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.