Drop in Venture Capital forces Tech Startups to more market focus

After years of record global Venture financing and flurry of Startup events, a new chapter is opening. Free from distractions, this chapter will be written by market focused Startups. By successful Entrepreneurs focused on Customers, delivering solutions to address real life problems. They will tell stories of Impact, focus, frugality and execution.

The lack of market is by far the number one reason for Startup failure. Tech Startups need to rely on a mix of Tech skills, market focus and sales methods to identify truly qualified customers for their technology. This is a marathon, not a sprint.”, says Hervé Flutto, Tech Entrepreneur and Founder of Sparksense.co.

It is critical for Tech Entrepreneurs to shape their Business Development and sales organisation over time. Best practices are emerging to guide Startups towards market focused strategies.

Business Development for Startups is very different

For Big Companies, Good business development is something that is tangential to their core mission. This can then become part of it, serves as good marketing or as another money maker. For Startups, Business Development is not just about winning new customers. It is a vital function to access specific market intelligence on innovative product offering. This intelligence feeds into improved product features, pricing model, extended services, channels, team profiles etc…

Organize your sales today for growth tomorrow

Sven Koehler, Co-founder & CEO with Anerdgy AG, Zürich, launches its new IoT solution with Sparksense flexible Business-Development-as-a-Service. More than ever he sees “Many startups and young companies start to look into financing and find out that their business needs to get more commercial traction. First steps for us are to identify the right customer for our new product- this is a key priority.

Over time, a B2B Tech Startup combines 5 key roles in its sales organization:

  1. The CEO as a Salesman – often the best option during the Prototype-to-Product phase. Founder(s) are immersed into both market reality and product development.
  2. Business Development – after initial product-market fit, specific resources are allocated to win new customers, launch Demo pilots and expand recurring customer base.
  3. Key Account Management – as business economics allow, a dedicated Team is established to manage and expand relationships with existing customers.
  4. Channel Partner Manager – to scale-up revenues quickly, and globally, many successful Entrepreneurs set-up indirect sale networks.
  5. Customer success team – tasked to ensure customers get the most value from the solution; particularly important role for novel solutions and source of future product insights.

Access the right Business Development resources

For Gianluca Cesari, Co-founder & Business Development Manager, Sparksense extended Business Development team works well for Sevensense AG, Zürich. “To do Business Development in our field, you need to have a clear grasp of technical concepts to convince customers. In addition, in a Startup we are often out of resources. Calling on customers, investigating which solution could be a good fit to for them is very time consuming.

Also, Entrepreneurs should realize that “people who excel at selling new products have traits and behaviors different from those of people who successfully sell existing product lines”.

Some things for Tech startups to consider when staffing for Business Development:

  • Attitude beats Experience – beyond relevant Tech knowledge, look for communication, great listening skills and resilience
  • Flexible set-up – team size and profile should adjust to match promising applications and evolving market opportunities; potentially blending internal and external resources
  • Minimize cash burn – keep fixed cost low to protect your runway while building revenues
  • Process first, tools second – an excel tracker is great to start prospection; just be prepared to introduce more advanced (free) software to secure team coordination

How to start winning new customers sustainably

Sparksense’s collaboration with numerous tech startups has resulted in the emergence of best practices:

Start with a clear goal – You might be looking for initial Proof-of-Concepts, new recurring customers or international expansion. In any case Qualified leads should meet 3 criteria: (1) right decision maker; (2) interested in your solution; (3) available budget.

Stay Focused – Beyond the Innovation Labs, concentrate on Operational business owners; they are more difficult to access but they are also closest to recurring business for your Startup.

Fulfill your promise – Balance new customer growth with Engineering and product management execution. Achieve true Qualification of Leads to reduce hand-over issues to scarce product engineering resources.

Whichever path you pursue, the CEO should remain closely involved in Sales, as your Startup launches new products, explores new markets or manages large customers. Prepare to flex your Sales efforts in line with your liquidity and revenue goals. Manage a close link between sales and Product development teams. And be resilient …