How to Stand Out to Investors and Customers When Launching a Startup

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Given the current downturn of the VC landscape and the global economy in general, founders should realize that the competition for venture capital is getting harder in 2023. So, there is a need to discuss how to stand out from the crowd and have more chances to raise capital. The following data show us a declining trend in VC investments, which clearly indicates the “venture winter” or the downturn:

The amount of venture capital deals is declining year-over-year in 2022.
VC funds have raised a record of $163 billion, however, they become more cautious and take a longer time for analysis and DD. They prefer to hold cash (dry powder).

It might mean that the fundraising process will be longer and more painful. So, I would like to discuss in more detail how to prepare your startup for the fundraising process in order for it to go more smoothly.

I’m dealing with tech startups that are trying to raise money from Social Discovery Ventures family office. We are looking to allocate up to $100M capital in for mental health, longevity and relationship apps. By pioneering in the field of artificial intelligence and digital reality, we strive to enable a future where humans and artificial beings coexist and interact in harmony.

Thus, we are now active in VC B2C direct investments across all stages and private equity deals. Our VC portfolio includes Flo, Woebot, Patreon, Academia and others. The current AUM of the family office is around $200M.

Here are some tips to prepare your B2C startup for the fundraising process:

Grow your organic traffic

This is the prime metric that tells the investor if you have product-market fit or not. Almost nobody wants to play the performance marketing game as acquisition cost is growing. However, if your startup sees growth with zero user acquisition, this can be the main selling point. Be creative. Use all possible methods. Here are some ideas:

Podcasts: Podcasts are becoming popular not only in the U.S. but worldwide. It is an effective way to build an emotional and meaningful connection with your audience.
Videos on YouTube or other platforms: Similar to podcasts, this is another way of explaining the mission of your business — however, it captures another audience segment.
Referrals: If your users would recommend your service to their friends and invite them, this is also a powerful sign for an investor that there is demand and the product could be spread via word of mouth.
Collaborations with other services for cross-advertising: Your audience should be relevant and products non-competing.
Ratings: If you win niche competition or you are recognized by an authoritative rating, this is also a good way to attract the attention of both investors and clients.

Bring more value for free (without monetization)

In an environment of hard competition, it is highly advisable to bring more experience and service without payment from the user. This is a very interesting hack to convert users into paying customers, not immediately, but later, when they become loyal to your brand. They can use your service for free, however, some sales may occur after the user is addicted to the service.

Concentrate on engagement metrics

All investors will ask you about retention in dynamics, sticky factors and other engagement metrics. Here are some ideas on how to grow it:

Ease the learning or communication process via gamification (quizzes): It’s been tested and proven by many app developers that any kind of communication icebreakers via games or cool gamified experiences increases the users’ desire to come back to the app. It can be simple chatbots, cards with questions or even a unique metaverse experience.
Smart moderation: If your B2C startup has a social component, then you can introduce smart moderation of the dialogues or group chats to avoid common problems (spam, scams, flood, off-topic, etc.).
Compliments: It has also been proven that if the user gets endorphins of any kind, they are also more likely to come back and recommend this product to friends. This is an interesting way to attract an audience if every customer gets some anonymous compliment.

In summary, on the one hand, it is necessary to know your clients closely, keep communicating with them, do frequent customer development research and make sure you are indeed solving some important problem. On the other hand, you still need to analyze metrics to show them to investors and think of creative ways to hack the growth.

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