Most information about startups and VC focus on chasing the white whale, so to speak: meeting and selling to a venture capitalist who can help put the startup on the map. There’s a deep lack of information about how to wisely spend venture capital once it’s acquired.
So how can startups put that capital to the best use, and come out making big splashes?
1/ Ramp up marketing
Can’t have a business without clients, and having VC funds is the sign that it’s time to ramp up marketing on a national scale. This should always be tailored to the nature of the startup; but might include flashy ads in industry magazines, airtime on Spotify’s ads, video ads in YouTube, ppc or social media campaigns… the works.
Well-placed marketing is worth its weight in gold, and VC money can help not just fund the campaigns, but an expert agency to make them. You could engage in an industry specific live or digital event. The corporate event production team at www.mig.cc can help. It pays to involve the professionals.
2/ Client support
Client support systems are one of the best way to invest in your own company; the old adage that a single bad review is worth 10 good ones has stuck around for a good reason, after all. And luckily, there are plenty of excellent companies that can handle client support matters for you, without the need to add and train and pay for your own staff. Your clients are your business, so invest in keeping them!
3/ Invest in experts
You know who can help your startup not just become profitable, but excel? Experts. Most good startups with VC funding should be well-placed to invest in adding an expert or two to the team.
And they’re worth it: expert opinion can help you streamline processes, avoid common pitfalls, and help protect you from seriously damaging mistakes. Even if it’s just for a consultation rather as a leading figure in the startup, get an expert opinion on all of your practices from A to Z.
Another idea is to invite experts in the field (or related fields) to try out your business for free in return for a published review of some kind. The good opinion of well-known industry experts is worth its weight in gold, not just to you… but to potential clients.
4/ Avoid unnecessary expenses and innovate instead
Unnecessary expenses eat into startup capital fast, and it’s hard to discern necessary from not now that there’s a great windfall. For example, if the startup in question requires very few employees and is primarily web-based, consider allowing employees to telecommute for the first several months, only meeting in person one or two times a week. Office costs (rents, utilities, furniture) are among the largest expenses for a startup; avoid them if you can!
Also consider other innovative ways to cut costs while increasing efficiency. A Dropbox account to store large files can be far cheaper than the initial cost of hard data storage systems, and can make it easy to share information between departments.
5/ Branding materials
This might sound a little elementary, but many startups forget this crucial element of growing their business: branding. Always look for new ways to differentiate your business and to make it memorable not just to consumers, but anyone who might stumble across your business materials.
Invest in branded letterhead and paper materials, and in strongly branding every product you ship, produce, or sell. There’s a reason Amazon.com has shipping boxes custom-printed with their logo, and it’s not just because they enjoy throwing money out the window.
The bottom Line
Any startup with a business plan knows how they should be spending their VC money: hiring enough employees to meet client demand and growing the base of clients. Rinse, repeat. But it’s worth remembering that most startups fail spectacularly: a large portion of new companies don’t survive for three years.
You must continually think outside the box and look for new and interesting ways to promote your business, to gain exposure, to become memorable, and to protect yourself. Reducing expenses, seeking the advice or review of industry experts, protecting existing clients, and investing in marketing and branding will help you do all those things.