
  5. Obelisk Consensus Algorithm

    Used by SkyCoin, Obelisk consensus algorithm addresses issues ...
  6. Lightning Network

    Lightning Network is a second layer to bitcoin's blockchain that ...
Related Articles
  1. Small Business

    Investor Info for Internet-Based Tech Startups 

    With all the empty startup hype and vast number of options out there, how do you sift through the noise to find the best startups to consider for investment? Start here.
  2. Tech

    #1 Country For Tech Start-Ups: U.S.A

    U.S. tech companies are receiving increased levels of investor funding. In 2014, the number of mega-deals for such ventures doubled over the previous year.
  3. Tech

    The Risk And Rewards Of Investing In Startups (GOOG)

    Investing in startups is a very risky business but can reward investors greatly if and when they do pay off.
  4. Small Business

    Declining Venture Capital Offset by Digital Economy

    While the amount of venture capital may be on the decline this new trend certainly does not seem to present a problem for tech startups in today's growing digital economy.
  5. Insights

    Falling Startups Are Sapping the Economy

    The declining number of startups is a major drag on the U.S. economy and employment
  6. Small Business

    Small Business Owners: Take Advantage of Networking

    What do we really get out of going to networking events? A lot, actually—if you follow up.
  7. Investing

    Druckenmiller-backed "LinkedIn for the 1%" Opens to the Public

    The network, called Relationship Science, aims to provide links between high profile individuals in the worlds of business, finance, and law.
  8. Investing

    Snowden Spawns Wave of Cybersecurity Startups

    Companies are snubbing network leaders like Cisco for startups, since Snowden's government spying scandal.
  9. Small Business

    Startups: Tech Giants' Next M&A Targets? (AAPL, GOOGL)

    Watch for large-cap tech sector companies to announce acquisitions of startups, as valuations for unicorns and other overvalued startups continue to decline.
  10. Small Business

    Valuing Startup Ventures

    Valuing a company is a difficult task, regardless of the size of the business - but these methods can help.
Trading Center