Steve Pammenter, Co-founder and COO of Venntro Media Group, Europe’s largest privately owned dating and lifestyle business with 25,000 sites and 50 million members across the world explains why tech start-ups should consider seeking investment.
As a tech start-up, raising funds is likely to be one of the biggest challenges you face while your business is in its infancy. A great idea is only the tip of the iceberg.
When we launched White Label Dating (part of Venntro Media Group) in 2003, we spotted a gap in the market for niche online dating products, and soon realised there was a huge opportunity to build a platform that enabled publishers to generate revenue from online dating. The online dating market was still reasonably immature which meant that we could create a product with clear differentiation and without vast competition.
My co-founder, Ross Williams, and I had a really strong belief in our product because we had clearly identified a gap in the market. We set the business up from Ross’s spare bedroom in his apartment in Windsor on half a dozen credit cards and with a great deal of luck.
We are proud to say that our business has always been privately funded. The risk that we took enabled us to achieve an annual turnover of £3 million in just four years, growing to generate £30m a year by 2011. We networked tirelessly and built relationships with entrepreneurs and major publishers who saw the potential that running an online dating business using our platform could hold. We quickly signed Bauer Media and The Independent as partners. Now we have 1,700 commercial partners, with 25,000 sites worldwide and annualised revenues approaching £50 million.
Over the years, I’ve realised that a lot of our success has come down to our business relationships with networks of advisors. And in 2016, not every start-up can afford to be self-funded in a marketplace as crowded as online dating.
Having recently launched our own corporate venturing arm, Venntro Ventures, one of our own observations from beginning to work with tech start-ups has been that seeking investment gives you a lot more than just the financials. And here’s why.
You’ll receive expert advice
You should never underestimate the advice of those that know the industry you’re trying to enter inside out. There’s a high probability that someone has already made the mistakes you’re in danger of making. Being able to discuss your ideas with experienced entrepreneurs who have a vested interest in the success of your business could help you navigate a smoother ride to the top.
The option of acquiring a database
The tech industry is continuing to become increasingly saturated, with more and more apps struggling to acquire and retain customers. Even if your product captures an untapped niche, having access to a large database will undoubtedly give you the leg up you need to set you apart and can significantly improve your ROI.
You may have an excellent product and your business may have huge potential, but if you can’t advertise it properly, that counts for very little in the densely populated market. A thousand different apps will be promoting their product at the same time as you, so it’s crucial that yours not only receives adequate air time but that it benefits from quality advertising space that attracts consumers with an existing interest in your product. Gaining investment from established market players not only exposes you to the knowledge of knowing where to advertise, but it may also open the door to widely accessed, lucrative advertising space as well.
Over 90% of all the world’s data was generated in the last two years and the Big Data market is worth billions, with good reason. As the possibilities for data-based customer insight are now almost limitless, it’s essential that you use that data to offer your customers products highly tailored to them.
Data can inform your decision making and help you find the best way to reach your target audience, learn what that target audience really wants and determine the best way to get them to buy into your business.
Legal cover is another resource that investors may be able to offer you. Time and time again we see start-ups who need legal advice hiring inexperienced legal counsel due to financial constraints. This can have a hugely detrimental impact on your business. By securing investment, start-ups may be able to lean on resources, like legal counsel, that more established businesses or investors already have in place.
For tech start-ups considering investment, the most valuable thing you can do is look to industry leaders within your sector. The relationship can be fruitful for both parties and aside from the financial gain, the benefits of solid advice and experience can never be underestimated.
To learn more about Venture Ventures, visit www.venntro.com/ventures.