When Venture Capitalists Strand Technology
Published by Bill White , June 26th, 2014
When scientists and engineers commit to finding a better way to do something, they usually do. But whether these innovative solutions sell or not depends on two critical structures. The first is funding, particularly angel or venture capital investment. The second, often deferred and usually misunderstood, is branding and marketing. For emerging growth companies, I believe this - sales is getting rid of what you have; marketing is everything else.
My experience with venture capitalists dates to my first technology start-up in 1980 where I was a co-founder and director of marketing. Now, for more than 30 years, I have helped emerging growth companies lay the foundation for global branding and marketing.
To the venture capitalist who has made the deal and perhaps taken a seat on the board, confronting technology branding sooner rather than later can be the difference between loss, break-even or a big win on an investment.
Avoiding Stranded Technology
As an entrepreneur and product manager, I have learned that valuable products and services – those that require an educated customer committed to evaluating benefits in context with alternatives – often evaporate somewhere between R&D and the sales report simply because they are not sufficiently positioned, branded and explained. Early stage companies who secure capital for seed financing need short-range and long-range strategies at the same time. In the short term, articulating professionalism and progress to justify the next round of financing is critical, but it requires investment in branding at a time the company can least afford it. Without proper marketing, the management team can’t communicate the benefits. The investors, many of whom are lay people, can’t appreciate the solutions. The value proposition is ambiguous, and comparative context is nowhere to be seen. In the end, the investment is tenuous and commercialization is at risk.
Large companies no longer have legions of product managers to build the precepts for a consultative sale. Small and emerging growth companies never did. Venture capital and angel investors who commit money and expertise to promising ideas are often at a loss to explain these ideas to those who matter most – the next round of investors and, eventually, customers.
Regardless of the stage of the company, my job as a marketer is to establish creative relationships, build the offer, and to educate and supply the tools necessary to manage the brand. Unless we acknowledge the sacred ground - first between the investor and the originators - then between the point of sale and the customer, even the most expensive marketing investments will fall flat. Even during the earliest days, we need to think down the road; if we don’t empower the last person hired, our sales efforts will be restricted by how efficiently we can pour knowledge out of an entrepreneurial head and spread it on the table for all to see.
Emerging companies cannot buy market share or customer loyalty; they must think their way into mutually beneficial investments and, ultimately, success in key customer management. This requires an integrated marketing effort. The burden of education, establishing context, competitive positioning and defining value always rests with us, not the customer. Left to inexperienced technology marketers, much information can be sexy but of no consequence.
In a technology company, the role of marketing is to bridge the gaps among R&D, investors, peer reviewers, sales and customers. Simply, we must sell our story an indifferent public. If this can’t be achieved in-house, outsourcing makes perfect sense, but only when your outside marketing partner understands the nature of the start-up, the realities of time to market, the technology and the context in which it is applied.
All of this requires partnership and patience. That is what we do at OffWhite. We call our work Brand Science.
Contact us today and we will be happy to discuss your specific marketing needs.
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