So, you’ve scratched together enough funds to create a new product or service. You’ve put your blood, sweat, tears (and bootstraps) into it, and now you’re ready to start selling. Enterprise sale? New market? Longer payment terms? These can all extend your sales cycle from weeks into months, into (gasp) years. Startups don’t always factor this into their budget when it comes to the cost of their sales team. In this blog, I will outline some different strategies for funding your B2B sales & marketing efforts.
Friends and Family
If you haven’t already tapped your personal network, now may be the time. With built-in trust, they’ve seen you working hard to get where you are so far, and may be more open than you think. Don’t spoil that good will by coming to the table unprepared. Have your business plan ready and looking sharp! While your brother-in-law or old friend from high school might not be worried if you don’t have the perfect slide-deck or are dressed appropriately, you are presenting yourself as a professional, and just as important, you’ll be ready for other presentations down the road, when the stakes may be higher. If you get them on board, be sure to leverage their contacts to reach out and make early sales with friendly leads. Be sure to be upfront about the risks involved and clarify the terms, whether it’s a loan or investment. Friends and family can be a great option, but don’t complain to me if your Mom shows up at your next board meeting (and tells you to get a haircut and tuck in your shirt).
Traditional Investors: Angels, Banks, VC’s
While friends and family funding can leverage the trust and goodwill you’ve built up over a lifetime, seasoned investors will look more specifically at you and your team’s professional history, and your go-to-market strategy for launching your product. This is where showing traction is important. What proof do you have that once you begin the sales process you will be able to close? If you already have some earlier sales, outline a ‘perfect customer’, how you made the sale, and the steps you are taking to repeat the process. If haven’t yet made any sales yet, depending on your product, consider offering samples, trials or pilots to be able to confirm that there is market interest. With Canadian companies securing 460 million in Venture Capital funding in the first quarter of 2017, there is money on the table. Just be aware that time spent “selling” to investors can distract you from your own product sales process. In reference to banking options, the Business Development Bank of Canada (BDC) specializes in business loans and also provides some options for youth-led projects through its partnerships with Futurpreneur.
For B2B Startups, two different approaches can be taken: perks-based and equity-based crowdfunding. Perks-based crowdfunding works best if you have a physical product. As a sales tool in and of itself, it can help you to pre-sell your product and create a buzz. Beyond the big players like Indiegogo and Kickstarter, there are niche platforms that can help you reach out to your particular market. Equity crowdfunding platforms such as BC-based FrontFundr take a different approach, helping you to become discovered by small investors who will receive an equity stake in your startup, providing the cash you need to ramp up sales and marketing. While some fear the chaos of having one-hundred investors around your virtual board room table, I’d prefer to think of them as one-hundred ambassadors building out your network with a truly vested interest in seeing you succeed. Just remember that for every oculus rift, there are thousands of projects that do not reach their goals.
There are several programs at the local and provincial level ready to support startups, particularly companies that have some market validation. In Ontario, a great place to start is your local RIC (Regional Innovation Centre) such as Communitech in Kitchener/Waterloo, Innovation Factory in Hamilton and MaRS in Toronto. Other programs and organizations which can provide funding for your sales efforts include:
- The MaRS Embark program offered in January, that will fund a sales or marketing position, and the Embedded Executive program offered in May, that will fund a VP of Sales or Marketing position.
- The Ontario Centres of Excellence provide several grants for hiring staff and creating academic research partnerships. Be sure to check out the Smart Start program for early stage companies.
- Small Business Enterprise Centres have a few programs for startups as well, but they usually focus on traditional business models.
- The Canadian and Ontario Government Budgets also identify some new funding, as well as the recently committed 2.5 million to fund 225 Ontario tech companies through the Federal Economic Development Agency for Southern Ontario (FedDev).
- Fundica and Funding Portal are both good search tools to track down both private and public funding opportunities.
In my humble opinion, the best way to fund your sales program is through sales. If you’re in charge of doing the selling be sure to track your leads in a CRM (read my recent blog about HubSpot) and persevere through the process. You’ll learn a lot about what is most important to your customers through regular contact. For further tips on the selling process, consider downloading our “Introduction to Startup Sales” white paper. Some companies find it helpful to outsource all or part of the selling process. Business Process Outsourcers like Timebel can help you save time and money while automating back-end processes. If you have the funding, consider working with VA Partners as your outsourced sales partner and let us create a Fast Start Plan that will speed up your sales cycle and help you start creating sustainable revenue sooner. Got any further funding tips or ideas? Be sure to add them in the comments section below.