We’ve long been aware of gaming’s transition from pastime to multi-billion-dollar industry but 2020 has seen the live-streaming community grow tenfold. In October 2020, 1.6 billion hours were watched across Amazon-owned gaming platform Twitch, the highest the platform has ever seen, and almost double the 839 million hours watched in October 2019.
What Brands Should Know About Twitch Influencers
Despite providing businesses with reach to huge audiences and unique insight into their target consumers’ thoughts and behaviors, Twitch remains a relatively under-utilized advertising platform. But for those brands willing to spend the time recruiting the right Twitch influencers and finding creative ways to communicate with their audience, there is much to gain.
On Twitch, typically hard-to-reach audiences (think males aged 21-35) are highly engaged and brand-loyal, making them a goldmine for advertisers, while increasing diversification in the gaming sector allows for brands to target the right people with the right message.
What is Twitch?
Launched in 2011 and bought by Amazon in 2014, Twitch is the world’s leading live-streaming platform for gamers. The property builds communities based on users’ shared streaming interests. Twitch users broadcast their live gameplay by sharing their screens with subscribers. This allows them to see and hear what the player is experiencing in real-time.
As viewers watch Twitch streams they are able to comment alongside other gamers. Depending on what channel they are watching, viewers can ask questions or make suggestions and receive real-time responses. Streams are automatically saved by Twitch, which affords subscribers the option to rewatch previously streamed games. Viewers communicate with one another through Twitch chat.
In short, the platform combines engaging video content and live-action viewing with the interactivity and community of social media.
Does Twitch Cost to Use?
Twitch is free to join. Users can view and stream content for free, as well as follow favorite streamers. However, many users pay for monthly subscriptions to their favorite streamers. This gives them a variety of premium perks such as special emoticons (called emotes) to use in a stream’s chat room, badges, special alerts, exclusive chat rooms and competitions, and ad-free viewing optionality.
These subscriptions also benefit the streamer and are one of the popular ways to make money on Twitch. Twitch offers three payment tiers ($4.99, $9.99, $24.99). Twitch partners and affiliates are officially receiving 50% of the total subscription fee.
How Twitch Viewership Grew Due to the Pandemic
Due to COVID-19 lockdown restrictions and changes in consumer behaviors, live-streaming boomed in 2020. With work, relationships, and events forced to move online, many who had never experienced or had limited experience with live-streaming platforms such as Zoom were suddenly using them for hours each day.
Online streaming and gaming platforms have surged in popularity as people turn to them for entertainment during home confinement. Twitch has benefited greatly from the trend: the platform’s record-breaking viewership last October represented a staggering 99% jump in year-over-year growth for the platform.
Interestingly, the record number of hours saw a shift in how Twitch is being used. The platform’s ‘Just Chatting’ section is now likely to be its most popular destination of the year, according to Doron Nir, CEO of StreamElements, a provider of live-streaming tools.
Talking to Forbes in November 2020, Nir credited the growth in Twitch’s non-gaming category to the wide-spanning interests of gaming communities and cited the U.S. presidential campaign as a conversation booster.
What Opportunities Does it Open for Brands?
Despite being geared towards gamers, Twitch also features a large variety of non-gaming content. The platform hosts live and recorded broadcasts on subjects such as music, sport, and cooking. It is apparent that a growing number of people are discovering their own use for Twitch; whether for escapism, socializing, or entertainment.
Instagram may be the birthplace of the influencer, but this year’s events have resulted in a significant drop in sponsored content on the platform. According to a report by Launchmetrics, sponsored influencer posts on Instagram decreased from 35% in mid-February to 4% in mid-April, with influencers within the categories of travel, fashion, and lifestyle most affected.
However, 2020 saw an increased interest in gaming, fitness, education, and DIY tutorial content, which prompted an uptick in brand collaborations on Twitch. There was also a noticeable increase in video performance, with the leading campaigns delivering an average of more than one million views.
According to Twitch research, Twitch users are more likely to seek expert opinions before buying expensive products. They tend to buy products they see advertised, making the platform a highly beneficial place for brands to advertise.
Who are the Influencers on Twitch?
Twitch influencers are different to that of Instagram or other social media platforms. They offer their subscribers live entertainment, rather than pre-recorded video or static images.
Twitch influencers are streamers with an engaged audience that can interact with them in real-time.
For brands, this functionality allows for live feedback from potential customers. It also gives them the chance to get to know their target clientele in a real-life setting. For subscribers, it fuels interest and promotes conversation in an organic, authentic way with the audience playing a role in the creation of the sponsored content.
Unlike celebrities who often shy away from interacting with fans, gaming’s biggest names actively seek out interaction with audiences. And subscribers are happy to pay money for this service if they feel the interaction is genuine.
Streamers can make a million-dollar career out of gaming, with data showing the five top-earning streamers on Twitch earning seven-figure incomes.
The website’s highest-earner in 2020 was Felix ‘xQc’ Lengyel, an ex-pro Overwatch player. Lengyel boasts more than four million followers on the app. And he brought in more than $1.8 million USD (with more than $1.5 million of that coming purely from subscriptions to his channel alone).
Tyler ‘Ninja’ Blevins, perhaps the gaming world’s most recognized profile, was omitted from Twitch’s list of top 10 Twitch earners for 2020 after spending much of 2020 exclusively streaming on Microsoft’s ill-fated streaming platform Mixer before it shut down. Now back streaming on Twitch to his 16.5 million subscribers, Blevins will undoubtedly top the 2021 list.
When choosing an influencer to partner with, brands should consider both a gamer’s follower count and engagement rate. Brands may yield better results from partnering with a micro-influencer with a hyper-engaged audience.
How Twitch Influencers can Boost a Game’s Playership
Twitch influencers have proven to be able to establish, grow and command huge followings. Also, they can have a significant impact on the sales of products within the gaming industry. The success of a video game marketing campaign heavily relies on gaming influencers.
In February 2020, Electronic Arts in cooperation with Respawn Entertainment released its new game Apex: Legends. And made $92 million within a month. This was despite not doing anything to promote the game prior to its launch and the game being for free. Users only paid for extra features and additional equipment for characters.
So, how did the game amass such a huge following?
Electronic Arts enlisted Ninja to play the game for 14 days and tweet about it. It’s reported that as a result, the game received 10 million sign-ups in the first three days of streaming. Neither Ninja nor Electronic Arts confirm how much money Ninja received for the endorsement. But Reuters reports he earned $1 million for it. The influencer play also saw EA’s stock price and market value rise by 16%, or $4 billion, in the three days after Apex: Legends launched.
Twitch Marketing isn’t Just for Gaming Brands
As the gaming world continues to grow and diversify. Non-endemic brands are getting in on the action, including those in the beauty and fashion categories. Large brands such as Hollister and Gillette now have dedicated marketing dollars to Twitch. Labeled a ‘virus-proof job’ by The New Yorker, pro video game streamers are an appealing investment for brands right now facing unprecedented challenges.
MAC Cosmetics began sending products to Twitch influencers in 2019 in hopes of audiences asking them what makeup they were wearing. The same year the brand released a product collaboration in Asia of five lipsticks inspired by the female characters from the video game Strike of Kings. The collection sold out in less than a week online, and all units on Tmall sold out in one hour.
How can Brands Partner with Twitch Streamers?
While some brands have established a presence on Twitch—some via their own Twitch channel—Twitch marketing remains in its infancy. For brands looking to begin advertising on the platform, there is plenty of time to get creative and see how Twitch can benefit their business.
Perhaps the most obvious way for a brand to gain a presence, gaming tournaments and esports afford businesses an opportunity to engage with their consumers. Twitch’s demographic skews to the younger side (73% of the platform’s users are 34 years or under, with 41% between 16 and 24 years), making it an ideal place for brands targeting Gen-Z and millennial audiences.
Businesses can also host exclusive branded digital events. Music festivals and game shows give them access to large, built-in audiences. With tutorial content gaining increased interest in 2020, many brands are showcasing themselves (or their product) via live-streamed ‘how-to’ classes. Round tables have also proven to generate engagement while being low-cost. An example of this was Bernie Sanders’ Twitch marketing strategy, which saw him conduct interviews and host rallies during the primary season.
Twitch is trying to reward streamers who are really engaging with their audience. This is good news for brands looking to implement Twitch influencer marketing. There are plenty of types of promotions influencers can participate in when partnered with a brand. Be it live unboxing, shoutouts, stream mentions, giveaways, brand merch, promo codes, or live chats. It’s worth noting that audiences best respond to authentic messaging.
Partnering with Twitch Influencers is a Winning Strategy
Interestingly, 2020 saw brands adjust their marketing strategies to accommodate for consumer value changes, with campaigns focusing on feel-good or socially relevant content. Many brands are choosing to frame content in a way that is fresh and relevant to their audience (e.g. productivity hacks, brain-boosting snacks) and spread awareness about COVID-19 health warnings and recommendations.
Despite decreases in digital marketing budgets, a number of brands have either kept or increased spend allocation for influencers. As Twitch continues to grow its audience, and sponsored content continues to generate more views and more engagement, Twitch influencer marketing is proving a winning formula.
How to Approach Twitch Influencer Marketing
Your choice of Twitch influencer will depend on your brand goal. If you’re looking to boost brand awareness, partnering with a Twitch influencer with a large following is your best bet. If you’re wanting to increase sign-ups, you’ll instead want to enlist an influencer who has a record of driving good click-through rates.
Select a Twitch influencer based on your target audience. Demographics are key when establishing an engaged and loyal customer base. Therefore, aligning with the right influencer can help you to reach the most beneficial viewers.
The most important part of Twitch influencer marketing is analyzing how your partnership went. Was it successful? Were your goals met? This will help your brand to fine-tune its Twitch marketing strategy.
All in all, live-streaming could help you unlock a new way of generating interest and revenue for your brand. And if Twitch’s growth rates are any indication of what’s to come, brands ignoring the opportunities of live-streaming advertising are most likely to be left behind.
Top Image Credit: caspar camille rubin; unsplash; thank you!
20 Team Building Activities Your Team Will Actually Love – ReadWrite
The human race has evolved over millions of years by sticking together, working in groups and teams. Living in groups has helped humankind survive on this planet and thrive better than any other species. Considerable credit goes to this particular nature of humans, i.e., living in teams. Therefore, team-building activities are a must for relieving the stress of employees.
Most jobs today — especially in tech, involve interacting with others, and often, these team members are not even in the same line of profession. So there has always been the need for dedicated, effective teamwork in any field — whether that means jobs in the business sector, science, or finance.
Steve Jobs revolutionized the entire pattern of living with his innovative and creative mind — but without his team of hard-working professionals and their abilities, his innovations would not have reached the hands of so many people worldwide.
All of the new world facts swirling around us makes it important to have effective ways to develop teams to obtain our best results. Here are 20 Team Building activities that can assure the development of professional bonds and coordination between team members:
20 Team Building Activities for Your Team
This activity aims to develop good quality communication and understanding between team members and understand how they think.
First, divide everyone into pairs. Then with each pair/team, do the following:
Give a pen and paper to one of them and give a picture to the other. Now the one with the picture has to explain to the other what it is without actually telling what it is. With this explanation, the other person has to draw the picture within a given time limit.
This game helps to know your team members on a personal level.
This is a virtual game and is great to play during times like the unfortunate pandemic — or anytime you have a large portion of the team working from home (like work-from-home-Friday). Each member has to make a short video of their homes and their favorite things about it and show it to everyone.
This fun activity works great to help team members bond with each other and design effective strategies for problem-solving.
Firstly gather some eggs and make several teams of 3-5 people. Give each team some office supplies like tape, pencils, straws, plastic utensils, etc. The teams will have 20-30 mins to create a platform that’ll prevent their eggs from breaking when dropped from the 2nd floor.
The activity is highly based on trust, communication, and effective listening, which are integral for any team.
Find an open space and place obstacles on the floor like cones, bags, drink cups, water bottles, etc. Then, divide everyone into pairs and put a blindfold on one team member. The other team member must help the blindfolded member cross the obstacle course (without touching anything) by voice instructions.
This activity promotes self and mutual awareness. It also helps team members understand each other on a personal level.
Ask everyone to take coins out of their purses and wallets. The entire group is supposed to create a logo using these coins and other materials like notebooks, pens, etc. The logo should, in some way, represent their team/organization. At the end of 15 mins, ask everyone how that logo represents their department/organization or team.
The classification game is a great activity for an icebreaker session for team building or a company party.
Create groups of 3-5. In front of their teams, each person in the group says three sentences about themselves with a like, dislike, and one dream. At the end of a quick discussion, each team has to develop a category to describe their entire team as one single group like sporty, night-owls, rain-lovers, etc..
This activity aims to state the importance of minor decisions that affect the entire team.
The leader has to choose a picture of some cartoon character and cut it into several small pieces. Then, each person gets one of the pieces, and they have to draw the same piece five times bigger. In the end, all the larger drawings are joined to see who dis-coordinated with the team. This is fun to do with paint — (as you see above) with acrylic on poster board. You can use cheap brushes from a local craft store.
This activity aims to create good communication and team building.
Make everyone stand in a circle facing each other. Then ask everyone to grab the hand of a random person on their right and left sides. After everyone is holding hands, ask them to untangle and form a circle without leaving any hand until they are in a tight knot — have a rule that they have to have someone step through (over hands) twice. Then have them untangle. (Yes, it is difficult to step backward over hands to untangle.)
Scavenger hunts test team-thinking and decision-making.
Divide everyone into groups of 3-4. Leave clues at multiple points that lead to the final Prize. The team that reaches there first wins.
This game improves meeting productivity and motivates everyone to work instead of trying to leave the meeting.
Before starting a meeting, make everyone stand and share what they aim to contribute to the meeting. The team will ultimately decide who actually contributed to the meeting, the point they shared earlier. The winner gets a prize.
Group juggle is a great icebreaker session for new teams.
Make everyone stand in a circle facing each other and throw a ball at someone. The one who catches it has to say their name and throw it to someone else. The one who catches it has to do the same. After some time, throw another ball into the circle and continue the activity with more balls.
Improves meeting productivity and attentiveness.
During routine meetings, say random things in the middle of the discussion topics and ask everyone about them at the end of the meeting to know who was listening. It can also be played as a team 1 vs. team 2 activity. You can also whisper an important point of a meeting in a person’s ear to the left and a different point to a person on the right. Then have them pass around the information around the circle. Finally, have the last two people who get the information tell what the information is.
This team-building exercise inspires creativity and individual innovation.
Divide everyone into groups and then share an object name with one member of each team in secrecy. They then have to explain what the object is, without saying anything but just with actions.
It is a great way to break the ice for new hires.
Write several pairs on pieces of paper, like Mario on one and Luigi on others. Ernie and Bert. Paste these papers on the back of everyone and make them find their partners.
The objective helps people work in groups and acquire problem-solving, creativity, and robust communication skills.
Take a 2-meter long table cloth and make 4-5 people stand on it. The aim is to flip the cloth upside down, but the condition is that they can only use their feet to turn the cloth. Another way to do this is to have the team stand around the cloth and turn it over, never touching the ground.
This activity is based on leadership skills and problem-solving. In addition, it aims to improve the overall teamwork and coordination of team members.
Make some teams of any but equal sizes and give each team a jigsaw puzzle of equal difficulty. The twist is that some of the pieces will be mixed in different teams. The missing pieces can hence be negotiated among the teams, but whatever happens, will happen as one decision of the entire team.
Truth and dare aim to develop honesty and interaction between team members.
As simple as it is, truth and dare can be a very effective game to help your team know each other better and create stronger bonds based on honesty and interaction.
This game improves problem-solving, knowledge about your office culture and is just also very fun to play.
Create a list of trivia questions regarding your workplace and see which team gets the most correct answers. You can type a document of the questions leaving an area blank for the answers, or do a live quiz.
Apparently, singing is a great building exercise and allows everyone to bond with each other.
Your team can all go out to a karaoke bar or sing karaoke in the office with the help of karaoke games like SingStar. Our team has had great fun dividing into teams and picking songs at a karaoke bar, then trying to outdo each other and vote who picked the best song, had the best singers, did the best harmony, etc.
It aims to develop coordination
Make everyone stand in a circle with their heads down and eyes closed. Then they have to start counting to 20, but only one person can speak a single number at a time. If more than 1 person is speaking at the same time, they start at one again.
There are numerous ways to build the team spirit of your company. We also play ping-pong, bocce ball, spike ball, various versions of volleyball (even without a net), and baseball (softball) when we can get to the field. By performing team-building activities, one can ensure a stronger bond together. The spirit of becoming the best team and achieving a collective goal helps boost confidence and further build trusting bonds.
If you have employees who have a great connection and trust; you are already halfway through the success door.
In the end, what matters is how happy your employee are. If they have a good time working at your organization, you will find a great coworking space. Let them mingle and choose your business as the best learning platform to which they have come up.
At the same time, engage them with skills and development programs to improve their skills, or they can take them as their hobbies like photography, public speaking, or some basic technical skills like dedicated WordPress hosting based web development which is quick and easy to learn.
What We Have Found
We feel that if you are using team-building activities — your team is much more likely to ask questions of each other when they don’t know a piece of technology — and they are happier to help each other with project issues.
The teams are more likely to work together to solve personal (work) problems rather than “tell” the boss/leadership that someone isn’t doing their job. They remind each other and are kinder and less harsh or judgemental to each other.
It is easier to engage your employees to do extra projects. The employees are more likely to keep themselves motivated to work towards your goal — This allows them to carry on with their side hobbies and learning. We have also found that our team building work has brought good results to our company in the end.
Nobody wants to keep changing jobs or avoid work until they are enjoying work with disciplined freedom. But, unfortunately, it seems that nowadays, everyone thinks it’s the responsibility of the HR Team to create better workplaces and cultures — but as a manager and leadership — you don’t always need HR to take care of everything — you can do it yourself.
I hope you build stronger teams with these team-building activities.
Incidentally: these games are great with kids, families, and family reunions, and large parties.
How to Build Ideal Partner Personas for Channel Marketing – ReadWrite
The world of marketing has become increasingly more complex in recent years. With omnichannel approaches, platforms, and various approaches to content. it can sometimes seem that a marketer’s work is never done. But, thankfully, new ways of dealing with our marketing issues have also arisen, including process improvement strategies, and new ideas.
How to Build Ideal Partner Personas for Channel Marketing
You will often hear the term channel marketing used, and it will often be used in conjunction with the term partner personas, but what do these terms mean? How can they benefit you and just how do you go about building this so-called ideal partner persona?
What is Channel Marketing?
At its simplest, channel marketing is about being involved in the total lifecycle of a product; from the point of initial production to its final usage by the consumer. That lifecycle can consist of several levels of people, organizations, and activities. Not to forget who is involved in the process as a whole.
Partners in your channel marketing help you promote the benefits of the product, either to end consumers or to other links in the chain. This can also include distributors, affiliate partners, agents, resellers, and other third parties.
Channel marketing is based on the idea that the relationship is both symbiotic and mutually beneficial. Unlike your normal way of promoting and advertising your products, your channel partners may be independent businesses who are promoting the same product as you, which means that your product can reach a different audience than if you were operating alone.
Third parties benefit as well as your business, as they may receive a percentage of overall sales or, in the case of resellers, they can access discounts if they buy your product in bulk. Channel marketing can also be of advantage if you do not have the (human or financial) resources to facilitate the required levels of marketing alone.
The Partner Persona
Image Credit: pixabay; thank you!
The first thing to emphasize is that a partner persona is not a real person. Instead, it is a representation of who your ideal channel marketing partner may be. It is most often based on market research and data analysis of who your target demographic consumers are. There are several benefits in defining that partner persona:
- Identify – helping you find partners who are relevant to you (your business type, your market, and your target customers).
- Understand – aiding you in understanding what drives your partners, what their perspectives are, and what motivates them.
- Communication – A good definition of partner personas means it can be easier to communicate with them, especially if you share a common UCaaS platform.
- Engagement – It is easier to engage with any partners if you have a clear understanding of who they are and what they want.
- Customization – clearly define your partner personas – it makes it easier for you to customize any partner programs to be mutually beneficial.
How to Build Ideal Partner Personas
Image Credit: pixabay; thank you!
Creating your perfect partner persona is not just a case of jotting down a ‘wish list’. If you approach this exercise without due care, and careful research, then you could do your business more harm than good. There are a number of factors that contribute to the partner persona:
- Demographics – ideally, they should already be working with the demographic groups you want to target (or be positioned to do so). For example, if you want to offer content writing services, it would make sense to partner with an organization offering SEO optimization services and keyword research.
- Size and Reach – the whole idea of bringing partners on board is to extend your reach and to increase sales. There is little point in partnering with a sole unit that has a limited customer base.
- Credibility and Expertise – you want new partners to have some experience in your particular sector. Experience and knowledge of the product – or at least the product type – means they have credibility with potential customers.
- Cohesiveness – when an organization offers products or services that complement your own, then they can make an ideal partner. For example, if you are offering a complex SaaS package, then a business that can offer localization testing could be a good partner to have.
- Values – sometimes you have to look beyond basic financial factors and consider whether a potential partner meets your company’s values. For example, if you are producing reusable silicone cups and mugs, you will probably not want to partner with a company that produces a high volume of single-use plastic items.
- Benefits – there should be some equality as far as benefits are concerned. That is not to say that any profits are equally split but more that you both benefit from forming any sort of partnership. That benefit does not have to be financial; it could mean increases (for you both) in brand awareness, visibility, reach, and reputation. For partners, it could also include a widening of their knowledge base if you offer product training.
- Customer service -how does your potential partner provide customer support? Do they have a dedicated call center or use a high degree of automation such as IVR?
- Goals – Ideally, a good partner should share some of your goals and motivations. If you both want to work towards the same – or similar – goals, then it is more likely that a successful partnership can be established.
How Do You Establish a Successful Channel Partner Program?
Image Credit: pixabay; thank you!
So, you’ve spent some time creating what you see as your ideal partner persona. And further research has identified potential partners that you feel fit that persona. How do you begin to create the channel partner program you have imagined. Some factors include the following:
- Profile – build a profile of your potential partner. Where do they do marketing/selling? What challenges will they face in marketing your product? What help – if any – do they need in order to be a successful partner?
- Program – put together what you see as a good reseller program. List the benefits they will receive and what support or assistance you can offer.
- Introduction – finding the right way to introduce yourself can be crucial. Will you send an introductory letter with detailed information? Or will you arrange for a meeting (in person or virtual) to discuss this in more detail?
- Timeframe – suggest a timeframe for the partnership to be authorized and established. This should include aspects such as product training (if needed) and an agreed start date for them offering your products to customers. This could also include a checklist for various goals or progress points.
- Application and/or Contract – if needed, ask the reseller to make a formal application listing their qualifications to sell on your behalf and experience. If details are already agreed upon through meetings or calls, then draw up a contract that defines the relationship between you and what you both expect from the agreement.
- Policies – this can be included in any contract and will cover all policies and procedures to do with your partnership. For them, that could include how to deal with leads and for you, it could also cover other factors such as training programs.
Successfully marketing (and selling) your product has many different approaches. For example, you may want to combine content marketing for SaaS with a solid channel marketing strategy that includes partners who complement your product well. How you identify partners and build a program will also depend on the industry you operate in.
Software developers seeking partners may often ask what is QA and its place in your current business model. A business offering organic fruit and veg is going to look for a partner who values sustainability. Customizing your partner personas to suit you is crucial when approaching the issue.
Top Image Credit: kaboom; pexels; thank you!
Startups Should Make Their First Dollar Before They Raise Their First Dollar – ReadWrite
The world of startups is a bit like a gold rush right now: there’s lots of money to be made, almost no rules regarding who will make or lose it, and only a few will actually see a sustained profit at the end of the day. Global venture funding hit a record high in the first half of 2021, with $288 billion being poured into early-stage businesses. Numbers that high are probably leaving entrepreneurs everywhere wondering what they need to do to get a bigger slice of that pie.
Small business leaders salivating at the idea of getting a big cash injection from an angel investor need to slow things down a bit and focus on their own company first. The answer to the age-old question of whether your business should be trying to make money or raise money is almost universally the latter. Generating solid revenue streams early on will make many of the fundraising problems much easier to handle later on.
4 Reasons to Focus on Revenue Before Fundraising
1. More Independence
It doesn’t matter how good your idea is, how scalable it can be, or how interested investors are: a startup already making money is in a completely different league from one with no revenue. That’s not to say that there’s anything wrong with startups that can’t initially generate cash.
Some ideas require larger amounts of capital than others to become viable — but the early establishment of revenue streams completely changes the relationship between your business and its investors.
If you’re already making money, you’ve already proven that you have an established model to maintain a successful business.
Any investors who hop on board later will need to acknowledge that they’re joining an already-successful enterprise, not trying to build one from the ground up. On the other hand, if your company has yet to make any money at all, your investors will want a bigger say in how you eventually go about doing so.
Every dollar you make before allowing investors to come in is a piece of evidence showing that your business works and doesn’t need an investor to come to save it. This can help protect you against any overbearing “angels” later on down the road.
2. More Leverage
Along those same lines, revenue also makes investor negotiations much easier to navigate. If you’re running a business without products currently deployed, it can be difficult to negotiate with investors in good faith. How can either of you confidently give a valuation of a business that doesn’t make money? How will you be able to push back against offers that seem too low, too controlling, or not cash-heavy enough?
The truth is that revenue is your ace in the hole when it comes to negotiation.
Not only does it increase your standing among investors, but it also ensures that your business doesn’t become fixated on ideas that only become profitable at a massive scale, ceding even more control to your investors.
According to Devon Fanfair, co-founder of startup studio Devland, “building companies that demonstrate enterprise value is the best path for new builders because they generate revenue with very little investment.
It allows operators to focus on solving quantifiable problems and building momentum that is fed with every new iteration. Unfortunately, some startup builders get lost solving consumer pains that are harder to validate without scale. This can prove to be adversarial to growing confidence and routine behaviors that breed traction.”
If it’s solid and consistent, even modest revenue can make a world of difference during seed rounds.
3. More Choice
The logic here is pretty simple: there is a relatively small subset of investors interested in investing in startups founded on great ideas that have yet to deploy them at a profit, but nearly all investors working today are willing to invest in companies that have an already-proven ability to make money out in the wild. So the more spoiled for choice you are when it comes to interested investors, the better terms you’ll be able to secure when negotiations eventually rear their ugly head.
If you don’t believe me, listen to Geoff Ralston, President of legendary startup incubator Y Combinator: “Investors need persuading. Usually, a product they can see, use, or touch will not be enough. They will want to know that there is a product-market fit and that the product is experiencing actual growth.
Therefore, founders should raise money when they have figured out what the market opportunity is and who the customer is, and when they have delivered a product that matches their needs and is being adopted at an interestingly rapid rate.”
A revenue stream of practically any size at all proves all of the things listed above — and more.
4. Greater Chance of Long-Term Success
It’s no secret that the vast majority of startups fail within the first 5 years after their founding, whether they received funding or not. While this issue is often thought of as germane only to the world of startups, businesses of all kinds are in constant peril of failure if they can’t find a way to make money.
Investor funding can only prop up an unprofitable business for so long, but it can disguise some of the internal problems young startups often suffer from. Eschewing early investment in favor of revenue generation ensures that your company never has the chance to mask unsustainable losses with investor money.
Secure revenue streams also mean that your business always has something to fall back on.
If plans for expansion and new products go completely awry, you can always be sure that there is at least one pathway for your business to remain viable into the future.
The world is so saturated with seed money right now that it’s easy to lose sight of what running a business is all about. Focus too much on investors, and they’ll never return the favor. Instead — prove that you have a business plan capable of surviving and thriving, and you’ll have no difficulty attracting the interest you want.
Image Credit: dziana hasanbekava; pexels; thank you!