How startups can use marketing to attract investors and fight off competition

More than 600,000 startups were registered in the UK last year but those that have the best chance of securing funding for future growth are the ones that put marketing high on the agenda.

Co-founders-Valery-Bollier-(left)-and-Benjamin-Carlotti
Founders of fantasy football platform Oulala.com Valery Bollier (left) and Benjamin Carlotti

The digital economy has led to the emergence of countless startups that are disrupting industries with new business models, products and services. Competition for investment among these firms is fierce – and getting fiercer – as they seek to attract the finance needed to take their businesses forward. In this context, marketing plays a crucial role in helping startups catch the eye of willing investors.

Unilever’s acquisition of Dollar Shave Club for a rumoured $1bn (£760m) last month is a case in point. The online subscription service shot to fame in 2012 after making an irreverent YouTube video entitled ‘Our Blades Are F***ing Great’. The video, which stars Dollar Shave Club co-founder Michael Dublin, has received more than 23 million views to date, helping the company raise awareness while establishing a likeable, edgy identity for the brand.

Beyond this effective piece of viral marketing, Dollar Shave Club has thrived because of the success of its customer acquisition strategy. This includes having a clear value proposition based around affordability and convenience, as well as a strong focus on customer service and the brand experience. Thanks to the combined effect of this strategy, Dollar Shave Club holds 54% of the online shaving market in the US, according to Euromonitor.

The brand’s carefully considered approach to marketing played a crucial role in the Unilever acquisition, and should serve as a guide to other startups looking to attract investor interest.

Getting noticed

Startups need their own strategies for how to engage with the investment community. Oulala.com, a fantasy football platform founded in 2013, has sought to attract investors by using PR and investor conferences as its primary communication channels. The Malta-based company provides a white label service to online gaming sites and sports teams so they can use the underlying technology to create their own fantasy football games.

The brand’s PR strategy involves compiling statistics and infographics on footballers’ performance, many of which have been used in national newspapers in the UK and elsewhere. Oulala.com also aims to speak at conferences that are popular with investors, covering a range of areas such as data, statistics and eSports.

READ MORE: What’s the value of being an early sponsor of emerging sports?

Co-founder Valery Bollier estimates that the company has spoken at around 15 conferences already this year. He argues that startups seeking investment should present themselves as thought leaders in the area in which they operate. “Most startups just want to talk about their core product but you have to talk about future trends,” he says. “In the end you can include your product in the story, but the storytelling effort must be about the sector, and not only about your own little brand.”

So far, Oulala.com has secured more than £1.5m in investment from business organisations and angel investors. It has also agreed a deal with Premier League champions Leicester City to provide a fantasy football game for the club’s website. Bollier suggests that such partnerships lend credibility to the brand and are another important means of raising investment. “Investors are like rock stars,” he says. “Everyone is trying to get their attention.”

“Marketing is probably the most important thing [investors] look at because they need to know you can grow.”

Daniel Murray, co-founder, Grabble
grabble-slide1

Daniel Murray, co-founder of fashion commerce app Grabble – one of Marketing Week’s 100 Disruptive Brands – also believes that having a carefully coordinated PR strategy is important when raising finance. He reveals the company, which raised £1.2m from a consortium of angel investors last year, aims to get publicity in the business press in the lead-up to its fundraising rounds.

“It’s essential that your PR strategy shows you’re ahead of the curve,” he says. “Any [B2B publicity] where we can focus on the technology and where we think the industry is going is much more valuable leading up to an investment round than any consumer-driven activity.”

Grabble also invests heavily in its internal analytics functions so that it can provide investors with clear data about the effectiveness of its customer acquisition strategy. As more and more online startups seek financial backers, such advantages can prove crucial in the race for investment.

“You need to be able to show that you can get customers cheaply,” suggests Murray. “Marketing is probably the most important thing that [investors] look at because they need to know you can grow.”

Marketing plays a significant role

Former eBay marketing director Michael Stephanblome, now partner at venture capital firm Eight Roads, which invests in online, software and financial tech companies, says that the role of marketing is a central factor in his investment decisions.

“My view is that if you run a consumer company, you as the founder or CEO need to have significant marketing skills,” he says. “A lot of marketing skills – especially when the company is early stage – are discovered through conversations. It doesn’t necessarily show up in the numbers.

“[Startups] need to be asked ‘what is my value proposition and how do I solve a problem better than anybody else for a specific group of customers?’ It’s not just about advertising, it’s about strategic marketing.”

Eight Roads predominantly invests in fast growing technology companies, including a deal last year to invest in online furniture company Made.com. Stephanblome says he is particularly impressed when startup owners or marketers can talk about specific marketing metrics.

READ MORE: From disruption to domination: The three lessons for long-term success

“One proof point is whether the company has thought about the kind of unit economics it wants to do,” he explains. “For example, what are its customer acquisition costs, when do customers engage, how likely is the customer to recommend [the business] to a friend. You get a lot of confidence as an investor if you see that [the startup] is mindful of these types of questions.”

Stephanblome adds that marketing capability is one of several important factors under consideration in an investment decision. “Obviously there are other abilities that are important – you can’t market yourself out of a problem,” he says.

“You also have to be good at attracting talent, you need a good overall strategy, you can’t run out of money. There’s a tonne of things you need to look at but marketing is undoubtedly very important.”

Festival

Entrepreneur and investor Sherry Coutu will be speaking about how marketers can turn startups into the next billion dollar business at the Festival of Marketing on Thursday 6 October. The Festival takes place on 5 and 6 October at Tobacco Dock, London. For more information about the event, including how to book tickets, click here.

Latest from Marketing Week

PLEASE SIGN IN OR REGISTER. IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and inspiration that will help you develop as a marketer and leader.

Register and receive the best content from the only title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work, so we can make Marketing Week more relevant to you.

Register now

THE BEST CONTENT

Our award winning editorial team and columnists will ask the biggest questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we will be your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Dedicated to developing your skills and helping you achieve marketing excellence. Find guidance on leadership, professional development and the latest industry jobs.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here