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Why branding can be make or break for startups and new businesses

A team of people discussing their start up business

Think about your favourite companies. Aside from bringing you enjoyment, what do all of them have in common? The answer is probably great branding.

Whoever you’re picturing, you might never have noticed them if it wasn’t for branding. Its importance cannot be understated. Branding is the difference between a cool, refreshing glass of Pepsi and a sticky cup of unbranded “cola drink”. The taste can be almost identical. The experience won’t even come close.

We tend to think of branding as the domain of large, multinational corporations. For most of us, the first brands that come to mind will be the likes of McDonald’s, Nike, and Apple. But branding is just as important for new startups as it is for established corporate giants. It can be the difference between success and failure.

Investors are drawn to great startup branding

To help discuss the impact of branding on startup success, we spoke to Marcin Zaba, Head of Marketing at online investment platform SyndicateRoom; The organisation has helped raise over £115m for 130 British startups, so they know a thing or two about which businesses are popular with angel investors. Zaba gives us his insight into what it takes to raise funds:

Having been involved directly or indirectly in the marketing of nearly all 130 successfully funded businesses, I spend a lot of time trying to understand the underpinnings of a successful funding round. There are several factors, but one of the most important is a company’s branding and messaging to would-be investors.

Zaba has found that startups have around 15-20 seconds to capture an investor’s attention and get them to read more. These are his two key tips for companies looking to secure funding:

1.Clarify what you do — Potential investors need to understand your proposition

Make sure you arm investors with a sound bite that they can tell their friends over dinner. Complete the below conversation with the simplest and clearest sentence:

Investor: Hey Emma, I just invested in this really interesting start up.

Emma: Cool! What do they do?

Investor: …

Option 1: It’s a business that is developing new, innovative synthetic molecules with specific antibacterial activity against susceptible and resistant bacteria.

Option 2: It’s a biotech business that’s developing a new generation of antibiotics.

The biggest enemy of clear language is jargon. Most investors on platforms like SyndicateRoom won’t know about your industry, so avoid sector-specific terminology. Business jargon is equally bad — terms like “innovative” or “solution” really are meaningless and don’t add to your pitch.

If in doubt, try to describe how you help your customers or end-users. Potential investors are more likely to understand your proposition from that point of view.

2. Create an emotional connection

I was recently talking with an investor who mentioned that a big part of his criteria was when the investee company will save the first life.

Most investors will have an agenda that goes beyond making money — they want to help companies that are affecting positive change.

Make sure that when talking about your company you emphasise the “good” that you’re bringing about. This is obviously more apparent for businesses that are directly saving lives or the environment, but it applies to all businesses. You just need to frame your proposition.

For example, StarStock is a marketplace connecting pubs to alcohol brands. It’s quite difficult to see how this can bring about positive social change — it’s essentially helping pubs get cheaper booze. But wait to see how the StarStock team present their proposition:

“By removing the middle-men such as wholesalers, the brand owners are able to pass this saving onto their customers. StarStock is focusing all its attention on helping publicans and licensees not just survive but thrive.”

Get these two elements of your messaging right and you’ll capture your investors’ hearts and minds, and you’ll be on your way to getting a cheque or two as well.

Effective new business branding can build a customer base

Zaba makes it clear that good branding is essential for attracting investors, but it can also help draw in your first customers.

While investors will scour the latest startups for a standout brand, potential customers will come into contact with new brands in a more passive way. They could be browsing the internet or strolling through the supermarket. Wherever they are, they’re likely to gravitate towards brands they already know. To get the attention of new customers, your branding has to be exceptional.

Here at Novanym, our focus is on brand naming. Your brand name is one of the most important things about your business—almost as important as its actual products and services. Your company can develop the best websites in the world, but no one will want to work with you if you’re called Virus Starters. The same goes if you run a medical firm.

In the internet age, having a website address that ties in with your brand name is essential. To help new startups out, we offer brandable domains—brand-ready business names which come with the url “[name].com” to ensure your business is visible online.

The importance of branding in beating the competition

Securing investment and building a customer base is hugely important to a new business, of course, but you don’t do it in a vacuum. No matter how unique, radical or disruptive your startup is, it’s still likely that you’ll have competitors—for funding and for customers.

Branding can be what sets you apart. Pittsburgh, PA branding agency Top Hat have christened it “blowfish branding”. It’s the idea that a small company can compete with much larger competitors, as long as it appears to be just as good. Just as a blowfish inflates itself to look larger and more intimidating, blowfish branding can make your brand look bigger and more established than it really is, gaining trust from customers in the process.

Branding, in a way, can level the playing field. It might be hard to start a new social network that rivals Facebook, but if you have a brand identity that is just as strong, you’ll be one step closer.

An investor, or a customer, might not jump at the chance to do business with a brand new company unless that company has a brand that suggests it is a serious competitor to the big fish.

Here at Novanym, we’re big believers in branding for all of these reasons. Branding can help your startup appear as a serious challenger to established businesses; it can help get new customers interested; and, as SyndicateRoom have proven, it can help you raise the funds you need to succeed.

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