Though a return to pre-pandemic ‘normality’ proves ever more elusive, entrepreneurs and investors remain hungry for action. Global venture capital funding broke records in 2021, with VC funding into European start-ups hitting an unprecedented $59 billion. The energising effect the pandemic has had on entrepreneurs to get out there and start afresh is fuelling what the Financial Times calls ‘’the UK’s strongest start-up boom in a decade’’. By Toby Strangewood
So, there may be an increasing number of funding opportunities, especially as the Omicron threat subsides, but that doesn’t mean anything can be taken for granted. Investors will stress-test every aspect of your business, particularly your marketing plan. A realistic and insightful plan for growing your brand, scaling your consumer base and backing your brand promise with solid business delivery will make all the difference for bringing investors on board. With that in mind, here are five things new brands must do when pitching to investors.
- Do your research
What have your potential investors invested in before? What did those businesses look like when they invested? This will help you gain an idea of what’s important and what’s not in terms of the business metrics and vision for the business. Unfortunately, investors aren’t always completely open about what they look for, so this is more art than science.
- Know your target audience
I’ve seen too many investor decks where the addressable audience is ‘everyone’. Although it’s great to be relevant to a broad audience, many investors’ eyes will roll when they see your bullseye is planet earth. Even brands that are seemingly ubiquitous built up their business with a core audience, expanding and broadening as they gained traction. This is where you need robust audience segmentation. It shows you really know your market. It doesn’t indicate a lack of ambition, as your segments can broaden over time. Show how you know when and where the growth will come, and who you view as your competition. Too often I hear from entrepreneurs ‘’we have no competition’’. Be realistic about your direct competitors (emerging brands and incumbents) and know your value proposition so you can demonstrate where you can offer something they can’t.
- Think beyond digital
Digital marketing is the catalyst of most initial growth and rightly so. It’s measurable, non-committal, flexible and the barriers to entry are low. Turning on digital marketing for many businesses is like hitting the gas in a drag race. From a standing start, the returns provide an immediate rush. However, in reality, digital will often become less effective over time. For some businesses this is a surprise, but to those in marketing it’s an accepted known. Savvy investors want to see that ambitious businesses have a pipeline of marketing that extends beyond digital. They want to see that the start-up has thought about how they will scale and have the means to adapt their marketing to keep ahead of any inevitable plateaus. Investors and strategic acquirers will want to see the business evolve beyond digital-only and expand into an omni-channel presence.
- Throttle if needed
If your product or service and the supply chain behind it can exponentially ramp-up overnight, hats off. But crashed servers, out of stock messages and long customer service wait times will create a poor consumer experience and negative public reviews. This won’t be a good look for investors, and indeed not for your customer base, who may never return. To avoid this fate, ensure your marketing choices and the activation of it is in sync with the capacity of your business. When marketing teams work hand-in-glove with the product teams and data and insights are openly shared between them growing pains can be avoided, or at least reduced.
- Stories are compelling
I’ve seen fledgling businesses with some incredible tech that had the potential to be category-defining. However, they struggled with investors because they needed a more compelling story. Make sure the investor is sold on the vision of the potential, not just on the cleverness of the tech. You may need to talk as much about how you’ll change the world (or at least your audience’s lives) as the mind-boggling software you’ve created to do it. Similarly, clearly articulate the problem and your solution.
About the author, Toby Strangewood – co-founder Wake The Bear
Toby Strangewood co-founded Wake The Bear in 2018, specialising in advising start-up and scale-up brands. Toby has been a marketer for over 19 years, working at global media, creative and branding agencies while based in the UK and North America. A contributor to the IPA, and guest university lecturer on communications strategy for high-growth brands, Toby co-founded Wake The Bear in 2018.