Venture Marketing: A Startup Story
On Tuesday we began our path to profitability, diving into the basics of marketing. Today we’re still on that path and just ahead there’s a fork in the road…
There are various avenues you can waver in when it comes to marketing, but you want to go down a path that suits your market and your business.
You’re an entrepreneur, after all… Aren’t you?
When it comes to startups we’re dealing in the world of product development. I call what I do as an investor and entrepreneur venture marketing, as opposed to venture capital.
Here’s the cold, hard truth:
An entrepreneur will have a business or a product, and they need marketing dollars.
Plain and simple. They need to expand it, they need to build it and you as an investor are going to bring the marketing dollars to the table.
Here’s what I mean…
Grow the Startup
I gave a public company a marketing campaign that cost me $150,000. In return, I got a million restricted shares of stock in the company. The stock was trading at $1 a share.
Now, in one year, that stock could be worthless and I’ve lost the $150K. In this case, however, the stock grew to $18 a share in nine months. Sounds great, right? But hold off a second because there’s more to this story.
The chairman of the company sold a million shares at nine months, so the stock went from $18 to $8. I still had the million shares, and they were still worth $8 million on a $150,000 investment, but that started a negative path and by the time the year ended, the stock was down to $4.
To make a long story short, that $150K turned into millions of dollars for me, and it happened in just one year (I took a one-year restriction on the stock.).
I put in the marketing campaign that created the buzz to take it to $18 a share. I got that quick return every startup investor dreams of!
Centralized Venture Marketing
When it comes to small startup ventures, they NEED marketing. Sure, they might need some additional capital but I’m not much of a passive investor — I like to take an active role…
There was a company doing about $5 million a year, and their stock was under a dollar a share. I’m talking about a very small public company with a small market cap. I stepped in, and yes of course made an investment, but I also brought in the ability to help them with marketing and helped them get into more distribution.
It’s venture marketing in motion…The company grew north of $35 million and its stock quadrupled.
As an investor and entrepreneur I come in with capital, with expertise, with some other investors to help out and some other distribution — that’s a 4x result that I like to see.
So what kind of investments should you look for?
Take it from a friend of mine who was the CEO of a multibillion-dollar public company who prefers investing in a small company that needs somebody with entrepreneurial expertise, a reliable track record and business credibility.
Outlining your marketing plan goes along with an investor’s desire to see how his or her money will be utilized, and vice versa:
- How are you going to get the word about your product or service out to your marketplace?
- How are you going to generate “buzz”?
- What’s your plan for distributing your product or service to the world?
As an investor in a startup company your goal is to grow the business, which means you’ll need a full understanding of how marketing will work before buying in/growing the business.
That’s smart investing. It’s what I like to do and it’s why marketing your product or business is so important.
It’s Not Over!
My dear Startup Profits Daily reader, it’s not over… Not even close!
Because as you know by now the story continues and our path to profitability is getting clearer and clearer. So cross venture marketing off your checklist because next week we’re hitting the future of marketing — just in time for the new year…
Sit tight and keep an eye out for the next edition of this Startup Profits Daily marketing series…
Sent from a shark,