For nine months I have been working to build Vie Carratt and have met with many Internet and technology businesses mainly in the UK and Spain, but also in other European markets. During this period I have learnt a lot. I have also been surprised by the lack of marketing. I had thought marketing and communications for private TMT companies would be similar to financial and corporate PR, which is what I have been focused on for the last ten years. But I have quickly discovered it is very different. Now I feel that my job is a combination of doing financial PR but for private companies with being a venture capital without the capital.
Public companies have long seen the need to promote their financial results to shareholders and financial investors. For private companies, whose financial results are not publicly available, the focus shifts to promoting the market opportunity, the business model and all the reasons why a private business will have a superior equity value. It remains an essential task to tell potential shareholders and prospective buyers of the business why this business is a better financial investment than the alternative investment opportunities.
I understand the pressures and worries of an entrepreneur. You work really hard building your business by growing your customer base, expanding internationally and improving your product. Your ambition is to become the next Spotify, Skype or Tuenti. And yet, the primary responsibility of an entrepreneur is to acquire the resources, especially financial resources, required to grow the business. Eventually, you may need to sell the business to provide a financial return to investors and to realise the value you have created.
Many businesses fail to appreciate that attracting financial resources is also a marketing challenge. To attract investors the first thing you need to do is to raise your profile and project your personality into the marketplace. This is completely different to the marketing you need to grow your business operationally.
When you target investors or potential buyers of your business the product they buy into is the investment opportunity. But, what is your business’s investment opportunity? Why is it better than your competitors’ and all the other potential investments in the TMT sector?
During my time in financial PR traditional fund managers often said the most important thing they look for in a business is free cash flow. Venture capitalists are looking for a very different investment profile – technological innovation, business potential and market size are more important to begin with that traditional measures of financial health.
Ultimately, management strength will determine whether the business is a success or not. One of the most important criteria for venture investors is the quality of the management team – so you need to highlight your team’s experience and why you have the right mix of talent to achieve the rapid growth this type of investor is looking for.
Consider also how you want potential investors to hear about your market opportunity. Investors talk to many advisors, analysts and other influencers to cross check what they are hearing from you. Your market opportunity needs to be understood by the corporate finance world and everyone who influences it, not just your customers.
As a startup you will be less well-known than established companies, so educating prospective customers and investors should be a top priority. This means creating content to show why your product or service is a must have and why you are unique.
Social networks have changed the way people consume information and communicate. Brands compete in an environment where consumers have instant access to information and are overloaded with content. This can make it difficult to be heard and to properly target messages.
Traditional marketing media, such as offline advertising, are not enough and on-line content marketing campaigns are proving far more effective at generating new business and improving brand value. This involves creating meaningful content about your business and the things that will improve your customers’ experience and encourage them to engage with you. You then select the appropriate channels to target. There are numerous social networks that can be used to get the message out and an ever growing range of techniques to optimise them. It is crucial that you use all the tools available to amplify your marketing efforts.
Gaining the attention of prospective investors takes time and effort. The good news is that we can help you because we come out of the corporate finance world and we know how to talk to investors and build genuine relationships. The strategy we follow varies from company to company but we focus on the areas that will make a difference and set your company apart at exit. This means we insist on defining your market, creating a distinctive equity story and communicating it consistently to investors, buyers and the people who influence them. We work as an extension of your team. As we say, teams win and partnership matters!
By Tania Vie, Founder and Director, Vie Carratt.