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Venture Capital Winners and Losers: How to Stop the Bleeding from a Struggling VC Investment and How to Capitalize on Success

Posted: 14 Nov 2019 03:00 PM PST

While venture capital investments can vary in countless aspects, one thing remains the same: They're unpredictable.

Risk-taking is at the core of venture capital, and sometimes that risk can pay off in a big way. Other times, it can result in a problematic situation that requires a concerted effort to turn things around. So how do you handle these two extremes – restoring a struggling, but possibly valuable investment, and exploiting a highly successful one?

Let's look at both ends of the spectrum separately.

The losing investments 

I recently had a venture capital client who had invested in a small software company that was essentially bleeding cash. The business had been in his portfolio for five years and had real customers and revenue, but profitability was lagging. The investor didn't want to shut it down, but he also didn't want to continue writing checks to barely keep it above water.

The company clearly had value, but the investor needed to know exactly how to derive that value – and how to stop the bleeding.

Although a so-called "purgatory" investment like this might have the potential to be valuable in the future, investors tend to view it as a drain on their resources, especially if there's no clear end in sight. A decision needs to be made, with the investor's choice of action ultimately tipping the tables toward success or failure.

When a venture reaches this point, investors have four options:

1. Sell the company: Ideally, you would sell the company to a strategic buyer who is interested because of the value the company adds to their own organization. This type of buyer can be hard to come by, but they are not infrequently found among a business's competition or current customer base. Approaching possible buyers in this arena can be tricky, however, as clients may become apprehensive about losing their vendor and end up shopping for a replacement. But in the end, the risk is worth the effort if the deal creates some value for the original investors.

An acquisition is another route to consider if the company can be sold for its revenue and a strategic buyer is hard to find. Under this agreement, the buyer can expand its roster of clients or add to its existing team, and the investor benefits from the sale of the company's revenue. Plus, organizations often flourish in a "new home" that may have access to better distribution or sales networks. For some companies, common-sense changes that came as the result of an acquisition ended up unlocking previously unrealized value.

2. Find a partnership: Investors should also consider partnering with interested parties instead of selling the company to them outright. An alliance is more likely if the seller is willing to accept stock as payment – which could prove valuable once the company has a "new home" to grow its worth. Going this course will take patience, as the investor likely won't see profitability from the stock right away, but it's a great option for retrieving value from a mediocre investment.

3. Find a new client: This avenue is often overlooked because investors assume their sales team would have found all possible clients, but new customers are always emerging. Some companies might see the benefit of your organization's products or services and just not have the resources for (or interest in) a merger or acquisition, which means you should approach them as a client. It's important to always consider new perspectives, contexts and opportunities when contemplating your options. Remember, this could be what your company needs to survive (or at least buy more time.)

4. Shut it down: A shutdown is always the most expensive option, so all other options should be carefully considered before conversations of dissolving the company begin. If the three alternatives listed above aren't possible, investors should:

  1. Find another company to take over,
  2. Minimize expenses as much as possible and let it run out, or
  3. Creatively work to keep the company alive without investing more money.

You may be wondering what happened with our investor client after this lengthy process. Two client prospects presented themselves, both who needed the software but couldn't afford an acquisition. In the end, the investors used expert guidance and crucial information to make an informed decision to pursue a revenue-sharing arrangement that had been on their back burner.

The result? They stopped the bleeding. The company kept all its employees and picked up traditional business operations instead of living month-to-month, waiting for the next check from its investors. 

The winning investments

On the opposite end of the spectrum, sometimes investors are presented with surprisingly successful investments. So, what do you do with the winners? The answers are quite similar.

A recent client, a medical device company, found success much earlier than expected. Their very capable CEO was experienced at shepherding new medical devices through the development and approval process, but this was a different problem. He needed to efficiently capitalize on the device's early success. Decisions he made then would certainly affect the choices he would have later, both in developing and monetizing the product.

Some strategic options for successful companies are the same as the options for struggling companies, such as partnering with another company or selling to another company. But successful companies have a few additional opportunities as well. Every potential path has advantages and costs, and immediate payoffs usually come at the expense of longer-term benefits.

1. Keep going: This is the default option. Doing nothing is a choice that successful companies can make, but not considering other options is shortsighted.

2. Sell the company: Selling the company outright is usually the quickest route to monetizing the product, but it means foregoing future –possibly greater – profits. The decision to sell early is usually driven by and done for the benefit of investors who want liquidity or don't have the appetite for the additional risk.

3. Buy another company: Sometimes, especially with a successful product, this option makes the most sense. If the acquisition target has a complementary product or good distribution, the combination of the two companies could unlock greater value. Our medical device client chose to avoid this option because it would have necessitated raising capital and adding risk, and the process would have been too much of a distraction.

4. Make a deal: Our client also had the opportunity to enter into a major distribution deal with another company. This would have eliminated the challenges of building a distribution network and the need to hire and oversee a sales force. Although the proceeds would have started flowing sooner, a deal like this could inhibit or even preclude a later deal to sell the whole company.

In each of these situations, the trade-offs have to be carefully considered to make sure the investors are maximizing their return for the amount of risk they are taking. Experience and good information – as much good information as you can get – will increase the likelihood of a good decision and an eventually successful outcome.

In both situations, whether a highly successful investment or a struggling one, the key is to understand that you have options and to clearly analyze all of them to make the most profitable decision.

How to Drive More Sales with E-Commerce Video Marketing

Posted: 14 Nov 2019 02:00 PM PST

When customers shop online, they take extra steps to ensure the products they're browsing are what they really want. Because they can't see the product up close or hold it in their hand, they require reassurance and detailed information that tells them they're ready to make a purchase.

So, why not use video marketing to move them through the sales funnel? Video content provides opportunities to give customers a better look at your products so they're comfortable during the checkout process. 

Engaging customers with video marketing

If you want to increase e-commerce sales, you need to give the people what they want. In this case, it's video. Around 40% of people say they want to see more video content from marketers, and with good reason. It's an easy, fun way to interact with brands and gather more information about their products and services. It also breaks the monotony of text, images and other content that isn't as engaging.

In general, people react more positively to video than other mediums. The demand for video has increased so much that marketers feel they have no choice but to make it the centerpiece of their content marketing strategies. About 45% of marketers plan to use YouTube as a content distribution channel in the near future, while 41% plan to use Facebook video content.

We're going to go over the different ways you can use ecommerce video marketing to generate more sales, including:

  • Optimizing video for mobile devices

  • Telling a story with video

  • Going live

  • Showcasing your products

Let's get started.

1. Optimize video for mobile devices

You need to appeal to those in your audience who view your content on their smartphones and other non-desktop devices. If not, you're neglecting more than 50 percent of people who view video content. If someone uses their mobile device or tablet to browse your website but can't properly view your videos, then they aren't able to serve their full purpose.

So, it's crucial to optimize your video content for mobile devices. Test your videos on multiple devices to ensure it fits properly on every screen size. Major hosting sites, such as YouTube and Vimeo, auto-adjust the screen so you don't have to worry about a good fit.

Choose a mobile-friendly thumbnail that gives viewers a solid idea of what the video is about. It must be attention-grabbing so it entices users to press play and engage. Make sure the thumbnail isn't blurry and accurately depicts the content of the video.

Mobile users are in a hurry and don't have time for a long, drawn-out video series. So, you want to create videos that are short and straightforward. How-to and close-up videos don't need to be longer than 90 seconds as they get the message across fairly quickly.

Don't forget about calls-to-action. Your videos are a great way to encourage your viewers to engage with your brand further and stay connected to your content. Tell your audience to subscribe to your YouTube channel, follow you on social media, check out the products on your website, and more. If possible, add a clickable CTA at the end of your video so it's easier for users to go directly to their next online destination. 

2. Telling a story with video

With video, it's easier to create a personalized experience for customers that bridges the gap between them and your brand. It gives you an opportunity to connect with your target audience in a way that text or images simply can't.

Leverage video to tell a story about your brand that touches customers and encourages them to buy. If you have an inspiring story about the start of your business, turn it into a compelling video that catches users' attention from start to finish. What about your brand makes it unique? How did it all begin? What inspired you to start your business in the first place?

Evoking emotion is a strategy that marketers have used for years to appeal to their audiences. It's easier to persuade people when you create an emotional connection first, which is why implementing this feeling into your video content is effective. 

A recent study found that videos that evoked certain emotions, such as happiness and hope, received position attention from viewers. If you can harness feelings and use them to send a message, you're already on your way to driving more sales. When people believe they're part of something bigger and better than themselves, they're likelier to take action.

3. Going live

In recent years, live streams have become a popular way for brands to engage with their audience and boost their marketing efforts. Interacting with your customers in real-time gives you another opportunity to grab their attention and encourage them to take action with your business. Around 80% of audiences would rather watch a brand's live video than read their blog posts.

Live stream marketing produces several benefits, including:

  • Increasing brand exposure

  • Creating urgency

  • Eliminating restrictions in your interactions

  • Improving engagement with audience members

  • Driving action through CTAs

  • Reaching a targeted audience

Marketers are constantly trying to come up with new ways to engage their viewers, deliver content and drive sales. Live streams provide instant communication between brands and their audiences, which encourages more views and interest.

4. Showcasing your products with video

When consumers shop online, they perform additional research to ensure that purchasing is something they want to do. That means they read product descriptions and analyze photos to get a better idea of the item they're interested in buying. 

With video, you can create video content showcasing your products in depth and up close. According to a Wyzowl survey, 80% of people said that product videos gave them more confidence when purchasing a product online. Instilling reassurance in customers throughout the buying process is essential to move them through the conversion funnel, generate leads and drive more sales for your business.

Use videos to give customers a better look at your products and explain how they work. Consider the different ways you can showcase your products to viewers:

  • How-to: Show customers how to use your products and how they work. This is especially good for products that have multiple uses or haven't previously been on the market.

  • Installation: If there's a process of setting up your product or piecing it together, you can create videos that demonstrate the installation and assembly process.

  • Close up: Offer an up close look at your products so customers can see details without having the product in front of them. 

You can use any of these videos on your website, email or social media accounts to further inform visitors and persuade them to purchase. When they have direct access to your video content, they get a better idea of what they're interested in. Therefore, it brings them closer to a buying decision.

Using video marketing gives your e-commerce business an advantage

If you own an e-commerce business, consider the ways in which video marketing can push your marketing efforts in the right direction. With so much existing competition, marketers feel the need to create innovative ways to engage with their audiences. It also makes it more difficult to drive sales when customers have so many options to choose from. 

When done creatively and with a purpose, video marketing can set you apart from the rest. Use these tips to transform your ecommerce video marketing strategy and watch as you attract more leads and generate more sales. How will you advance your business using video content?

When Does Coworking Make Sense for Your Startup?

Posted: 14 Nov 2019 07:00 AM PST

Many startup owners are hard at work trying to find an affordable workspace for themselves and their employees, but that's easier said than done these days. Partly because the real estate market is so crowded in major metropolitan areas, more and more startup owners have been resorting to coworking arrangements or sharing an office space with workers from another company who help split the bill.

More often than not, coworking makes sense for startups, but only if those in charge are familiar with the arrangement and know how to make the best of it. When does coworking make sense for your startup? Here's what you need to know about making the move into a shared working space.

Working from home isn't always the answer

Many startups begin in the home, which is only natural given that most have relatively little cash to spare on expensive offices. Just because you're crunched for cash doesn't mean you have to put up with squalid working conditions, however. When working from home isn't the answer, a coworking arrangement may be an alternative way to establish your business without breaking the bank. There are also many benefits to a coworking space that you can take advantage of outside of shared rent; shared internet services, electricity, and 24-hour access, for instance, can go a long way towards supercharging your startup's initial foraying into the market.

The average costs associated with coworking arrangements are routinely lower than those associated with traditional business offices. This should come as little surprise, as sharing your space necessarily means that it's not as valuable as it once was before. Don't fret about your startup going stagnant because of an inability to work in shared conditions, however; many of those who rely on coworking arrangements were initially opposed to the setup but later found that it was perfect for their specific situation. Businesses that thrive through collaboration, for instance, are likely to derive immense benefits from the creative sharing that occurs in most coworking spaces.

You should still be ready and willing to survey your options, as picking the wrong coworking arrangement can have the same deleterious effects as picking the wrong traditional office. Rushing your judgment could result in your startup being confined to conditions that are too crowded or lackluster to thrive in. Always browse the office space in question before signing a lease, and don't be afraid to thoroughly quiz your potential new coworkers about their experience in that shared space before opting to join it yourself.

Some of the things you'll need to consider when making this tough choice include commute options and the availability of nearby community events. Don't forget to also peruse the availability of nearby public resources, as open spaces like libraries can offer your stressed-out employees a quiet place to work if their particular coworking arrangement becomes too hectic to deal with.

Younger employees are big fans of coworking

Startups relying on a younger workforce should pay extra attention to coworking arrangements, largely because younger employees are the thriving heart of the budding coworking industry. Millennials, in particular, are flocking to shared workspaces in droves, though even older workers often find the collaborative atmosphere of a coworking arrangement to be a refreshing change from the traditional office formats they're used to.

Why are younger people so enthusiastic about coworking arrangements? Largely because they supercharge collaboration, which is more important for youthful workers than ever before. In the midst of a knowledge economy that's constantly demanding more and more creativity from its workers, your startup employees will need to be able to pick the brains of other creative types. If you rely on a traditional office environment, you'll find your workforce siloed into an isolated, stagnant environment that's not conducive to creativity or thinking outside the box. One of the reasons that London coworking spaces have been in such hot demand is that workers there can't stand lackluster conditions that don't give them on-demand opportunities to readily share and collaborate with others.

Still, coworking arrangements don't always work out, even for startups with a youthful workforce. Knowing when, how and why coworking arrangements can backfire is essential towards securing a lively workspace for your startup as you proceed into a tumultuous marketplace.

Avoid coworking nightmares

How do you avoid coworking nightmares? For starters, carefully survey the terms of your lease, as they can sometimes be subject to change, particularly if some of the workers who share your office suddenly move out and leave your landlord hard-pressed to collect enough rent to keep the lights on. You must also consider the value of membership carefully, as different coworking arrangements come equipped with varying benefits, some of which are radically better than others.

Coworking arrangements that offer constant access, for instance, are immensely beneficial to startups where the grind never stops. If your startup suffers from overworking its employees, however, giving them 24/7 access to work could actually lead to increased burnout, stymieing your ability to grow further. Office equipment like printers and scanners, as well as basic amenities like coffee also need to be provided if you expect your workforce to help you achieve your commercial dreams without revolting for want of comfort. If a landlord tries to convince you that providing such amenities would end up increasing your rent, consider a different coworking arrangement that's willing to be more hospitable.

You'll also want to consider the issue of space. Coworking arrangements are so beloved because they help you acquire a working space without breaking the bank, but that often means that you don't have enough space to expand if your startup suddenly enjoys unexpected success. Being capable of quickly scaling your operations is essential, so don't silo yourself into a tiny room that will thwart your future ambitions, even if it means saving some money in the short term. Hourly rentals can be appealing, but the truth of the matter is that they're mostly not worthy of the time, attention and limited money of most startups.

Be prepared for fewer responsibilities

Finally, you should understand that a coworking arrangement makes sense for your startup if you're looking for fewer responsibilities. Basic things like everyday office management are largely someone else's problem when you're coworking, for instance, which can be delightful for some startup owners but a serious nightmare for others. If you're a control freak and something goes wrong, take into consideration the fact that it may be some time before you can modify the conditions of your office to solve whatever crises spring up.

You'll also want to ensure your employees are happy, as startups that fail to provide fair wages but invest in a coworking space could lose their human capital to competitors who scoop up your mistreated employees. Don't make the mistake of thinking that a coworking arrangement permits you to ignore the needs and desires of your workforce. Search carefully for the right coworking arrangement, and soon your startup will be saving sizable sums of cash while enabling more collaboration to occur than ever before.

Progressive Web Apps: The New Must-Have Format for Mobile Branding

Posted: 14 Nov 2019 06:00 AM PST

For some time now, Google has been emphasizing the importance of responsive websites. According to Statista, 48.9% of all website traffic comes from smartphones alone, and that number is expected to grow as developing nations get online using affordable and accessible smartphones, and as more people ditch desktop computers and laptops in favor of the convenience their tablets and smartphones offer. 

Back in 2015, Google announced that it would start to favor responsive sites, and we've certainly seen search results reflect this preference, and will continue to do so. Not only did it put new measures in place for monitoring and tracking the optimization of sites, but it also provided site owners with the necessary tools to do so as well.

But technology progresses quickly, and now there is a new way to engage with your website visitors in a more effective and engaging way, which is through the use of progressive web apps. 

Editor's note: Looking for the right mobile app development solution for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

 

What are progressive web apps?

Take the best aspects of a native mobile app and a minimalist responsive website, and you've got a progressive web app (PWA). 

First announced by Google four years ago, the format has already been adopted by many big brands, including Twitter, Forbes and Housing.com. However, thanks to the maturity of the tech required for their creation, PWAs are now becoming accessible to all, including small businesses – even those who could not have afforded to have their own app developed from scratch, which is a big part of their appeal. 

As a format, PWA is designed to offer a perfect user experience; they are as reliable as a website (no apps crashing here), load as quickly as a downloaded offline app (since downloaded content is cached locally), and increase re-engagement fourfold. And again, just as Google provided tools and reference guides for site owners on how to make sure their sites are compliant and mobile responsive, they've done the same for everything relating to PWAs as well.

In other words, a PWA offers the best mobile apps and responsive websites have to offer, packaged neatly with a launcher button on a user's smartphone home screen. They are compelling, engaging, and bringing users back time and time again. 

Why develop a progressive web app? 

Essentially, it comes down to user experience. It is now possible for even the smallest businesses to give their website visitors a great experience; thanks to recent advancements with reliable hosting solutions, PWA builders and code frameworks like Polymer, Duda and Webpack. 

Many businesses understand the power of a native app but don't have the know-how or budget to bring one to life and provide ongoing support for their users. PWAs bridge the gap between the ease of a great website and the difficulty of building and supporting an amazing app. 

A PWA provides an app-like user interface (UI), almost instantaneous page load speeds, the reliability of an offline app and many of those offline capabilities, telephony features (geolocation and notifications) and the key real estate for businesses – a button on a smartphone or tablet home screen. This button gives you the opportunity to stay at the forefront of your user's mind and even become a part of their daily routine, without requiring any installations via app stores.

How are progressive web apps more affordable? 

While an app built from the ground up will set you back thousands of dollars, PWAs can be added to your website's current functionality. While this feature will take some time to spread to all website design platforms, Duda has already added PWA functionality for their customers to use on top of the websites they manage, and it really only takes a few clicks and some customization – a far cry from the months of development many apps take. 

The benefits of finding a site builder or hosting solution that provides easy access and set up for PWA also eliminates the need for excess costs and resources to create one on your own. As the demand for such solutions continues to increase, it's only a matter of time before we see more implementation across the board from other site builders and web solutions.

In fact, the cost associated with creating a progressive web app for businesses and brands was recently a discussion on Quora, where several members weighed in. The common theme of this discussion was that the price can range widely based on the needs, skills and customization that a brand might be looking for – though participants also agreed that a PWA will have much lower associated costs than that of attempting to create a new mobile application from scratch.

How is a PWA different from and better than my website?

In 2017, Comscore's US Mobile App Report found that although users do much of their web browsing from their devices, they spend the majority of time on their smartphones using apps. Most of us would be able to agree; while we are more than happy to ask Siri or Google to help us with a query, we'll open a social media, shopping or gaming app when we're simply spending time on our smartphones. 

While responsive websites are vital to every business's online presence, an app is conducive to a longer period of browsing and an overall better experience for mobile users. A website is for information, while a PWA is for connecting with other people, brands, relaxing and being productive. 

When a member of your audience creates a home screen shortcut to your PWA, they are not only showing an interest in what you have to offer but are making a commitment – much like joining an email list. It's then up to the company or brand to continue to provide that same value and engagement that one would expect as if they were joining a mailing list to get updates, deals or exclusive opportunities that others might not.

With a PWA, you can immediately show users exactly what you can offer them using personalized push notifications. And, for Android users, website visitors will be notified that they'll have a better experience if they install your PWA, so pushing people toward your PWA will not require you to prompt them or hope they stumble on it while browsing Google Play, and likely in the future, the iOS App Store. 

Why do I need a PWA?

While a PWA is not a necessity, it is a key way to deepen your relationship with current and future customers while also overcoming the difficult hurdle of getting website visitors to return. Many people become numb to the prompts to join an email list and often don't take the next step to open and read the emails, but if you can get a customer to integrate a PWA into their life, you'll create true brand loyalty. 

Lastly, as referenced throughout the article, you should also remember the preference Google has expressed for responsive websites, as it is reasonable to suspect that they will feel the same way about PWAs in the future – so if SEO is a key strategy in your marketing, as it should be, adopting a PWA for your business, or influencing your clients to do so, will likely be a smart move that will pay dividends in the future. 
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