3 scaleup paths to grow your startup

“What got you Here, may not get you there”

After numerous pivots, sleepless nights and uncertainty, you’ve survived the chaos and crushing ambiguity of start-up life and managed to develop a unique tech idea or already patented an offering for customer. You are bootstraping your venture through project consulting while further developing your new product before scaling up. But the same strategy that got you through the initial start-up stage, is not working anymore. Still wondering why?

Tech companies face different challenges when it comes to scaling up and coping with risks at various stages.

Scaleup strategies

Recode in 2016 provided the following definition which we think are to the point:

  • A startup is on the quest to find product-market fit, developing and iterating its product or service, experimenting with customer segmentation and working toward a positive contribution margin.
  • A scaleup, on the other hand, has already validated its product in a market, and has proven that the unit economics are sustainable.

When a Venture is exiting the startup phase, it generally needs to choose:

  • In-house Scale up – Develop and test the product in-house. Upon successful development and validation, set up production unit and selling through own channels.
  • Outsourcing a function of the business – Letting an external partner handle the function, for eg. Marketing or HR or production, to get expertise in the field.
  • Licensing – Licensing a well-developed technology to another company / person and charging a royalty fees on the Net profits or revenue-share-agreement obtained through implementation. 

Key factors guiding your scaleup strategy

Plans for scaling up must consider a broad range of factors and balance what is desirable with what is feasible. Following are some of the factors to consider:

  • Barriers to entry – in some industries, regulation, certification, scale of production, brand reputation or distribution can be formidable barriers to a new Product entrant; in such case a Licensing strategy could be preferred
  • Time-to-Market – Depending on the stage of startup, competition and strength of IP, licensing can be a fast track route to get your product in the market faster.
  • Integration risk – while you might have validated a first lab prototype, some residual technology risk might remain from the integration of your solution into existing products; a high integration risk threshold would favour a licensing strategy to OEM
  • Team capabilities – Available expertise and experience of your team will confirm the capabilities to produce inhouse or with partners; this allows you to focus on your core strengths, avoid the challenge to develop expertise across the board.
  • Access to capital and Return on Investment – Licensing requires much less investment and time as compared to in-house development. The access to adequate capital is often a key driver in strategy decision.
  • Location and cluster – your geographical ease of access to specialised capabilities, processes, talent and know-how can play a decisive role in your scaleup

How to implement your scaleup strategy

Once you have chosen a strategy based on above factors, below are some key steps to consider on your path to implementation.

  1. Research the environment and current situation – Assessment of external environment is critical to know your market, know the bigger picture and the challenges you might face.
  2. Build a plan based on the idea and selected strategy – Assess you core competencies, adopt your business plan in line with the selected strategy and capabilities of your team, set KPI’s and a clear roadmap for the future.
  3. Outsource what is non-strategic to optimize leverage – find the right partners, for non- essential activities and focus on leveraging on key capabilities. Scaling up is not only about leveraging internal capabilities but also outside resources.
  4. Strengthen your team to support core capability – Recruit more people to strengthen special know-how and broaden the Management skillset of the team.
  5. Leverage your network to build collaborations – Network plays a key role in building the trust with the partners for your idea. Leverage your existing network to find the right partner with required competencies to scale up your idea.
  6. Monitor and Evaluate the results – regularly review KPI’s to evaluate the success of your strategy and take corrective actions as necessary

A plan, no matter how strategic, is only a plan. The success of scaling up depends on actual implementation but also the ability to react to changing market conditions.

Photo by Samuel Zeller on Unsplash

Which events are right for startups?

As a young Entrepreneur, you know that getting out of the office is key to building a relevant network. You know that a great event can propel your startup where it can thrive and achieve its business goals more efficiently. However, we are always amazed at how much time Entrepreneurs waste attending the wrong events. Are you also tired of not getting what you expect from events?

Why attend an Event in the first place?

Motivation and goals to participate in an event can be diverse but mostly fall into one or several of these categories.

  • Scouting for new ideas, market intelligence and competition
  • Reputation marketing to build credibility as opinion leader & employer in your field
  • Raising funds for your venture and increasing your visibility to Investors
  • Accelerate Customer acquisition and connect with relevant decision makers
  • Influence key policies and decisions within your industry
  • Have fun, combining team building with business related discovery

As with any business decision, in a resources constraint environment, it is foremost important to ensure you have clear goals regarding event participation.

What types of events can you attend?

Of course there are many different types of events available to startups depending on time, resources and costs of participation.

  • Networking & Apero & Meetups
  • Pitching competition
  • Startup event e.g. Pioneers Festival
  • Hackathon: 1/ 2 or 3 days of rapid prototyping (coding) for project sponsors
  • Tech show: horizontal events covering multiple markets, typically focused on selected technology solutions e.g. Mobile World, CES Las Vegas
  • Trade show: Vertical events covering multiple technologies but focused on targeted market segments e.g. CEBIT
  • Accelerator: 2-3-month programs e.g. Kickstart Accelerator, IKEA Rainmaker
  • Incubator: 6-12-18-month program often with co-working spaces

You can check some selected upcoming events for startups here.

Some things to watch-out when picking Events

Whether with customers, investors or partners, it is great to try out some various events formats. However, below are some pitfalls you should be aware of.

  • Being in the spotlight: as Founder, you put yourself in front of your business; you use the venture as a vehicle for you to get visibility and positive reinforcement; this syndrome is likely to appear in pure-play startup events, remote from market challenges
  • Comfort zone: some Entrepreneurs tend to select those events where they know they have an edge; remember that for a deep tech start-up, pitching and winning at tech events might feel great but does not solve key business questions
  • The Booth: getting a booth at an event can be a curse for a startup; A booth is great for established companies to gather partners or customers efficiently. Generally understaffed, startups are better off walking the floor and talking to people
  • If it is Free… you are the Product: many events are popping up financed mainly through corporate sponsors; they are scouting for innovation & ideas but not always with a clear purchasing mandate
  • Vision vs. Market: as you engage on the growth path for your business, you will encounter many challenges along the way. As you do this, be prepared to call “bullshit” on pitch focusing only on “vision”, “paradigm shift”, “disruption”. As your talks shift away from talking about markets, customer and sales so are your chances of building a sustainable business.
  • Selling vs. Discovering: as you start facing commercial challenges, watch out for being stuck in “discovery” event mode; early on you should shape your ideas and technology into a product + pricing proposal you can bring to potential customers
  • Escaping reality: as the business challenges increase, attending Events can become a place of comfort away from the tough reality of the business

Making the most out of your event

  • Selection: take a bit more time to challenge the need to join specific events; look for qualitative assessments and peer recommendation to meet your objectives
  • Priorities: stay focused on key business questions you are trying to answer? Key challenges? Resist the temptation of going to events just because it is free or you “won” a pitching slot! (Remember: if it is free…)
  • Liquidity: most likely you are better off not renting a booth and walking the show; as needed, booking a demo room nearby a larger event can be a great alternative to renting out expensive space on event premises
  • Time: you might leverage the event platform to connect with speakers or participants but decide not to attend in person; this might prove a great compromise to not participating to the event at all
  • Impact: prepare extensively before attending time-intensive events and particularly when you have a targeted audience in mind e.g. Investors or customers; review their specific strategy, focus and priorities so you can be razor sharp in your message
  • Value: a thorough and timely post-event follow-up is critical to getting real value from an event and send a clear execution-focused signal
  • Focus: Events should only be a means to an end; make sure you do a candid post-event lessons learned to inform your business decisions and challenge further event participation.

Given the lack of transparency, information and reviews, identifying and leveraging the most out of the right events can be a challenge for most Entrepreneurs. The need for exposure to peers, customer, partners or investors should force a sound judgment on to the few events, which a Startup must attend.

To simplify this task for you, sparksense.co provides you with a platform for start-up events here. We would appreciate your suggestions and feedback !

Pricing for Value… not Price

You have spend nights, tears and money to develop a fantastic new Product. You are excited, now getting ready to launch it to the market, but there is a big unknown: PRICE! You know that establishing the right pricing is one of the most critical step for your Venture. Unfortunately, many innovative Startups fail to capture their true value potential because of inadequate pricing.

Avoid common Pricing pitfalls

  • Lowest bid wins it all

    Confronted with uncertainty, many Entrepreneurs are looking for ways to undercut the “market”. It is a common misconception that a low price will increase the likelyhood of success. In reality offering the right Value is key to sustainable success.

  • Do not blindly follow the pricing herd

    There is a large wave of solutions which are being priced through a monthly subscription fee model. While this brings many advantages, your customer group might be used to a very different model e.g. one-time fixed price.

  • Free “Proof of Concept”

    Winning a first customer is a challenge for most new Ventures. Getting a track record has often priority to first revenues. However, offering a Free solution does not demonstrate if you provide true customer value, or confirm Readiness to Pay.

  • Project consulting temptation

    Selling a new solution often requires some pre and post sales consulting. While these consulting revenues help pay the bills, they are not scalable, non-recurring, postpone price discovery and distract valuable resources away from building a great product.

Maximise customer perceived value

  1. Anchoring value through a high price point

    It is key to position the Value point for your product as high as possible. This provides an “anchor” for any future reference of value. It also pushes you to offer true benefits. Second it is very difficult to “work your way up” from a low price point.

  2. Match customer value points

    Remember that customer perceived value extends way beyond pricing. This augmented value includes reputation, brand, leadtime or quality. It is an opportunity to revise your Product delivery, Make vs Buy to best match key customer value.

  3. Maximise value from product Features

    Acknowledging that each customer within the defined segment will have different needs, you should take the opportunity to establish a feature-based pricing model. This will further guide your product roadmap towards the most valued features.

  4. Simple pricing to optimise readiness to pay

    From day one, your pricing should support customer readiness to pay. A subscription, % or unit based pricing can enhance the stickiness of your product and bind customers over a longer period of time. Sometimes pricing simplicity can increase customer value.

Implement a successful Value Based Pricing

  1. Define your target customer

    Pricing is a reflection of perceived customer value and hence highly depends upon your target customer base. One helpful framework for this is to use a user Persona.

  2. Assess market value

    Survey and evaluate the customer perceived value for each persona and the product being offered. This includes evaluating the pain points, product features, and eventually readiness to pay.

  3. Validate customer benefits

    Understand how you create value for each customer. It is important to quantify specific process-level benefits derived from cost reduction, higher efficiency or increased quality .

  4. Setting the Price

    Your price will be reflect additional value creation, price of competing solutions or products and value capture strategy e.g. Premium pricing. You might include feature-based or subscription based pricing as appropriate.

  5. Lean Pricing method

    Continuously gather specific pricing feedback and market intelligence to narrow down which features ‘ideal customer profiles’ will value the most. This will also allow to fine tune the value capture and pricing, particularly important in rapidly evolving Software markets.

In essence, shifting to a Value-based pricing model will not only maximize profits but more importantly foster an on-going understanding of your customer value proposition. For some it might come as a surprise on what customers truly value, focusing on product features you didn’t know were important .

We are curious to hear back from you and your specific experience as you implement this value-based pricing for your business!

Smart fundraising for startups

We receive many investment requests from Technology Startups, Impact investing to even ICO’s. Some have great businesses to share; others underestimate the fundraising trap.

We talk with Balz Roth, a professional Business Angel, investor and board member for SMEs and technology startups. Various successful exits of technology startups to companies like Intel (Lemoptix), Monolithic Power Systems (Sensima) and Everyware (Safe Swiss Cloud). Balz is also a Venture Partner at Go Beyond, an international business Angel Network.

Slideshare 

Podcast

This webinar will provide hands-on, practical insights and tools towards a successful Fundraising:

  • Do I really need 3rd party money to achieve my goals?
  • Which Investors are most likely to be a good fit for my Business and development stage?
  • Key steps towards a great first Investor meeting and the first Term Sheet
  • Critical ways how to take the relationship further and get through Closing

He will draw from his broad investment and Entrepreneurship experience to provide exciting insights and practical examples. You will have the opportunity of a live chat to ask relevant questions.

B2B markets: Delivering top line growth

How to get traction with large organisation as a startup

As per the 2017 European Scale-up report, contrary to Silicon Valley, where 2 out of 3 startups are consumer oriented, 60% of European scale-ups are B2B focused. Initiating, building and maintaining productive relationships with large customers are challenges for many startups.

Slideshare 

Podcast

Adapting to a different operating framework

To become successful at driving sales in a Business-to-Business environment, it is critical for any Entrepreneur to first accommodate to a very specific operating framework.

Large customers are primarily assessing new innovation against Return on Investment, validating how it will help them increase profitable sales. In the background, the Entrepreneur will have to establish deeper relationships with a small number of companies. A further focus will be to cater for a Person-to-Person selling across multiple stakeholders. And above all, to be patient, acknowledging slower decision process of large organizations.

Executing the Key account sales process steps

In the established context, it will be important to manage the related end-to-end process:

  • Robust pre-sales approach
  • Well prepared sales interface
  • Thorough post-sales follow-up

To prepare for the sale, it will be critical for the Entrepreneur to get-out and understand the industry structure and its dynamics, so also to articulate a solid, simple Value Proposition. Beyond the market focus, it will also require to research customer organization and identify the true decision makers, their readiness to pay and seek early adopters.

During the sales process, it is very critical to listen to customers, so as to deliver what they need. To build credibility, the Entrepreneur will need to apply full human resources bandwidth to gain management trust, similarly to Venture Capital discussions. During this critical phase, the focus should remain on key contract items: scope, liability, IP ownership and termination terms. The Entrepreneur should always be weary what its organization signs and seek legal advice whenever appropriate.

The management of the post-sales process is a fundamental building block to success. The Entrepreneur will have to expand its discussion and reach to other functions within the customer organization. It should be useful to consider implementing a Key Account penetration plan but also some simple but effective web-based sales pipeline management tools. Finally, the Entrepreneur should ensure not to be blindsided by the urgency to get the order on the table and prepare for the next sales opportunity.

About the Author

Roberto Magnifico, Chief Commercial Officer, with the Startup ActLight SA.

He draws from his broad key account sales and senior management experience to provide exciting insights and practical examples. You will have the opportunity of a live chat to ask relevant questions.

Fake it before you make it !

We enjoy working with diverse Entrepreneurs and Ventures, also on supporting them on their path to Market Launch.

Before moving too quickly towards Product & solution development, we recommend each Entrepreneur to focus:

“Make sure
you are building
the right it,
before you build it right!”

They are a lot of excitement around Minimum Viable Product, Product-Market-Fit and other Prototypes.

We find the use of “Pretotype” a great way to focus on what matters – the customer and market adoption.

” Pretotypes make it possible to collect valuable usage and market data to make a go/no-go decision on a new idea at a fraction of the cost of prototypes: hours or days instead of weeks or months, and pennies instead of dollars.”

Download and read along in this short, practical and useful guide called Pretotype It

Making a great first impression

We receive many investment requests from Technology Startups, Impact investing to even ICO’s. Some have great businesses to share; others underestimate the fundraising trap.

Fundraising can become a substantial distraction from getting your business off the ground with real customers.

We felt it could be useful to share some experience-based guidance for Entrepreneurs to manage the “Fundraising” process, starting with a great Teaser. And increase your chances for application to possible “Accelerators”, Startup competitions or ICO’s.

Download your copy below

WP_Teaser_Picture

The Power of your Investment Teaser