In October 2022, the DeepTech Cambridge-based sound recognition company that I’d worked at as VP of marketing for five and a half years – Audio Analytic – was acquired by tech behemoth Meta, as reported in The Telegraph.
I joined in 2017 just after the Series A round as we started to grow the company and move into new offices. In 2019 we closed a successful Series B round, before pushing through the pandemic and then getting acquired.
Marketing a DeepTech startup is a rewarding, fun and challenging journey. In our case, we were a ‘whale hunting’ business – licensing software to a smallish number of very large complex organisations. Our ‘products’ weren’t really locked-down products in the traditional sense, as they required some customisation to meet the needs of different customers.
They were also delivering a new capability, so we had to show that our tech was ‘must-have’ and needed to be designed-in to the next generation product, or retrofitted easily into a current product on the market. Sales cycles were long and there were many different personas within the target organisations who influenced decision making.
Organisations don’t like risk and licensing new technology from a startup is a very risky endeavour, so our marketing had to tread that line between presenting us as a disruptor AND technically credible. You want to shake things up to challenge the status quo but then very quickly segway into demonstrating that you are a safe and sensible choice.
In addition to demand generation and account-based marketing, another key part of a tech startup plan is the end-goal, the destination, the exit. Now some companies dream of an IPO and it is important to have a vision for what happens if you do go all the way, however, something like 98% of DeepTech startups that make it to an exit do so via an acquisition. Therefore it is critical to plan ahead and to be thinking about how to create value and communicate it. As a result, a startup needs marketing people that can get heavily involved in value creation and discovery.
A lot of value comes from tech innovation and research, which marketing can play a key part of discovering and communicating, but there are pockets of value that can be built, especially around the brand, the culture, and the applications that the technology enables. Let’s dive into a few of these areas:
Brand value
Sometimes an acquisition event is for ‘tech and talent’, where beyond the acquisition, the brand has no value. If you were acquired and the brand was going to be used by the acquirer, then clearly building brand value is essential as it makes up part of the deal.
However, building a brand that isn’t expected to have a long shelf life is still advantageous. Being recognised as the technology pioneers or the gold standard comes with a lot of attention and if you are in a position to be acquired by multiple parties, having that strong reputation and symbolism is incredibly valuable when it comes to FOMO on the part of the acquirer or investor.
A strong ‘disrupter’ brand can also support recruitment, especially in very competitive job markets like Cambridge.
Value discovery
As well as creating value through building a strong brand, marketers need to use their exceptional skills to help others within the business find and expose value. This means thinking about value top-down AND bottom-up. The engineers, scientists and researchers within a startup are solving problems on a daily basis, as they are often working at the bleeding edge of a discipline.
This means that they are regularly inventing new tools and techniques as part of their work. These small innovations often don’t get the attention internally that they deserve, even though they are essential cogs in the machine. I think the issue comes from the different definitions of innovation used by the different groups.
In my opinion, all innovation creates value. To a research engineer, however, ‘innovation’ could mean something significant or novel resulting in a scientific paper or a patent. While these major breakthroughs can stand alone as easy-to-understand value, there are also opportunities for smart marketers to piece together these smaller bits of value and use their core marketing skills to explain why they are greater than the sum of their parts.
Valuable user experiences
When you are selling to large consumer electronics companies they don’t want to buy technology. They obsess about delivering exceptional user experiences to consumers, because they know that this is what drives customer acquisition and retention. Therefore what they value are powerful, revenue-generating user experiences and the technology that enables them.
I think that it is very easy for deep-tech companies to get stuck in a mode of pitching the tech, explaining why it is so hard, trying to break down objections and proving technical competence. These messages are important to certain groups and at a certain part of the long sales cycle, however, if you are trying to get your technology into their next product, then your target personas are the product managers and product marketers within the consumer tech company.
They are always looking for ways to improve the experience that they can sell to consumers, so expressing the capabilities and benefits of your technology through user experiences and hero moments (that capture the precise point of maximum benefit) can be so useful. In addition, talking about how the tech enables these user experiences can be hugely valuable to investors and acquirers, as it articulates the broad range of high value applications.
Conclusions
Everything about the startup journey should be driven by the destination, whether that is an acquisition or IPO. And that journey is one of value creation. Therefore, the most important thing we can do as founders and especially marketers, is to understand how value is created and how to communicate that value.
Some of it is obvious, some of it can be hidden and it requires a combination of skills to extract and express it, while some value is built and created from nothing. But all of it is important.