How Will Startups Deliver Fast Results as Global Venture Investments Hit $125B?
Global venture funding across B2B startup companies has reached new heights. In the first quarter of 2021 alone, venture capitalist firms invested $125 billion, an all time record high according to Crunchbase data.
What does this surge in VC funding mean for startup executives and founders?
Once a company receives early stage funding, rounds that are typically between $3 million to $15 million, the pressure is on to deliver. Expectations to successfully grow the business are very high - B2B startups typically need to triple the revenue in the next 12 months. Startup leadership must determine how to utilize the new funds in a way that will deliver the aggressive growth targets investors expect and the business needs. Where do you begin?
Post-Series A is time to leverage marketing
Producing results quickly translates to successfully bringing products to market, increasing revenue, driving brand awareness, and growing the client-base. These growth goals typically sit squarely on the shoulders of marketing and require resources with expertise across branding, demand generation, marketing automation and operations, product strategy, customer acquisition and retention, and the list goes on.
For many startup executives, the idea of “figuring out marketing” is daunting. Which roles do you hire? How do you allocate your budget? Which channels do you invest in?
It’s tempting to full-time CMO or VP of Marketing. Afterall, at this crucial stage startups must invest in people and resources that will enable the business to reach growth goals. Each dollar spent should guarantee a return and that’s why companies should rethink expensive full-time marketing hires.
Challenges with hiring a full-time CMO
CMOs are expensive and their salaries are going up
The role of the CMO has changed from being more creative-driven to data-driven as this role is now seen as revenue-generating. Therefore, salaries have gone up. On top of paying for an expensive full-time salary, companies also need to consider benefits, equity, bonus and compensation plans, taxes, onboarding and training, etc.
Recruiting a top CMO is challenging for non-marketers
Experts explain, “non-marketers face the possibility of missing signs in the interview process that would have been a deal-breaker for former marketers who are now focused on marketing executive search. The success of a candidate cannot be simplified into a checklist. You need the knowledge to go into deeper marketing conversations with them to understand how their mind works and the impact they are capable of having.”CMOs don’t last very long
According to Korn Ferri Institute, CMO’s have a significantly shorter life span than other C-suite executives with an average of just three years. Research from the Harvard Business Review and Fournaise found that 80% of CEO’s admit they do not trust and are not impressed by the work done by Marketing. On the other hand, 90% of the same CEO’s do trust and value the opinion and work of the CFO and CIO’s.CMOs lack the ability to execute
Hiring a seasoned executive gives startups years of experience, guidance and mentorship, executive sponsorship, and high level strategy. What companies will most likely not get is someone who can roll up their sleeves to execute against the plan you hired them to build. CMOs are typically great at building strategy and empowering teams but not so great at doing the nitty gritty, tactical work that is really the driving force behind results.Disrupted workplaces
The pandemic has transformed how and where we work. With some many companies going fully remote or allowing more work-from-home policies, recruiting, hiring, and onboarding is also occurring remotely. Potential candidates are receiving new job information only online versus by in-person networking and there are almost no opportunities to meet with co-workers in person. The world of marketing online has become noisy and it’s getting more difficult for companies to stand out when it comes to finding the best talent.
An better alternative: The Fractional CMO
Post early funding is not the time to hire a full-time CMO. But startups do need that executive level thinking to help map out how to achieve milestones and accomplish growth goals.
Enter: The Fractional CMO.
A Fractional CMO is an interim executive that provides companies CMO-level marketing expertise, strategy and execution without the hassle of hiring a costly, full-time executive. This role is a part-time, dedicated executive that is driven by helping startups reach their aggressive growth goals. They may be working with other startups so they are able to incorporate learnings and new strategies that have been successful across other startup types or industries. Fractional CMOs offer an eagerness to achieving goals, years of experience, and a different perspective.
A Fractional CMO delivers everything you would expect from a seasoned marketing executive. But the real value is found in everything else you get. Beyond providing strategic direction, Fractional CMOs execute against the plan they build.
A FRACTIONAL CMO MAKES A $5M START-UP LOOK AND ACT LIKE A $50M COMPANY
— Amanda Rabideau, CEO of Arch Collective
In closing
With billions of investment capital at stake, each dollar a newly funded company spends should guarantee a return. Smart deployment of marketing dollars is essential to getting from Series A to Series B. Hiring a Fractional CMO is one of the best ways to intelligently spend capital. Burn less cash in making the wrong hiring decision. Hiring a Fractional CMO sets startup companies up with strategy and execution without the commitment (or risk) of hiring full time employees.