As seen on the Austin Business Journal
By Kathleen Lucente
You convinced investors to finance your business. You signed on the dotted line, high-fived your CFO and are prepared to keep moving forward. The hard part is over, right?
Hardly.
Securing funding of any kind — from angel to IPO — is critical validation and a great confidence booster for your startup. While that’s a necessary first step, it’s important to understand how to strategically position that news where it can have the greatest impact — an area where some founders and executives struggle.
How founders handle early funding announcements (with realistic expectations) and a holistic strategy is an early indicator to investors, employees and other stakeholders of how the company will be managed.
Questions will be asked:
• “Do they have consistent and impactful messaging?”
• “Was the funding announcement vetted and thought through?”
• “Is there a narrative around how the funds will be used?”
• “Which reporters will be briefed in advance?”
• “Did the CEO get all of the approvals needed by the investors and was the communication to investor partners clear before, during and after the news comes out?”
I’ve been answering these questions for more than 20 years, as a former regional head of communications for JPMorgan Chase and at Red Fan Communications, where we have helped companies announce successful funding rounds across every point in the company lifecycle.
Here are a few things I’ve learned along the way that executives and founders need to consider to ensure their funding announcements have the greatest possible impact.
Reporters scan Form D filings
Startups can be caught off guard when reporters preemptively write stories from Form D filings. As a founder, you never want to walk into the office and find a call waiting from a reporter about to go to print on your funding announcement before you’ve even wrapped your mind around how to serve it to the media. It can be hard to get ahead of a story once a reporter has already begun to tell it, but integrating with the right public relations partner can give you a fighting chance.
To avoid this scenario entirely, the first step is to communicate with your investors, legal team and PR agency to ensure the timing is right for the filing.
Making non-news news
The most impactful funding PR strategies incorporate the circumstances surrounding the company as well as the industry and competitive landscape. For example, a funding round paired with the appointment of a new CEO can incite high-level business and trade interest and generate more robust coverage than either announcement would on its own. Similarly, launching a new product offering in conjunction with a funding announcement can draw more attention than just a product announcement or press release.
A stealthy startup is a thoughtful startup
There are times when not announcing funding is the best strategic decision. Traditionally, this option is chosen when a company is in the latter stages of product development, but it needs to be balanced with the necessity of proving to investors and partners that you and your company have a solid foundation and a sustainable business model. Stealth mode allows you to establish a timeline and build a roadmap for unveiling your company that will generate press coverage and raises brand visibility.
Keep current and future investors in mind
An announcement that didn’t undergo a rigorous approval process that examines the messaging, quotes executives in ways that add value and exhibits a confident forward-looking strategy indicates to investors a lack of preparedness and cohesion. Ensure investors are aware of your strategy and quickly dispel any potential misconceptions among them.
Reality checks required
It’s critical to recognize your funding is likely bigger news for you and your team than it is for the outside world. Yes, funding announcements can silence competitors’ accusations that you’re not ready for market or don’t have the staff to scale, but these types of announcements rarely drive new customers to your door. Positioning separate storylines for the press and for your clientele becomes all the more important, and it’s where taking time to select the right PR partner can add more value, identifying what brand narratives will have the greatest impact with specific audiences.
The key is to establish a company narrative that answers relevant questions reporters are sure to ask and creates a roadmap for success that can be showcased to investors and customers — well after a funding announcement.
