To receive our investment, we require a portion of this be dedicated to building a brand with us – we look for companies we feel our creative work can add value to. But when is the right time for this? Should you work with a branding agency as soon as you have the finances to do so, or hold out a bit longer? Having branded over 50 companies, many of which are startups, this is a question we’re asked often.
What can we learn by looking at the most and least successful startups we’ve worked with?
Our experience with such a diverse range of companies means that over the years we’ve witnessed all different levels of success – and, unfortunately, failure. For the sake of this blog post, we picked out a selection of 12 companies we branded to analyse – the 6 that have had the most success (those that we believe have grown most in absolute shareholder value since we developed their brand), and the 6 that have experienced the least (4 have gone bust, while 2 are in the terminal stage of life support).
Since the crucial question here is *when* to invest in branding in order to be successful, we looked at the funding stage each of the 12 companies was at when we completed projects for them.
Out of the 6 most successful startups, 2 (Supercell and Argent) were at the pre-seed stage when we branded them, 3 were at the seed stage (Oura, Fy!, Peak) and 1 was at an ‘other’ stage (Dawn Capital).
Looking to when we branded the startups that went on to be the least successful, 2 were at the pre-seed stage, 2 were at the seed stage and 2 were at another stage. (We won’t be mentioning any names here – our second ever post is far too early to provoke scandal…)
From our relatively limited data set, it would therefore seem that the stage a company is branded at is not a predictor of performance either way. This is not to say, however, that branding doesn’t affect a company’s success. Of all businesses, a majority (60%) will have failed after 5 years**(1)**, while a somewhat depressing 96% will have failed after a decade**(2)**. Of the businesses branded by us, on the other hand, only 10% have failed to date. The indication is that, if you’re in a financial position to invest in branding and have the mindset to understand its importance, you’re likely to be running a company that will survive for years to come.
Successful companies build a strong brand strategy early on, and stick to it
So, what do successful companies do differently? Looking at our Top 6 and Bottom 6, we identified an interesting difference within the groups. Regardless of their stage, the most successful companies are now doing a very similar thing to what they were when we branded them, just at a far larger scale and in a more polished way. Supercell is still a small, decentralised organisation making free to play games with a social component, Oura is still making a smart ring, while Fy! continues to be a marketplace for lifestyle products.
On the other hand, 5 out of 6 of the failed companies attempted changes to their core offering after the branding project. One attempted to go from a consumer marketplace to an industry platform. Another tried to transition from a niche to a mass offering.
Get to product-market fit before investing in branding
This leads to an interesting conclusion. The right time to invest into branding seems to be when you have high confidence in your product market fit. For startups with a veteran team tackling a market well known to them, that may be before they even build their product - this was the case with Supercell. For others, it may be when they have the first prototype at hand, as was the case with Oura. And for others, it’s once they’ve traded enough to confirm a lasting ability to drive revenue, like Fy!.
This is in-line with what we’ve been telling some friendly VCs for years - a brand or design cannot salvage a fundamentally undesirable product – a polite way of saying there’s no point putting lipstick on a pig. But a strong brand can be a huge boost for a desirable product.
- We looked at 50+ companies we have branded over 7 years and identified the Top 6 and Bottom 6 performers
- If you are a company investing in branding, you seem to be at least 5x as likely to survive compared to the average company
- The formal stage on when you invest in branding does not matter
- It does matter, however, that you have high certainty in your product market fit when you invest in branding