PR for start-ups and early stage companies

PR is a cost effective mechanism for technology start-ups to reach target audiences. But just as companies seek to hype their credentials, there's a lot of hype about how best to do it. Here Rainier PR draws on industry insight to illustrate what a well executed PR campaign could do for your business.

Introduction
PR is not purely the domain of large corporations. It is the most cost effective marketing tool for many start-ups and early stage companies.

But then we would say that, we're a PR agency. Bias aside, this paper aims to provide a basic insight into what PR can do for your business, and equally where its limitations lie. And equally important, what PR actually means to companies at this stage in their development.

Yes, a great piece of press coverage can be wafted under the noses of current and potential investors and customers. And yes, it may also pander to the management ego and make staff feel smug.

Start-up Support
How PR can aid the development of a start-up:

• Develop brand and shareholder value
• Support fundraising and investor relations
• Warm up customers and generate direct leads
• Establish the perception of industry leadership
• Promote products and services
• Attract the attention of potential licensees, OEMs and partners

But that's just one part of it. Done intelligently, PR can be the catalyst that sparks and sustains business growth opportunities - and can help to create an exit. And it doesn't take undue quantities of spin; just brainpower, commitment of the management team and persistence.

There is no magic here and it's a two-way street. Journalists want to write compelling copy for their readers, and by their very nature start-ups typically work at the edge of the innovation curve.

"PR is an incredible tool for attracting the attention of customers, licensees, OEMs and building financial value within a company. It can be the single most effective marketing activity for a start-up or early stage business," said Danny Chapchal, a tech executive with a strong track record of developing early stage businesses extending back more than 20 years.

Chapchal is formerly the CEO of polymer display developer CDT and digital rights management firm Bit-Arts, and is now chairman of venture capital fund ACUS Management Partners and also Camcon Technology, a developer of digital valve technology.

PR Industry
Let's get one thing straight: the PR industry has an image problem. Overall, the quality of staff in the profession is lacking, and the board rarely takes PR seriously as it doesn't deliver an output that can be measured in the profit and loss account or on the balance sheet.

That last point is crucial: the PR industry has developed all manner of measurement criterion in an effort to prove the value of PR. Raw output, advertising equivalent costs, audience impressions and message penetration are all attempts to demonstrate return on investment.

But ultimately, the only way to prove the value of PR or marketing in the broader context is to measure its success against a business plan.

It's logical, but if your goal is to sell your company within 18 months then your PR plan should aim to support the attraction of potential suitors and be measured against this goal. Likewise, if you want to attract customers or secure customer wins, PR effort needs to be targeted to achieve this.

Integrated business approach
PR cannot work in isolation. A piece of coverage in the Financial Times may bring investors knocking at your door, but if your management team fails to put forward a convincing business plan and pitch then your PR investment is pointless.

A piece of coverage in a trade magazine may result in customers from far and wide wanting to buy your product, or partners wanting to partner, but if they can't find your web site directly or via Google then you've wasted your time.

"Verum is a software design consultancy in the very early stages of development. Having secured a URL and developed a corporate identity, our first marketing communication job is to put up a web site. It's a fundamental fulfilment tool, without which it is pointless investing in other marketing communications activities," said Robert Howe, founder and managing director, Verum.

Start-up lifecycle
PR can support an early stage business through its lifecycle. Rainier PR develops programmes around the specific audiences that a client wants to target at a particular time within in its lifecycle, and with specific messages. Each audience is reviewed in detail in the following section.

Fundraising
Start-ups need cash. They need investors, ideally with deep pockets that understand the business and are able to provide access to a high level network. Of course, the reality varies, but the funding principles remain the same.

There are less than 100 individuals in the UK responsible for investment in early stage and start-up tech companies. These people work within the tech practises of major investment banks such as Barclays, HBOS and HSBC and private equity houses or venture capitalists such as 3i, Amadeus Capital Partners and Apax Partners.

Targeting this village of investors with a regular flow of news or a quarterly newsletter will warm them up when you come to present a business plan for a second or third round of funding. The better your message, and the better targeted, the better results you get.

"Raising capital can become a full time role for the CEO of a tech start-up. A strong profile of the management team and the company in the business media, complemented by technology profile in the trade media makes a difficult job that much easier," said Tony Hooley, founder and president, 1… Limited.

In PR terms, the financial community is turned on by coverage in the financial and management press, but also niche vertical magazines in your industry and sector.

PR effort invested in these areas is likely to result in investors picking up the phone and asking to meet with you at best, or at worst they'll take your call and meet with you when you make an approach.

There can be no substitute for third party endorsement. Press clippings about your business and its prospects included as part of a business plan make a powerful statement.

Licensees, OEMs, channel partners and other friends
Let's not forget that there are some important phases between starting a business, attracting investment and securing an exit, including developing a channel to market and securing customers.

Start-ups generally have a tough time selling. At the moment large companies are particularly reluctant to buy from start-ups, not wanting to back technology that might ultimately fail, and fear that the start-up might not survive through to maturity.

Licensing and partnership with a larger organisation are ways of overcoming these corporate concerns. Likewise, developing a network of channel partners that will resell and support your product provides comfort to corporate organisations.

In fact, start-ups rarely sell directly to consumers. Instead products are frequently incorporated as part of a solution by a channel partner or integrated into a product by an OEM. In this instance, PR needs to promote the benefits of your technology and put it on a pedestal for prospective partners to seek out.

"By packaging our portfolio of audio Intellectual Property alongside our service offering, Sensaura has become recognised as a one-stop shop for audio solutions within the OEM community," said Doug Balfour, managing director, Sensaura.

Geographical issues come into play here as well. An early stage company in the UK will typically not have the resources to invest in an international salesforce. But targeted PR in trade media in Asia and the US can result in calls from companies wanting to provide representation.

"The Internet by its very nature makes the audience for web-based news international. But beyond this, articles that I write for the EE Times' UK web site are frequently syndicated across CMP's sites worldwide," said Colin Holland, editor, EE Times UK.

Customers
The ultimate goal of any start-up must be to sell its product or service to customers. The PR tactics here are similar to those used to attract licensees, OEMs and channel partners.

PR deals with perception, and again a smart PR plan should keep at least one step ahead of the development of the business. In this sense the development of a PR plan is straightforward and should lead the product development cycle - yet all too often it follows it.

By their very nature start-ups take time to develop products. The time between the inception of a business and the availability of a product is the most crucial. It is during this period that the market can be warmed up ahead of product delivery.

PR before product
Education is a good tactic. By demonstrating the opportunity for your technology and developing arguments around industry issues you can develop a strong industry profile without ever needing to discuss products.

Tackling industry issues also works. Large corporations will rarely have the time to debate emerging standards or legislative issues and frequently corporate politics will dictate that spokespeople are muffled. This is good PR ground for the start-up willing to invest the time and energy offering insight and comment to journalists.

"TagText has developed a strong profile for itself within the mobile industry by discussing the exploitation of Bluetooth as a communication medium for mobile phone users in a localised environment. The fact that our product ultimately will not utilise Bluetooth technology is irrelevant," said Russell Buckley, founder and director of TagText.

Roadmaps and development plans can provide further PR fuel, but ultimately this approach has a finite lifetime. When the time comes to launch your product, context is crucial.

Product PR
Demonstrations and product concepts that help show how your product fits within a larger system are excellent mechanisms for showcasing your value proposition.

Quorum Tools has developed a product called Quorum that enables design teams to work together in a shared environment. "There is no substitute for touching and feeling a product. Quorum is a new concept for an existing market. Demonstrating the benefits to user and the return on investment is key," said Mark Gostick, chief operating officer, Quorum Tools.

So customer endorsement is the most powerful PR tool of your goal is supporting sales efforts. Nothing is more likely to persuade a customer to investigate a new technology than reading about the benefits that it is bringing to its competitor.

"A public statement made by a start-up and a corporate development partner acts as a wake up call to other large companies in the sector. It also fosters commitment on both sides of the relationship at an early stage," said Wladyslaw Wygnanski, founder and managing director, Camcon Technology.

Of course, it is not always possible to persuade customers to go public about their use of your products, but when you can produce a joint press release targeted at trade media it can be incredibly powerful.

And there's more
The benefits of investing in PR frequently extend beyond the constituencies outlined in this paper. Press releases are considered legal documents in most countries and are generally admissible as evidence in court. The announcement of a joint development project between a start-up and corporate customer or partner can provide protection against IP theft.

PR can be used to complement lobby efforts of staff members within standards bodies and at a governmental level. It can also be used to raise the profile of a company and its technology directly within the technical engineering community by utilising Internet user groups.

Finally, let's end were we started, but on a more serious note. Working for a start-up is tough. Management teams must remain constantly upbeat, and progress is characterised by a hard slog punctuated by breakthrough moments. Positive press coverage placed in reception or on kitchen notice boards is a great aid to morale.

References

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About Rainier PR
Rainier PR is a leading business-to-business technology PR agency. Based in London, it employs 10 people and had 2003 revenues of approximately £1.1 million. In 2002, the company was wholly acquired by its management team. Rainier PR is a top 40 UK technology PR consultancy as well as a top 100 UK PR consultancy (PR Week magazine). For more see www.rainierpr.co.uk.