MaRS Library How to brand your company to investors
For advice on this, we spoke to a seasoned entrepreneur who owns a successful startup in the beer business. His name is Bob Russell and he is a partner in the craft brewer, Collective Arts Brewing. Collective Arts has a unique business model that largely hangs on the way it labels its cans with new artwork every three months. Support for indie music is another big part of the marketing mix. After four years in business, Collective Arts now has seven brands and is sold all over Canada, as well as in 16 American states, three European countries, and China.
Bob’s success is partly attributable to his long history as an entrepreneur in the world of visual communications design. As a designer with strong packaging and branding chops, he understands the power of design and art in a marketing context. And as an entrepreneur, he is very familiar with the challenge of raising capital. For a growing concern like Collective Arts, that task never ends.
Investor branding checklist
1. Clearly articulate your company’s vision and brand story.
This is why you need to do what we have already talked about in this series. There can be no lack of clarity about the potential you see in your idea. Your vision should not only be clear, but bold and inspiring. You need to have a very compelling value proposition.
2. Know the size of the opportunity.
How big is the addressable market? What about the serviceable market? Know the difference and what you can actually deliver at scale. Your product may be relevant to several markets, but you will only have resources to service some of them. What kind of revenue can you expect from your serviceable market and how fast can you expect it?
3. Know why you will win.
This is really about your business strategy and value proposition. What are you delivering that your competition cannot? What’s different about you? (See Treacy and Wiersema’s value disciplines strategy, which is discussed in the second article of this series). What operational support will you put in place to win? Where will you play to win?
4. Know your competition.
We talked about this in the second article in this series. You will have conducted a robust analysis of the competitive landscape and you’ll be familiar with the strengths, capabilities, product portfolios and value propositions of your competitive set. You’ll see the gaps the competition is not addressing, where your opportunity lies and how you will seize it.
5. Know your target audience.
Without this, you have no brand. Or business for that matter. You actually have two audiences to worry about: investors and your eventual customers. The former is easy: they want to know that you are going to be a worthwhile investment. They need a tight business plan. They need to trust that you can deliver. And they need to know that you completely understand who you’ll be selling to. As with everything else on this list, you need to be very clear and focused. (Hint: you can’t sell to everybody.)
6. Build a strong management team.
People invest in people. Your idea may be great, but ultimately it will come down to who you are, what your credentials are, what qualifies you to be doing what you’re doing, and what kind of special expertise and talent you bring to the table. Investors are taking a risk, and they want to feel—not think, but feel—really comfortable with you as people. They need reassurance. You need confidence in yourselves and a track record to justify it.
7. Know how you will spend your investors’ money.
What are you going to do with the investment? How will you deploy it against capital equipment, staffing, marketing and product development? Make sure you have a comprehensive, detailed budget to share.
8. Know your product.
Know what you are selling, how it will work, what problems it will solve and what new value it is creating—both for your end customer and your investors. Be prepared to present all of that with demos if possible.
9. Know your business plan.
Build a financing roadmap. How much revenue do you need to generate and how much time do you have to generate it in order to move to the next level of funding? Lay out how you’ll deploy the revenue across all the elements listed in point #7. Know the stages and timing of your growth as a company, both short and long term.
10. Know your exit strategy.
Investors don’t just give their money away. They want it back—with a healthy return. So you need to understand when that exit will happen and what that ROI will look like.
- Bootstrapping and Alternative Sources of Funding.
- Investors and preferred convertible stock: Liquidation preference and dividends.
- Fiscal period assumption.
- Financing workbook 1: Developing a financing strategy for your company.
- Shareholders agreement for startups: Sample template for Ontario startups.