What is Business Development for Early Stage Companies?

When talking with early stage companies we find a fair bit of confusion as to what exactly Business Development is. It means different things to different people and it takes different forms for different companies. What is the difference between sales marketing and BD?

The base definition is that sales is asking another party for money and that BD is forming partnerships, with caveats that opening a new market or business line may start under BD. We subscribe to a slightly different line of demarcation that I find operationally helpful, particularly in building out your teams. I like to start by examining two questions for each company: How do you make money? How can you significantly accelerate growth? If the answer is relationship based ‘selling’ as opposed to high volume transactions, than you are likely looking for BD professionals. If it is high volume, then you are likely building out a sales team. That said, a sales organization, or a low value transaction driven by a marketing organization can frequently benefit from channel partnership, another sweet spot of the, relationship based, BD professional.

At Fulton Waters we take a slightly broader definition than many. Are there companies that, if you had a team member who could walk you in to the right person, you could see a meaningful impact on your growth rate. This is what we focus on with a network of vertically focused professionals with 15–30 years experience, and connections to leverage. Some examples of different BD opportunities we have seen include:

· A B2C mobile content company that can grow their user base by preinstalling their application on smart phones.

· A hospital grade wearable device that is looking for partnerships to expand into the consumer market.

· A sales or marketing platform that could sign a deal with a major US cruise line.

· A social engagement tool that could be resold by digital agencies.

As you can see, BD means something different to each of these companies. The common themes are that, they are opportunities to deliver rapid growth, and they happen through relationships.

Our Response: Hard Choices — Growth vs. Profitability

This is in response to Albert Wenger’s great post here

Albert references a period when growth slows and a profitable startup has to decide between navigating profitability or doubling down on growth. What he is describing frequently correlates with the point when a company has saturated early adopters, and is learning how to attract the mass market. Geoffrey Moore may call it crossing the chasm, but this can be at a stage of revenue that well exceeds what entrepreneurs expect. I’ve experienced this first-hand. There was a period at comiXology when we had to start attracting new comic fans, not just converting existing fans to digital.

The implication for Albert’s post is that, if the company is at this stage, doubling down on growth requires different strategies. This requires a major mind shift when it is easy to revert to what lead to the initial success, which may not work as well.

Additionally, the “lean” startup mentality is replaced by the realities of a larger, more complex business. There is structure and process in place and quick iteration is no longer a core strength. Very quickly, management realizes they have less to prove and more to lose. Young companies experiencing great growth often start to adopt a risk aversion that makes innovation difficult. Stress for a CEO is always high, but as the employee count grows, so too does the pressure to succeed. At this stage, employees can also be less risk averse, unmotivated by the options-heavy compensation that lured the start-up’s early believers.

I agree with Albert that pursuing both paths — profitability AND growth — makes a business less likely to succeed. Then again, revenue traction opens up investment opportunities and scaling for growth, while demonstrating profitable unit economics, can be a powerful combination. As they say, the cream rises.

Access & Innovation: The Birth of Fulton Waters

Innovation is a funny thing. It usually takes risk — a lot of risk. One might think well-funded corporations are poised to own future innovation, but startups are largely the driving force behind “what’s next.”

Startups are willing to chase ideas that don’t fit anywhere else. They have the vision and the talent, but without the advantages of an established brand or deep pockets, iteration must happen quickly.

On the flip side, major corporations want to innovate, but are structured to be risk averse. They’re left to sift through a very large sea of startup solutions that don’t resonate with their business, wasting time and resources.

Fulton Waters bridges the gap. We work with early stage companies to help them access the right opportunities. And we run Innovation Summits for major corporations to help them pinpoint products and ideas worth their time. In short, Fulton Waters takes the friction out of forming the partnerships that should exist.

If you are a high growth company with a fantastic solution, or an established brand trying to find the next best thing, let’s connect.