Startup Database Blog

Marketing to Startups: How to Handle The Double Edged Sword

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There are a couple of important facts from the U.S. Census Bureau that any company marketing to startups might want to reflect upon:

  1. Recent research shows that the job creating prowess of small firms in the U.S. is better attributed to startups and young firms that are small.
  2. Most startups and young firms either fail or don’t create jobs...but a small proportion of young firms grow rapidly and they account for the long lasting contribution of startups to job growth.

This tells us that establishing relationships early with promising startups can yield a lot of revenue for years (often increasing over time) as these companies grow. However, target the wrong types of startups and you'll find that many wont even be around in a few years and your cost of customer acquisition will become a major problem.

So should you consider just not going after startups? Research says you'd be missing out. According to The 2019 Global Startup Ecosystem Report (GSER), over 2016-18, the global startup economy was worth $2.8 trillion, a 20% increase from the prior period. That's a lot of opportunity, but you need to be savvy in how you go after it.

Here are four tips on successfully marketing to and landing promising startups:

  1. Leverage a startup database of recently funded companies to reduce your risk. Why? If a startup has been funded by angel investors or venture capital firms, this means there has likely already been some pretty strong scrutiny of that business and that people actually believe enough in the company (vs. the millions of startups created every year) to invest some of their own or their fund's money. 
  2. Be aware of where the growth is. According to the same GSER report, deep tech startups relying heavily on intellectual property are the fastest-growing group globally. The four fastest-growing startup sub-sectors are advanced manufacturing & robotics, blockchain, agtech & new food, and artificial intelligence (AI).
  3. A recent trend that has been seen lately across b2b sales for all size firms is the involvement in more people in making the ultimate purchase decision. So look to make multiple relationships within the startup you are targeting.
  4. Finally, as Harvard & Berkeley research shows, if you can be the first salesperson representing your particular type of product or service to connect with a company, you will ultimately win more of the deals since buyers have an implicit preference to buy from the first salesperson encountered.
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