Kim Garretson is a founding partner of Ovative/Group and leads the emerging innovation practice area. Follow him on Twitter @kimgarretson.
The world is awash in startups, making it hard for agencies to sift, sort, vet and validate all the latest and greatest technology. Anonymous Agency exec X nailed the VC problem when he wrote, “you’re so irrelevant to them. They need funding, the exact thing you don’t have.”
Yes, it’s about money. That is, the best starting point for weeding through startups is to start only with those with some cash. Then think like a VC; think pattern recognition, nuance and personality. Put aside, for the moment, how you make money (billable hours) and how you keep clients (killer campaigns and by not failing).
My “Act Like A VC” prescription for innovation includes three things:
Most successful startups today have raised capital and are market-ready before VCs even look at them. For you to act like a VC, early-stage companies have to prove they have enough capital to allow you to run low-risk, low-cost tests, and then scale along your typical campaign schedules. The money doesn’t have to be venture capital, but the “smarter” it is the better. (By “smarter,” it should be from investors with a track record, not just family and friends.) In my experience, even startups that have been through the gauntlet of raising venture capital have less than a one-in-five chance of even staying in business two years. Imagine the odds for earlier stage companies?
Founders’ patterns and nuances
The best founders have found real opportunities. Charlie Kemper of Revel Partners in New York says that the old saying that VC’s bet on jockeys, not racehorses, is over-simplified. I agree, especially if you focus on the founders around the patterns they see and the nuance or niches they’re pursuing. That means asking hard question about the competitive landscape they’re entering and how they’re recognizing patterns and applying winning nuance to their innovation. The absolute worst founders, in my experience in talking to more than than 500 of them, is those treading the fine line between arrogance and ignorance on market factors and trends. A good filter for finding these best founders are venture capital firms. Their venture partners are especially attuned to betting on the best. If you have VC contacts, they may be open to helping you assess the people behind the deals you like.
Bringing founders together with your team — and perhaps clients. With your filtering done around startups with cash and founders who’ve found niches you like for your planning departments, how do you cut even more of your agency staff’s time to pick winners? I like the concept of Demo Days, where you bring together a group of founders to do 20-minute presentations on their solutions, perhaps even with clients attending. It’s important to coach and preview the presentations so they’re focused on solving real problems and opportunities for you clients, not just a pitch of their features. I also like to have all the companies hear all the presentations to underscore the fact that often the niches being pursued by one company are similarly being pursued in a unique way by another. That means that for a startup to work with an agency, the founders must again be flexible in molding their solution around the needs of the clients.
Image via Shutterstock
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