Why “Brand” Could be the Unspoken It-Factor for Startups

When you launch a business there are many things to think about and prioritize. Where does building your brand factor in and how do you do it? Many entrepreneurs grapple with this question and the current startup ecosystem doesn’t necessarily provide resources to answer and act upon this question. Achieving goals such as driving customer growth or securing that next round of investment are directly related to your ability to connect with your audience and persuade them to buy into what you’re selling which is more than your product, it’s your brand.

We wanted to explore a viewpoint that is often top-of-mind to a startup, their investors, so we sat down with two friends of the SDP family to hear their perspective on the value of branding as it relates to startups. We were joined by Erica Duignan Minnihan, Co-Founder and Managing Partner at 1000 Angels, a private venture investment network for select accredited investors, family offices, and venture funds and Zosia Ulatowski, Principal at Cornerstone Venture Partners, an early stage investment firm.

How much does a company’s brand factor into your investment decision?

E: It factors in a great deal, particularly for a B2C business. I’ve seen lots of startups in creative sectors who have horrible branding. If you can’t inspire your customers, why should they hire you?

Z: As an early stage VC fund, we look at the product, technology, size of the market, company traction, and of course the team. Branding and story however, is often the unspoken ‘it-factor’ that can differentiate a company and provide an edge in the investment process. We invest at a point in the company where the story, brand, and even product are still in an iterative phase. So, while ‘branding’ may not be the first item on our list when evaluating companies, we do look for vision – how a founder communicates that vision and positions themselves can ultimately sway an investment decision.

What are the most common design or branding challenges you see?

E: We see challenges with people who aren’t willing to invest in a designer who can help them with UX UI issues. Steve Jobs was so successful because he was all about branding and customer experience. It’s really one of the most crucial elements in consumer facing and even enterprise technology solutions. One of the great things about technology is the ability to integrate great design and use branding to establish a customer relationship. It’s part of the key element of helping your customer understand why your product is for THEM.

Z: One of the main issues we see is a lack of clarity in messaging or story around the mission, product, or technology. It is sometimes difficult for founders to take themselves out of the weeds and think about the most compelling way to explain what they do everyday and the problem they are addressing. The process of just thinking about your brand and how your company will be perceived can be invaluable for startups even if they haven’t yet implemented their brand strategy.  Asking the right questions force discussions and push toward company alignment on vision and business strategy. This can ultimately help founders as they meet with VCs but more importantly is a critical step as they grow and build their company towards the ultimate long-term goals.

Do you think developing a strong brand can add to the valuation of an investment?

E: It adds a great deal. A business with poor branding or design is unlikely to get investors excited. It also makes you look sloppy and unprofessional. Having great design talent on your team can make the difference between failure and raising your next round of capital. It also shows investors that you have the ability to look past the basic functionality of your product and invest in a long term relationship with your customer. Think SnapChat or AirBnB. Amazing design and a great user interface that wows a clients with creativity can make a standard platform (for messaging or booking a room) into a billion dollar business.

Z: Definitely but you can’t think about branding in a vacuum, you need to check the other boxes as well. Having a strong brand is part of a larger equation that can be indicative of a lot more than just marketing – it can demonstrate the ability to attract customers, drive sales, communicate vision, and hire top talent down the road. These factors can help show and drive value as you are raising money with VCs – brand is a reflection of real assets not just hype.

It’s clear from Erica and Zosia’s responses that a startup’s brand is important and there are many ways it can impact your business. Their insights also give rise to more questions such as when is the right time to invest in your brand and who do you work with to get it done?

This conversation is the beginning of many more and part of a larger dialogue we see happening in the startup community. On April 6th we’ll be hosting a panel to explore this topic a bit further and from even more perspectives. More details to come soon!

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