Why Is Branding Crucial For Startups This year a certain reality check has been observed in the investor-startup relationship.

By Mahesh Nair

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For a startup in the world's third most prolific startup market, some patterns have emerged which require re-evaluation in its approach to business. This year a certain reality check has been observed in the investor-startup relationship.

There is a noticeable decline in investments due to investor hesitation and awareness of overvaluation. Deals slipped almost by 4 per cent and funding fell 24 per cent. Although the new initiatives and fund outlay announced by the government to boost entrepreneurship have brought cheer, startups have to look for alternative routes of investment rather than the regular Angel and VC channels.

With investors becoming increasingly wary of throw away discount modules and freebies at their cost, startups need to move towards more sustainable and viable business models. Since they no longer have access to deep coffers and loss-making schemes to attract customers, they have to work very hard at retaining and creating new customer profiles to succeed.

Even for lean, early startups, just their idea and prototype alone is not going to attract any kind of meaningful funding without a sufficient clientele and a profitable revenue pipeline for their products. After all, if the product is to sell, it has to sell for revenue and profit. This is where branding alone can play a major role from keeping an enterprise from going bust. Going forward, in the new startup climate, investors will put their money into a more profitable brand than a brand built on discount sales.

Even in the old scenario, for every five startups that are still around, more than double have failed due to lack of branding. They started well with an idea they thought was brilliant.Then, they spent months and years perfecting the product without testing it with the prospective customer. By the time they thought of reaching out to the desired market it was too late and they failed.

So, it is important for startups to "go live" and start generating revenue before running out of seed capital. For a startup, "Visibility creates Opportunities". The faster they become visible the closer is the possibility of a commercial success. It is only through branding that your market will learn of your existence and your products.

With effective branding you will further become visible to the investors and other stakeholders and be a valued firm.This is one big reason why startups should make branding an important component of their overall business strategy.

As the marketing marketing Guru, Philip Kotler says, "The art of marketing is the art of brand building. If you are not a brand, you are a commodity". If you want your startup to be valued for what you have created and want to stand out in a crowd, branding is the way to go. For example, many companies make running shoes but only Nike sells excellence, "Just do it".

Similarly, India is one of the largest milk producing nations but only Amul, "The taste of India", seems to represent the best of it. A company's brand is it's entire personality. It is the medium through which a startup can express what it's product can do, it's core values, business methods and how it can change an user's experience. Eventually, a great branding can scale up the worth of a start up, far exceeding it's physical value.

Once a company has decided to go down the branding path, it is forced to revisit, analyse and focus on the catalysts and objectives of the business. Evolving a brand strategy makes the turbulent journey of startups more manageable through consensus building amongst co-founders and by providing a rare far-sighted lens in a very short term environment.

Products tend to change, teams transition and customers shift in the journey. But, once a brand has been created the core of the brand remains a constant and everything settles around it. A clear brand strategy provides clarity and a roadmap for the team to be successful and how to meet the organisations goals. So, creating a brand far outlives the mere purpose of gaining market share and benefits an organisation organically.

In the future, as businesses will be increasingly driven by cloud technologies, it will become easier for newer startups to join the fray. Competition will become fierce and swift changes in offerings will happen. In such a case, marketing, branding and positioning will be of paramount importance. Only startups which are able to reach out to their target customer bases with emotional connect, promising a particular experience and conveytrust through effective branding, will survive.

Mahesh Nair

Founder, Picsdream

Mahesh is the Founder of Picsdream - a platform for photographers and videographers to share, showcase and monetise their art!

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