A technology startup needs about everything.
Sales, marketing, patent protection, a benefits program to attract talent and not drive it into insolvency and a hundred more things. So if you need everything, where does one start? And where is building a Business Development program on that list?
Business development means finding partners who need you badly, will take you to your early customers and will take first market advantage rather than your precious equity.
Business development for the raw startup is NOT building leveraged sales channels through partners or third parties. Sometimes these are VARs and sometimes these are the major partners like Accenture, Infosys, Tata and the rest.
Business development, aimed at the partner who desperately needs differentiation, can truly accelerate a startup and deliver non-dilutive, equity free funding. But that is a one in a thousand bet—yet one every startup should consider.
The history of business development departments is pretty sketchy.
They are invariably staffed by people who look and speak better than they perform. They are often known as Bus Dev = No Rev. They do not usually produce more than the inconsequential, pabulum press releases with major system integrators.
Their execs almost always have great hair and can talk about baseball.
The sales force cannot understand what they do.
They do not typically drive deals down at the field level. They do not often build sustainable programs that leverage sales.
CEOs and sales leaders do not typically have a bus dev background because this department does not often produce much of any value.
But “often” is not “always.”
When approached properly, business development can not only deliver a leveraged sales channel, it can almost eliminate the need for an expensive sales force and marketing department. Business development, properly executed can deliver non-dilutive funding that sustains a raw startup through the early phases of growth.
This is a radical departure from what most bus dev departments do. It is something that one in a thousand business dev execs has even thought about.
So let’s take a tour of how one worked out.
A small cloud security product wanted to come to the multi-billion-dollar security market space. It had less than $500,000 in funding from grants, owner’s equity, loans. Thus no sales, marketing, services, nothing much. A two page web site.
It chose to try business development in a radical way. It looked at the cloud space and found several cloud firms that had a specific type of cyber intrusion. That intrusion was common and the entire security industry was building new walls to try to slow it down.
This innovative company had a much better way to stop the intrusion. It took it for granted that intrusion would happen, but its technology made the intrusion of little value.
It was the equivalent of making sure if a robber robbed a bank, they would only get $1. So they did not stop the robber—they made it uneconomical to even try.
Their business dev team (1 person who worked on contingency) showed their technology to several highly profiled cloud providers. Several of them could not believe the technology so they ran the product internally.
The results were stunning. Their world class security teams could not make the product fail. They could break all their internal systems, but when they hit the databases, well, the bank robber only got a dollar. So the problem was solved.
This cloud company, with revenue in the tens of billions of dollars, started funding this startup. They funded it for their needs, they started bringing its products to their customers. All, non-equity, no dilution.
So here, business development, done well, enabled a startup to get to market, drive a $100 million valuation, with zero equity dilution.
Find the customer looking for you. Works every time it’s tried.