You have developed your concept for a business and brand. Somewhere along the line you are going to require funding to grow. With China rapidly becoming the biggest market around the globe, it makes send to be looking in that direction for venture capital. But there are some crucial things you need to take on board, and this is what Chinese investors want to see in your brand.
Brands are super fictions
“Brands are super fictions that contain a series of factors that attract us to the company’s mission, vision, values and potential to succeed. Some of us become so invested in their success that we are willing to help make it happen ourselves.” – Patrick Hanlon, CEO & Founder of Thinktopia.
If you’re wondering why story-telling is so important to potential investors, consider how closely brand is connected to profit. 23% of companies see an uplift in revenue when they achieve a consistent brand presence across all assets. Brands that have strong core values and a vision that is aligned with their company mission enjoy greater success. In the first few minutes of your pitch, make sure you capture the investor’s emotion with your brand story.
Your brand image must be consistent across channels and countries
One of the first (and possibly easiest) thing to do is to ensure your brand’s visual identity is consistent across all channels and in all countries. Your square profile photo should be consistent across different social media platforms. The voice and tone of your copywriting should remain the same, whether it’s on your website, advertising or product packaging. And the color scheme and photography style should be the same across platform, especially on visually dominate platforms like Instagram. Consider The 7 Key Elements of Brand Identity Design.
If your products or services are offered in different countries, make sure you own the intellectual property of the brand assets in each of the countries. Some brands also require some adaptation in a new geographic market. For example, many mid-tier Westerner brands have better success when they re-position themselves as premium brand in China.
Consider the following for your brand before approaching an investor:
- Are the visuals consistent across platforms?
- Can you clearly explain the meaning behind the brand identity?
- Can you clearly elaborate on your brand persona?
- Has your brand name and logo been localized to different geographical regions?
- Are your name and logo trademarked in all the countries you operate?
The first few slides in your investor pitch deck should showcase your brand. During a pitch, you should expect to answer lots of questions about your brand during the initial pitch meeting with an investor, and be prepared to discuss the design concept behind your name, logo and visual identity in detail. Investors want to see how much you have thought through your brand identity, why you have chosen what you have, and have executed this accurately.
Your marketing strategy must match your brand
Your marketing strategy has to sit in unison with your brand. For example, you should consider which social media channels, advertising channels or influencers match your brand’s identity.
For brands that are interested in entering into the Chinese market, it’s imperative to work with a marketing team that understands the local culture. An example of an advert failure is Dolce & Gabbana’s cancelled Chopsticks advert. A poorly-judged advertising can have an adverse impact on your brand. The company has faced backlash across China due to its racist Instagram video, portraying a Chinese woman in a way that The Independent describes as a “demeaning stereotype”.
If you have not conducted proper market research on what will resonate well with your target audience, you are not ready to pitch to an investor. When you do pitch, make sure that you present a marketing strategy that aligns with your brand’s purpose.
Loyal customers are a key measure of brand equity
Customer loyalty pays dividends. 64% of consumers say that shared values will keep them loyal to a brand. So, you can understand why potential investors are keen to understand your brand vision, mission statement and retention figures before they commit.
Here are a few things to consider showing when approaching an investor:
- Customer testimonials and reviews
- Positive press coverage
- Metrics to demonstrate your customer fan base and their purchase power
- Customer retention figures
But how do you increase customer loyalty if your retention figures are not yet impressive enough to win over VCs? According to Howard Shultz, CEO of Starbucks, “Mass advertising can help build brands, but authenticity is what makes them last. If people believe they share values with a company, they will stay loyal to the brand.”
It’s okay if your brand doesn’t have a huge following, as long as you are serving a targeted group of loyal customers with a high combined purchase power. It is also good to demonstrate your potential for growth and the steps on how you would scale your business in the next 3 – 5 years. Just as brands need to be transparent and open, the entrepreneur should also be transparent about the company’s core competencies and future projections.
A premium brand can ask for premium pricing
Chinese brands are on the rise, with established successes like Huawei becoming a household name in Europe. In 2018, Huawei became the second largest smartphone maker, breaking apart the top two phone-makers – Apple and Samsung – for the first time in seven years. Its brand value is $8.4 billion.
Huawei phones are known for having excellent features that rival the iPhone. As such, they can use premium pricing, which is when a brand places its products or services intentionally higher than its competitors to give the impression of higher quality. This technique increases a company’s growth potential, worth and their brand value. Selling products or services at a higher amount can reflect the brand’s ‘exclusivity’ or uniqueness in what they’re offering. It is important to note that this only works when the brand and its products are some of the best in its industry – which is why Huawei can sell phones for almost $2000.
Premium pricing means higher gross margins, which signals a strong opportunity for high growth rate. Gross margins are the difference between the cost to produce a product or service and how much it sells for. Investors are usually keen to look at a brand’s gross margin before investment to help determine its growth potential.
Brand building is a worthy investment
If you hope to secure funding from investors, always start and end with your brand story. Use the emotional appeal of your brand to catch the investor’s interest. Entrepreneurs only get one opportunity to make a great first impression, so make sure that you come to your initial pitch meeting fully prepared to impress your potential investors with all the right statistics, evidence and customer testimonials as well as a stand-out brand vision and mission statement.
Lastly, investors are also concerned about future exits and initial public offerings because that’s how they will make their money back. So give them another reason to invest in your brand by showcasing how a valuable brand can be sold for more money in the future. In the end, building a brand is a long term investment and it’s one that will always pay back dividends.
