Last week saw the release of The State of European Tech 2019 report by Atomico and Orrick at the Slush tech conference in Helsinki. It interesting for a number of reasons, but the key takeaways for us here in the UK are that Europe is doing very well at raising VC money. The UK leads Europe in this area, and AI-based technology is the main driver of tech investment. All of which is great news for the UK based beneficiaries of the £25+ billion invested over the last couple of years, many of whom are now refining groundbreaking new products and scaling.
However, for most of those selling their products to large organisations, from a sales and marketing perspective, the old challenges are as stark as ever. Despite corporate leaders’ apparent appetite for tech and digital transformation and the press and conference scene’s readiness to provide coverage and speaking slots, converting that interest into the revenue needed to grow a business is as challenging as ever.
With any new technology, educating potential users takes an awful lot of time and money. And it’s rarely an easy job, often requiring the customers of the future to think fundamentally differently about something they’ve been doing one way for years. Even once the client understands what your product does, they still need to educate their leadership team and wider business team. Also, the client’s ability to harness the full power of the product depends on them having the skills to drive it in-house. And those skills are often in short supply. Accreditation programmes, account management and customer success teams will help clients once they’re on board. From a sales perspective, that lack of knowledge is a purchase barrier.
Another barrier is the big enterprise suppliers – Oracle, Microsoft, IBM, SAP et al – who will be well embedded. They have the ear of the client and will undoubtedly be planning feature releases matching your product’s capabilities, at least in name. So you’ll hear a lot of “Our big tech supplier does that”. Your product might be different and better but the power of those big brands is difficult to overcome. After all, nobody got sacked for buying IBM. Demonstrating credibility and communicating that the benefits of the product can’t be got elsewhere is a top priority. This is why your brand and your comms are so crucial in getting the message across as fast as possible.
Then there’s risk
Many industries are notoriously risk-averse and others have such bureaucracy in place that selling to them carries a high cost. Sales cycles, which can run to anywhere between nine and twenty-four months, are long enough anyway. Since most start-ups can’t afford that long a wait to sign up clients, faster ways to get revenue have to be found. Who you target is vital. Finding companies more open to innovation and decision-makers who are willing to take the risk are both key aims. Smaller clients can be a ready source of short-term revenue, sustaining you until enterprise clients commit.
And getting cut-through will be a challenge. We work in an economy packed with tech innovations. It’s no longer enough just to say you have an AI-driven software product that does new things because everybody has AI and machine learning and big data and all the other buzz words. You need to go beyond that to find your niche and zero in on your audience. And you need to do a lot of showcase events, exhibitions, webinars, demos. You know, get out there and tell your story, but most of all, it needs to be focused.
These are just some of the challenges SMEs face. In the race against time – both to secure clients to drive future growth and to grab market share – speed and efficiency are a must. Scaling brings skill and resource gaps, and with it, pressure. In the heat of the battle, the basis for strong performance is a solid plan, robust management information and frequent progress reviews. Being ambitious with targets is one thing, but sticking to your strategy and regularly considering whether you need to pivot or persevere are all important in allowing you to reach those targets.
Given the drive for technological transformation across European organisations, coupled with available funding and expertise, there is a huge opportunity. It’s no surprise that UK start-ups have performed so well in recent years and everything points to that continuing, Brexit notwithstanding. However, individual start-ups have a lot to consider when setting their stall out for growth. As technologies mature over the next 5 years, will the myriad digital transformation projects happening in Europe continue to throw up the opportunities that they are today or is now the time that startups must get it right in order to secure the business they need to be a serious player in the future.