Recently , certain important statistics about Startups caught my attention and I quote – “India now ranks third among global startup ecosystems after the US and Britain, with more than 4200 new age companies, a growth of 40 percent YOY “ . On the other hand, data also suggests that the hits and misses ratio for startups is only 10 pc. I.E, Only 10 pc of startups sustain long lifecycles while 80 -90 pc of startup businesses shutdown in 1-3 years.

Intense Competition for funding renders many Startups  unable to go beyond Angel investment or Seed Capital phase. Relationship euphoria and emotional considerations are factors that can complement a good business proposition  for an Angel or seed investor . But these factors are no longer  relevant when the businesses move to a VC phase where funding decisions are generally taken  by a Robust Board . Funding gets even more challenging because  of multiple competitive  options that can offer higher future valuations and payback  and only the best gets rewarded.

What defines  the survival ,let alone long term success,  in a startup -  goes beyond  just a customer value proposition . Even with an  ongoing  commitment from  the Government to  create an ecosystem conducive to Startups, there are several  other challenges that need to be well managed  at the business level for the hit miss ratio to improve and one of the most important challenges  is  Early Stage Brand building for Startups. 

Indeed it is  hard and  rightly so - due to other  overwhelming commitments  - for startups to recognize  investment on branding as a priority fund allocation .  But  let’s face it -   there can be no overemphasizing on how a well thought out brand building strategy  right in the beginning is what defines the  future and the sustainability of the startups .  The rewards that follow from a  well structured Brand strategy are more than just redeeming ,they will be rewarding ,indeed.

I recently had  an interesting interaction with  few new entrants to the Startup community and  it was  very encouraging to  see  a shift  not just  in terms of  increasing awareness  for   Early stage  Brand  identity and positioning but also  a pragmatic vision towards how a  professionally carried  out  Brand building effort could generate  faster and  higher revenues. That said, apprehensions still remain  in the  Startup community  on what a good allocation  would be , in the Startup Budget for branding .Well, there is no rule book that defines this  .  What  does determine a good budget  is the  vision of the founder  as a roadmap for the business .

 It is important not to look at  a spend in Branding as an expense, it is an important and inevitable but very rewarding initial  investment . The benefits that accrue to startups  from a well thought out allocation towards branding are multi dimensional .

  • Sets the stage for ensuring that business idea  is sustainable and viable
  • It is a tool that provides a direction to the business and builds strategy.
  • It ensures marketing spends done at the right places .
  • It helps to establish strategic connect with customers right from the beginning.
  • It ensures unified communication of brand and the culture and ethos uniformly across all touch points by the entire team .
  • It helps in communicating strong signals of brand across all stakeholders .
  • It  enhances negotiating power for funding  from VCs or from banks for that matter.

Most importantly however,  It helps to build healthy  valuations in a short time and creates a good  negotiating power  for an exit or a buy out  strategy. It is  well worth recalling some of the good brands that  have commanded  high valuations  early in their life cycle and stand testimony to how  brand building early in the lifecycle  makes a huge impact on the businesses when it comes to valuations. Instagram, for example  commanded a high brand premium  on its sale to FB just within 18 months  .  In fact Instagram has become so popular in a span of  less than  2 years that “ millenials are naming their babies  after  Instagram filters.”   Freecharge , acquired by Snapdeal for  $ 400 million  in less than 5 years of  inception . TaxiforSure acquired by Ola for $ 200 million  in just about 4 years  . Another interesting statistic, in this connection and I quote – “ The number of acquisitions jumped  100 pc from 23 in 2013 to 55 in the next year . And until the first week of December 2015, over 120 startups had already sold out. The trend is likely to intensify this year as cluttered sectors see the trimming of flab.” 

A holistic  Corporate Brand Management process  goes beyond   Name, logo and Tag line. It is  about   building a very distinct  Brand Architecture that aligns with Business Strategy and mapped appropriately with Marketing Strategy  and encompasses Brand positioning,  Business Story and Brand promise Communication and ultimately ensuring that  the customer experience journey  fulfills the Brand commitment.  Brand attributes are largely intangible.  On the Contrary, the ROI in Brand building are highly tangible and quantifiable, no matter how mystic it may seem.

This blog is part of Brandhorizon business talks – Leading the present, Shaping the future @www.brandhorizon.net.

 

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