As a startup accelerator for IT services companies, our goal is to support young IT Services businesses as they grow and reach their potential. We completed our first cohort of companies in November. After completing our first cohort, we have collated some observations and recommendations based on the learnings from our interactions with the startups.
Observations About The Startups:
Lead generation was identified as the biggest opportunity by 100% of the companies. However, scaled lead generation has either not been attempted or failed due to poor incentives, inadequate service packaging, or a lack of uniqueness in the value proposition.
75% of the startups lacked a differentiated vision, making it difficult for them to stand out in a crowded market.
50% of the startups needed assistance entering the US market, which can be a challenging and competitive environment.
The need for effective sales collateral was identified by 75% of the companies, including help with creating an elevator pitch, one-slide introduction, and sales deck.
100% of the companies were able to improve their service packaging and sales collateral to effectively communicate their offerings to potential customers.
The development of sales metrics and win/loss analysis was another area where 100% of the companies needed support.
75% of the startups needed help building an SDR (Sales Development Representative) function, which can be critical to driving lead generation and revenue growth.
All of the companies recognized the importance of financial maturity, including accrual accounting.
None of the companies cited engineering hiring as their main challenge.
As we made these observations we were able to focus our energies where most help was needed. This started with relooking at the unique value proposition and better definition of the services.
Learnings About The Program:
Our first learning is the importance of focusing on scale rather than exit. This means deliberately building a sales and lead generation engine, with all other efforts serving to support it. We have changed our value proposition accordingly.
Another key learning is the importance of intermediate deliverables as outcomes. This includes creating a unique value proposition, an effective elevator pitch, a one-slide introduction, and building up to the actual sales collateral. We have deployed this strategy in the next cohort and have seem good results.
The role and relationship we have for our customers is closer to Gartner and Forrester. We should think of the relationship as two pronged with a main point of contact, and connections we make to people from the Vixul expert network. We already instituted changes for this by introducing a success manager in the process.
We must help our companies conduct market research to understand the competitive landscape and identify opportunities for differentiation. We should help with pricing research to understand the market demand and ensure that the startup is charging appropriately for its services. We are working towards building this service but it is a bigger lift that we hope to achieve down the road.
In conclusion, the insights and recommendations from our observations can serve as a roadmap for IT services startups but also for consultants, M&A advisors, and Private Equity players in the IT Services space. At Vixul, we have taken some of these lessons and turned them into actionables. The second cohort started on February 6th, 2023. We hope to share similar insights again in three months from our learnings from the second cohort.