Tips for Startups Looking to Break into the B2B Market
tartrampe is a startup hub and accelerator initiative run by the Upper Austrian bank Sparkasse. Located in the Tabakfabrik business community, their mission is to help founders make their dreams a reality through targeted programs and expert advice. They offer everything a founder might need to get started, such as help with business plans, networking in and around the Tabakfabrik, general business consulting and help preparing for fundraising.
As Head of the Sparkasse bank’s startup hub and accelerator Startrampe, Johannes Pracher has to draw on both his extensive resume and personal experience in order to advise the wide variety of startups he helps get off the ground. Johannes studied business and social economics, with a focus on entrepreneurship, at nearby Johannes Kepler University. Coming from a multi-generational family of entrepreneurs, Johannes juggled a job while completing his first degree, before going to work in banking. However, he soon missed the creativity and engagement of having his own business, so he went back to work at the university, helping run a program that aimed to make entrepreneurship a regular option for graduates. After five years there, he moved to the startup300 business angel network, where he helped develop the factory300 at the Tabakfabrik. When Sparkasse launched their Startrampe startup hub upstairs from his office, he was offered the position as director for the new accelerator. Startrampe is now three and half years old and offers everything a startup might need, except bank consulting. It supports founders to turn their dreams into realities, from early-stage development to establishing connections, investors and a public platform.
In his time working with startups, Johannes has come to see that there are significant advantages for those focused on a B2B market, with two main reasons why startups in the Linz region might want to focus on B2B. First, Upper Austria is an industry-heavy region and globally competitive in areas like precision manufacturing, medtech, automotive hardware and chemical production. Second, B2B offers several benefits to startups looking to quickly scale up and move beyond the startup phase.
However, there are important differences to keep in mind. “In B2C, the customer is your friend. You can do a minimum viable product (MVP) and then go to market fairly quickly. Then, you can learn and improve your products and services. But ultimately there’s no way to predict how it will go; no matter how you prepare, the market is always right.”
In B2B you have more time and a clearer idea of what the customer wants. Johannes says you need to have a more mature product, not just an MVP, and be able to sustain a longer, slower sales process. This is also because corporations talk to each other, so if you make mistakes at one company it can hurt your chances at other places. All this means that “if you want to work with B2B companies, you need to be able to afford it, both in terms of time and runway.”
The most important thing to demonstrate when you want to work with a big company is how your solution can save them money.
Startups in the Linz area are particularly well served with a strong B2B market. Linz is situated in the region of Upper Austria, “which is the biggest industrial and corporate area in the country. It’s also home to several excellent universities so you get a lot of know-how.” A significant part of the GDP comes from regulated industries, like steel production, chemical industry, logistics and healthtech, so there are lots of opportunities for startups to work with big players.
Working in these industries, Johannes stresses, means that “startups need to have their research and legal preparation done.” At the moment, many of these industries are also trying to transition to greener models, so “startups looking to work with them should also consider SDGs (Sustainable Development Goals) and ESG (Environmental Social Governance) when preparing and pitching.”
startups need to have their research and legal preparation done
Johannes recommends that founders looking to break into the B2B space “thoroughly research their market, important companies they might want to work with and the specific people at those companies who could be points of contact.” He points out that due to the way many big companies are structured, it can help to make your pitch personal, as the individual you pitch to will often benefit personally by bringing your startup onboard.
“Most importantly, show them as factually as possible how they save money by working with you.” Whether this means improving their efficiency in some way, or simply offering them a cheaper alternative to an existing solution, saving money is the most attractive argument to large corporations.
At the end of the day, Johannes tells founders to “just go for it.” All the preparation and research and knowledge is only helpful if you take that final leap and make it happen.
Most important tips for startups:
- Do your homework. Know the market, the companies you want to work with, and the individuals at those companies. Also make sure that, if your potential B2B clients are in a regulated industry, you’ve started the approval process and applied for the appropriate licenses.
- Make sure you can afford it. Working with B2B clients can pay off in a big way, but it also comes with challenges. There are extra hoops to jump through, long lead times, complex systems, etc. Startups need to be able to plan long runways and handle a high cash burn.
- You need a mature product. An MVP and fast go-to-market strategy might be the norm in B2C, but B2B customers will expect a more mature and ready to use product.
- Demonstrate your benefits. Show how your startup will save the corporate customer money. Also think about how the person you are pitching to might benefit by working with you.
Main Photo by: Antje Wolm