Marketing for Money - Marketing's Role in Helping You Attract Outside Capital

Spending time and money on marketing activities during the early days of a start-up venture can be a challenging undertaking, and it may even seem frivolous to some.  Marketing is often seen as a cost-only function that can be postponed until you’ve raised money and are ready to scale.  However, allocating time and money to a few key marketing activities prior to approaching investors can strengthen your business and help your chances of securing the funds you need.

Activity #1:  Messaging and Positioning

Messaging is about communicating the value of your company and product to your target market in a way that compels them to engage with you.  Far too often, particularly in tech firms, the focus falls too heavily on listing the product’s features and technical capabilities, not on articulating the business value your solution provides to your target customers.

Positioning is how you frame your value proposition uniquely to each segment that your product will serve.  For example, if you sell healthcare software to doctors at hospitals, you will need to develop different positioning for the doctors, the clinicians, and the hospital’s CIO or IT staff.  While doctors might care most about ease of use, the CIO might care most about reducing IT spend and adhering to IT security requirements.  When you are looking to raise money, you should also consider potential investors as another segment or another role that needs attention, just like your prospects.

Positioning is also your chance to differentiate your product or service from the competition.  Whether you have direct competitors or are competing against a ‘do nothing’ mentality, your ability to depict your product’s value over other solutions on the market will not only increase your effectiveness with prospects, but it will also increase your credibility with investors.

Activity #2:  Lead Generation

For many digital and software sector firms where startup costs are relatively low, investors will expect you to have some customer traction before seeking outside capital as the evidence of the demand for your product.  Even though you’ll likely need funding to properly scale your customer acquisition efforts, starting with small, targeted lead generation efforts will make your venture significantly more appealing to investors.

These can take the form of embarking upon small-scale marketing campaigns (such as email or search engine marketing), attending a relevant industry conference for face-to-face networking, or having one of the members of the founding team put on their sales hat and do some cold calling.

Activity #3: Create an Attractive Investor Deck.

When pitching your idea to investors, the quality of your presentation is a reflection of the quality of your venture.  You want to ensure that your presentation exudes credibility and that it proves your solid understanding of the market, your command over how your product fits into your target market’s ecosystem, and a good grasp on the strategies and resources you’ll need to bring your product to market.

Whether you do these activities on your own or look to outside support, focusing on these three marketing activities and tactics above will help increase your odds for success in raising capital with outside investors and serve the added bonus of better resonating with your target market.

Magnetude offers complimentary consultations to early stage startups to determine when and how to engage marketing for the first time.  To request a consultation, please contact us today.

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