If you’re planning to start your own business, you’re not alone. According to U.S. Census Data, more than 5 million new business applications were submitted in 2023. What do those businesses have in common? A need for capital that can be difficult to come by. You may have a great product and a strong business plan, but accessing capital can be the difference between success and failure—making it that much more important to build channels to efficiently share the right information with potential funding sources.
Most entrepreneurs are familiar with the often-quoted stat that 90% of startups fail. In 2022, lack of financing was the no. 1 cited reason for startup failures at 47%. Number two on the list was running out of cash, which clocked in at 44%.
Post-pandemic movement in 2021 and 2022 created hope for some startup founders that the capital situation would continue to accelerate. Unfortunately, 2023 was a harsh reality check. In Q2 2023, North American startup funding fell to the lowest quarterly total in over three years. In addition:
- Late-stage and tech growth funding dropped 48% quarter over quarter (QoQ) and 54% year over year (YoY).
- While early-stage funding was down just 2% from the previous quarter, it plunged 47% YoY.
- Seed funding was down 13% QoQ and 39% YoY.
Startups seeking funding are up against more competition than ever and a cagey investor market. Even the most savvy entrepreneurs, who have strong investor relationships and stringent research to back their ideas, are dealing with a smaller investment pool. So, how can entrepreneurs crack the 10% of startups that last?
For most new businesses, effective PR is the key. When done right, public relations is about more than attracting the attention of potential customers—it serves as a communications framework that establishes credibility for your company and drives awareness to the key differentiators that will help you stand out to investors.
What Is Good PR for Startups?
At any stage of business, good PR doesn’t happen overnight. Whether you take care of public relations in-house or hire a firm, you’ll need to set up long-term strategies and be patient as your business becomes visible to the world. While public relations is all about spreading news, startups have a bigger job to do. When you’re in the early stages of building industry relationships and establishing your brand, PR can be a tremendous support to help get a foothold early without spreading resources too thin.
At the local level, new companies can gain a lot of recognition with old-fashioned networking tactics. Attending industry conferences and trade fairs can help you build relationships and establish credibility. At the same time, it’s critical to incorporate modern technology and earned media into your efforts. Social media platforms are one of the most efficient ways to reach wide audiences, and are rapidly becoming the way modern consumers prefer to learn about new brands and products. However, social media doesn’t always confer credibility. For that, many businesses turn to earned media campaigns. PR professionals pride themselves on their rolodex of industry reporters, and their ability to help you get news out into your target publications—including the media outlets read by your potential investors. As you incorporate different communications channels, always make sure to validate the results of your strategy with data.
Why Startups Need PR
Forming a business is not enough to generate success. Almost every established brand started out as an entrepreneur’s passion project, often with very few resources and no credibility in the market. As digital technology offers new businesses immediate market reach in a way that wasn’t possible 50 years ago, consumers find themselves inundated with constant advertisements for shiny new products or investment opportunities, making it that much harder for your brand to stick.
Savvy entrepreneurs put in the work early to develop a distinct brand voice and invest in storytelling to help them stand out from the crowd. Honest, consistent and engaging communications can help you reach any target audience, including investors.
Forge Relationships
Investors aren’t primarily driven by the strength of your ideas. They’re interested in investing in companies with a promising future that will return strong and consistent profits. And they’re inundated with hundreds of pitches from companies in the same position as yours. As you can imagine, crafting the perfect pitch that is both concise and engaging is challenging.
PR gives you a platform to proactively tell your story to investors. When investors see your business is getting media coverage, they’re likely to want to learn more about what you have to offer. Conversely, when an investor reads a cold pitch from you, they’ll expect to see credible results pop up when they search for your name. These early relationships can help you build a network of potential investors interested in helping you grow your business.
Build Credibility
Investing in PR allows you to share your industry expertise and showcase why you are the best person to do what you want to do. Every piece of public information about your company offers a chance to increase your bandwidth and become a recognized player in your space. By building hype around why your startup can relieve customer pain points and consistently sharing relevant industry information, you can prove that you have more to offer than a single idea and sell your overarching vision to both investors and end users.
Generate Interest
While you can’t build a business on customer engagement alone, attracting the attention of end users can help you gain recognition and build credibility. About 87% of consumers start their search for a new product online. If they learn about your must-have products or services, they’re likely to share the information, extending the reach of your PR efforts. Consumer interest doesn’t just support your viable ideas, it shows investors you have successfully targeted your ideal audience—a good sign that you’re on the right track to achieve your goals.
Unfortunately, starting a business doesn’t guarantee success. However, if you start a solid business that provides a viable solution to an existing problem, PR can help you map a journey to the success you deserve. Working capital is essential for running a successful business, and PR is a vital tool for generating investor interest and securing financial viability.
