The importance of the right go to market strategy in early stage technology startups raising funding from VCs

At pre-seed, the clarity and strength of your strategy to acquire your customers and validate your problem is likely to impact the chances of both your fundraise and startup success

Hi, and welcome to AfroFounder where I share fundraising, operating and scaling tips with founders building high growth technology businesses in Africa. I’m Maria, Operator turned Early Stage Investor, and this is the 17th issue. If you’re new - you join almost 500 incredible AfroFounders on their entrepreneurial journey.

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Now on to the topic of today

Photo by Kenny Eliason on Unsplash

In the dynamic world of startups, securing funding is a significant milestone.

However, there is an issue.

To get funding, you will need to reasonably demonstrate the following

1) your problem is big and scalable enough

2) that your customers want it and will pay for it and

3) that you can find these customers

….and of course how the funding helps you do this.

Your go-to-market strategy is critical to giving early signals that prove #2 and #3. Think of it as your one shot to hit a mark. VC funded startups are on the clock to show signs of market pull and your initial approach to the market is critical.

Its result is a strong signal on whether or not you are likely to succeed. A.k.a Traction.

Many VCs won’t invest till they see traction. Yes even pr-seed.

A well-crafted and carefully executed go-to-market strategy can propel a startup ahead of its competition, create those initial strong signals, while a misguided approach can lead to missed opportunities, and poor traction, leading to a difficulty to fundraise, and ultimately failure.

In this note i’ll share five things to consider as you create a well-defined go-to-market strategy for your early stage startup.

1. Think Distribution Even Before Product

There’s a popular saying:

First time founders obsess about product, and second time founders obsess about distribution

Securing initial customers who sign up and even pay before a product is live is a strong sign that you are building something people want. There is a real temptation to want to obsess about product. Manage this. Because what is product if you don't have evidence anyone will use it?

If you’re a B2B startup, a design pilot partnership (paid even better) with a business customer who is willing to work with you to develop a solution to their problem is a great way to validate that the problem is large enough. Get it in writing.

For B2C customers, your skills in finding a decent number of ICPs (Ideal Customer Profiles) who show their interest and adoption of your MVP (Minimum Viable Product) is critical. A waitlist. etc

But this is only the first step.

2. What's Your Minimum Viable Product

I believe founders see the future of the world with their innovation in it long before investors and everyone else does. This visionary insight is what the greats like Melanie Perkins of Canva, and Matt Zuckerberg of Facebook saw.

However, many founders often get fixated on the full fledged vision, they forget that to get there you will need to execute on a microscopic scaled down version of the problem to prove that you can do this. I promise you it will NOT look like what you have in your mind, and honestly if it does you shipped to late.

So, while the big vision is clear, it is time to ask;

What is a really really small version of my solution that proves #2 and #3 above by what customers do and not what they say. I personally think surveys are flawed and should only be taken with a pinch of salt.

A good question to ask is:

What is the one simple solution that I can build to solve this problem. One that even though it is shitty, people are likely to use it because the problem is so painful, and the options are so bad?

Be okay with it being clunky. Anchor on the problem you’re solving and that the solution (whether or not it has tech) solves it.

Don’t obsess too much about the sophistication of the product.

3. Choose Your Wedge Wisely

Now , you’re beginning to explore pilot partners and thinking of initial customers.

You will have to decide exactly what feature you will need to start with to solve a sub-set of their existing problem. You’ll also need to match this feature with your initial customer profile.

Remember, you have limited time and resources, you technically get one shot. So choose this wisely as whichever of the problems to solve first and your approach, will likely decide your fate as a startup.

There is a common saying with investors;

Is the wedge strong enough to crack the market wide open?

Pick your wedge wisely. It needs to be;

1. A painful enough problem that shows quickly initial signs of market pull

2. Simple (not necessarily easy) to execute with limited time and resources

3. Able to quickly give some usage data that validates/disproves your thesis

Many people often pick the easiest wedge to execute whether or not it fits the above. Be very careful of this. You want to pick a wedge that is able to give data points that prove you’re on to something not just a wedge that’s easy to execute.

4. Codesign Solution With Initial Customers

Your initial solution to a problem is a thesis. It is a suggestion. It could be wrong, or best case an oversimplification. It is what you think people want. It is important to take this with a pinch of salt and as you launch iterate to figuring out the real customer problem.

The market is constantly moving, and so in a sense are customer needs. Productising this isn’t always easy and it is best to take an iterative and experimental approach. As you work on a timed pilot and you find evidence of a customer behaviour that supports or disproves your thesis, either way, it is critical information to help you figuring out what customers really want, need and will pay for and that is what you will eventually capitalise on.

At the end of the pilot, you want to demonstrate a superior and in-depth understanding of the customer, their problem, with data to boot.

This is your narrative for fundraising.

5. Think of Your Fundraising Narrative

At pre-seed, fundraising is storytelling. Some stories are more compelling than others. The more data, even though qualitative can be strong signals that boost confidence. The difference between a strong and poor case for funding at pre-seed is the ability to paint a large commercial opportunity accompanied by evidence - albeit qualitative that you are the right team to build it and that this is a problem a large set of customers will use and pay for.

For early-stage startups fueled by VC funding, a well-designed go-to-market strategy is an indispensable tool for success.

When fundraising, what you want to be able to do is say to investors hey - this is a big enough problem that over x people used even a shitty version and they said it was better than the existing solution. There are xm of those people in the world (market). I need funding to go unlock them and refine the product based on what we’ve learnt in the pilot.

This narrative demonstrates that you can execute in the right direction, and when it aligns with investors' expectations it can stimulate access to capital that help you optimise resource allocation, establish market differentiation, and continue to power your iterative learning and adaptation towards unlocking that billion $ ambition.

Till next time.

Maria

P.s want micro doses of my thoughts? I’m on twitter HERE