There are many things angels are worried about during and after making a startup investment oddly enough b2b lead source types are rarely among them. Though scalable vs. unscalable lead sources can make a big difference regarding your investment money.
What can your money do with unscalable lead sources?
Most startup founders believe that their business could have more leads if they had more money. Which can be true under certain circumstances but it is not true in general. There are many lead sources in b2b sales and hopefully most of them work just fine. But what if most of them are not scalable? Unscalable lead sources can be a problem if you are a Venture Capitalist or an Angel. In a due diligence process you can check sales figures and forecasts and they can look OK. But only a Commercial Due Diligence can tell you the type and ratio of lead sources to stay on the safe side of investing your money for boosting b2b lead generation. You can learn in advance if there is nothing your money can do with certain b2b lead sources because they are unscalable.
Let’s take marketing agencies as an example!
Here is a study about their typical lead sources by The Agency Pricing & Financials Report
As you can see currently unscalable lead sources dominate the sales of agencies so with your fresh cash their sales would not be much better off. (Certainly on a long term there are many possible sales improvements to do in such cases but no immediate results caused by the investment itself.)
So if your startup’s b2b sales heavily relies on either its founders’ university network or client referrals or local communities etc. then think twice if your fresh money can really help them generate more leads to sell more!
Some other common startup misbeliefs regarding b2b sales:
Beyond unscalable lead sources here are some other honourable mentions of startup misbeliefs about b2b sales solutions:
- “…all we need to sell more is a big brand behind us…”
- “…if only we could afford a senior salesperson…”
- “…after our first big reference our sales will be much easier…”
- “…with more money we could buy more PR…”
- “…with a more representative office we could impress our opportunities to make them buy…”
- …and the wishlist could go on…
Probably you have already heard some or all of these wishes from startups so here is my wish:
If only these startups knew how much more they could learn about the nature of b2b sales…
ps.: nowadays I deal mostly with blockchain startups and let me admit they suffer the most from the problem of having funds and not being able to scale up their b2b sales…