VCs can be a strategic thought partner to startups

At the centre of innovation in any country, much like India, are its founders. These entrepreneurs juggle multiple responsibilities. They need to build a brand, hire and train employees, calibrate product-market fit and go-to-market strategy, and ensure sustainable growth and deployment of capital, all while being the captain of the ship and steering the company in the right direction.  

As founders embark on their entrepreneurial journey, venture capital (VC) firms can play a strategic role by offering the required support, beyond capital They can support startups in navigating the various dimensions of business-building, including brand and marketing, hiring, operational efficiency, M&A, etc.    

An easy nugget from the history of VC funding would be that of Arthur Rock. He advised Bob Noyce and Gordon Moore in 1967 to quit their jobs and start Intel. Rock not only encouraged the duo to pursue entrepreneurship but also helped them in securing financing. If Intel revolutionised the technology industry, it has Rock to thank. This, however, wasn’t just an investment into a company, or a founder, but an industry. It goes to show how radical conviction in a founder’s vision, coupled with an active partnership in the building process, can work in tandem with capital to create great outcomes.  

Today, India is home to 113 unicorns with a combined valuation of more than $350 Bn, as of January 2024. For founders, the path to long-term success hinges on not only on sustainable unit economics but also building an enduring brand that resonates with the right audience through strategic marketing interventions.  

The ABC of brands and marketing

In the early stages of starting up, founders must focus on the ABCs of nailing brand building and positioning.   

• The right audience - Deepening the understanding of the target audience, including demographics, habits, behaviour and attitudes, and media consumption patterns. In a market cluttered with multiple players vying for customers’ attention, it is crucial to deep dive and analyze every facet of the audience and find out the best possible ways to reach them
•   Differentiated offering – Striving for differentiation to create a lasting impression and helping position the brand as the ideal choice in a crowded marketplace or for a particular business problem. Also, identifying the optimal Product-to-Market fit (PMF) by gauging market depth and competitive landscape
•   Feedback loops - Running a seamless 360-degree customer feedback loop that not only offers space for customer critique but also incorporates recommendations into product or service features.   

The brand identity forms the bedrock of any company. By playing the role of a strategic thought partner, VCs can help founders with the fundamentals of this process, laying the foundations of an enduring brand. They can also help in other areas of brand strategy including, identifying the levers of marketing that can be best activated and harnessed for maximum awareness, consideration and conversion with target audiences. They can also help connect to their vast network of partners like performance marketing experts or quantitative research agencies to service key jobs to be done, across the marketing funnel.  

Here are a few ways VCs can help the new founders in their journey:   

Brand Story - Creating a compelling brand narrative that not only differentiates the startup by helping it define its unique value proposition (UVP) but also highlights its vision and mission. Helping a brand identify its product/service differentiation and emphasising on its unique attributes, enabling it to resonate with its audience and position it as the solution to their specific needs.  

Feedback - Guiding startups on gathering quantitative and qualitative feedback, allowing informed decision-making for the present and future. 

External Presence and Digital storytelling - Lending expertise in helping brands create an external presence through digital media like website, social media, and online content. These external platforms should reflect the brand identity and allow direct engagement with the target audience. Impactful content, along with effective use of search engine optimisation could be leveraged to communicate the brand messaging to the right audience. 

Events and community building: Helping startups determine how and when to organise events to meet prospective clients and future hires and how to go about building an engaged community. Also tapping into their network and helping founders connect with strategic key opinion influencers or high conversion audiences. 

Performance assets Giving advice about devising performance campaigns with measurable results. Goals for such campaigns include awareness, lead generation, increasing brand loyalty, and conversion. 

Mainstream advertising: Guiding founders about when, where, and how to implement ad strategies as advertising, be it print, digital, or electronic, requires a long-term thought process and roadmap and the right execution partners who can deliver quality and cost advantages. 

Public Relations: Actively contributing to the public relations efforts of startups, shaping their narrative in the media and creating a positive external image. PR can support marketing efforts by positioning the founders and key leadership as thought leaders in the right forums and media as well as leveraging media channels to highlight the brand’s messaging.   

Hiring and organisational design- Helping a brand develop a vision and strategy roadmap aligned to its brand, communications, and marketing functions. Also, supporting the company in the hiring process, especially of the brand and marketing talent, as well as identifying and interviewing suitable candidates. This is especially critical considering the emphasis on hiring the right talent. Consider this. A 1998 study conducted by Harvard Business Review stated that VCs spend nearly 20% of their time recruiting. Cut to 2023, the role has only expanded. 

Never will there be anyone as consumed by the nuances of running the company as the founder. From branding and marketing to customer journey, they want to do it all. However, in-house experts at VC firms, especially those who have seen market cycles and brand evolutions, can bring fresh perspectives and become natural thought partners for founders. Together, the two can craft and tell great stories and build enduring brands that stand the test of time. 

Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of exchange4media.com.