Robert Ochtel’s Blog

An Experienced Approach to Venture Funding

Entrepreneurs, a Well Thought Through Go to Market Strategy will Increase Investor Confidence

Venture capitalists are always looking for a reason not to invest in your start-up company.  By their very nature they are risk adverse. Even if they like your business concept, believe in your executive team, and have confidence in your business model, they still need to be assured that your start-up company’s technology, product or service offering will be able to secure immediate traction in the market.  The ability to develop early traction in the market is a key to securing revenue and convincing investors that your start-up company is real and will produce the expected returns for their early stage investment. By developing a well thought through go to market strategy, you can convince investors that your start-up company will be successful in the market and at the same time increase their confidence level. This article focuses on the requirements for developing a well thought through go to market strategy and the  things you need to focus on as an entrepreneur to be successful in this process.

Identify and Prioritize Potential Revenue Sources

Identifying and prioritizing your targeted revenue sources will help you develop a well thought through go to market strategy.  Here, prioritizing your near term revenue sources will provide your start-up  company with focus and at the same time develop near-term cash flow, a key for any successful start-up company.  Often, start-up companies have many potential revenue sources that can generate cash flow for their start-up company.  Some of these revenue sources will take time to secure both from a development and time to market perspective and from a customer development perspective. Other potential revenue sources may be much more immediate.  The key here is to identify those revenue sources that will allow your start-up company to generate cash flow as soon as possible.  By doing so, you will provide your investors with confidence and at the same time provide the ability to expand your horizons as you move forward and continue to develop your start-up company.  By identifying and prioritizing your near term revenue sources you can develop a go to market strategy that is sound, create immediate market traction, and inspire investors’ confidence as you move forward as a start-up company.  So, take the time up front to identify and prioritize your near term revenue sources, it will increase your chances of success in the market. 

Map Out Your Rollout Schedule with a Realistic Burn Rate

Once you have identified your near term revenue sources, as an entrepreneur of a start-up company, you want to make sure you have enough money available from your investors, to achieve both your start-up company’s product development goals and objectives, as well as your requirements to secure near term customers and generate top line revenue.  To do this you need to map out your start-up company’s technology, product or service development and rollout schedule along with your required burn rate – the amount of money you will need to spend each month to achieve your all of your development and go to market goals and objectives.  The key here is to be realistic.  Investors know that it always takes twice as long and twice as much money to achieve traction in the market.  So, you need to provide yourself and your start-up company with some run way to achieve your development, market, and revenue objectives.  Therefore, spending the time to thoroughly review your development costs and mapping them to a rollout schedule takes into consideration the amount of time it takes to secure real paying customers is a key to success as a start-up company.  Here, it is better to under promise (within reason), and over deliver than it is to over promise and under deliver.  As such, investors have a realistic understanding of what it takes to get traction in the market and they will appreciate a well thought through roll out schedule that has an associated burn rate that will allow you to meet your start-up company’s goals and objectives in the market.

Develop a Targeted and Prioritized Customer List

Finally, as an entrepreneur, you need to identify your target customers and develop a prioritized list of these same customers that will be interested in your start-up company’s technology, product or service offering. This targeted customer list needs to be well thought through. Not only do you need to identify your target customers, but you need to consider which customers will take time to develop, which customers have an immediate need, and which customers are risk takers. In this case, it is always better to call your customers and determine their interest up front, as this will allow you to prioritize your customers and at the same time identify those customers that will be early adopters of your start-up company’s technology, product or service offering. Having done this homework up front, you can often identify which customers will be willing to become early beta customers and at the same time provide your start-up company with instant credibility with your investors. So, take the time to not only develop a targeted customer list, but prioritize your customers as early adopters, this will help you when engaging with potential investors. 

Developing a well thought through go to market strategy takes time and effort. Therefore, as an entrepreneur, you need to take the time to develop a realistic go to market strategy that will afford you success in the market and provide for the ability to create market traction and secure near term revenue. To do this, you need to identify and prioritize your potential revenue sources, map out your development schedule with a realistic burn rate and finally develop a targeted and prioritized customer list.  All of these things will help to ensure success in the market and at the same time provide your investors with the necessary confidence to invest in your start-up company.

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December 22, 2009 - Posted by | Venture Capital

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