Have been working with a wide range of start ups recently (CSR, water treatment, asset management, AEC design services); developing and validating 'go to market' strategies'. In the initial or early phases of maturation (both for the company and most times, the market segment itself), direct sales by the founders and other 'visionary' staff (both internal as well as advisors / directors) is critical to get early successes: pilot projects, demonstrations, regulatory review & approval (if appropriate) and brand awareness. If thinking of being acquired, it's better to develop a strong alliance first
But as the start up begins to grow, the markets for the technology solution (that is: the product, team expertise, company vision, and solution roadmap) will require that the solution most likely be integrated into a larger business solution (think of a new roadway; wastewater treatment & distribution system, environmental remediation, etc). This is particularly the case for those cleantech start ups that are targeting industrial clients as well as governmental clients. At this stage, start ups need to build partner 'ecosystems" consisting of complimentary technology and services firms; which requires the development of an alliance & partnership strategy.
Some insights are provided here:
Position yourself to allow your partner to lower the cost of their customer acquisition efforts & identify 'up-selling' opportunities
For the larger and global AECs, the real opportunity for growth is to continue to develop their existing accounts and user bases; providing more value to them (such as incorporating energy modeling solutions, or facility management services). Case in point: can your solution allow the AEC firm tap into other technology or operating budgets in the clients' organizations, that the AEC would typically would not be able to access?
Don't be the obnoxious sales guy when representing your company
CEOs of start ups need to focus on the partner's business model; how can they assist in driving more value and solutions of the partner through the partner's channels? (so: don't go in to a discussion with executives at an AEC firm saying: " I would love to get access to your clients so I could sell my stuff to them".......not a good idea)
If you have something special, they will find you...although it may take some time
Most of the global AECs have executives whose roles include responsibilities to constantly survey the cleantech / green landscape: interview companies, and make recommendations on strategic alliances and acquisitions. Chances are, if you are making headway in your market sector and are building brand awareness and a sustainable client base, that the AEC firm already knows about you. Your alliance strategy should take into account how you can leverage these sales channels to build relationships with the AEC practice leaders as well as with the alliance executives at larger complimentary technology companies. In many cases, a great way to begin the development of an alliance is to focus on specific key end - user accounts where both your company and the AEC may provide a joint solution.
Much of the acquisition activity during the IT growth period of the last 10 years has been a result of demonstrated joint customer success, alignment with product strategies, and some synergy between corporate cultures and goals of the start up and acquiring company. I think this trend is quite applicable to cleantech start up growth and maturation. There is no question that building strong relationships within an AEC firm (or larger technology company) allow for increased awareness of the start up company, and allows for constructive M&A dialog at the appropriate time.
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Saturday, April 12, 2008
Building Effective Alliances for Cleantech start ups
Thursday, January 24, 2008
Column on Cleantech.com: "Driving Cleantech Growth via Engineering & Environmental Channels"
I authored a column on Cleantech.com this week, link is here; column is below.
The cleantech sector and its subsectors is now reaching a critical mass, in terms of investment momentum, public awareness and numbers of viable prospects. A number of segments, such as solar, are already in a land grab mode, where participants believe rapid client acquisition is the primary activity to ensure company success.
Similarities to the software/tech start up market?
- Founders: Like many software start ups, cleantech start ups are usually founded by strong engineering and academic individuals, who are not necessarily strong in market strategy and sales.
- Investor experience: While there are a handful of investors with deep domain expertise in specific technologies, many new investors do not have that same level of expertise. We have seen evidence of this with the rapid influx of capital into this nascent sector.
- Need for reference accounts: Creating demand in the market requires the identification of strategic accounts where successful referenceable pilot projects can be deployed.
- Go to market strategy: Demand fulfillment may be met via a direct sales force, or via indirect sales & deployment channels, dependant upon a number of factors, including the complexity of solution, the role of the technology in a business solution, and degree of access to markets & decision makers.
- Alliances and partnerships: when the technology and team are an integral part of a larger solution (such as engineering design & construction of a desalination plant, for example), the development of a partnership ecosystem is required, in order to integrate and deploy solutions across key sectors.
The environmental consulting and engineering & construction channel
Cleantech start ups may build their own sales forces to sell solutions, but most of the time their technology is just one part of an overall infrastructure or building/facility solution. Another sales approach is to build indirect sales & deployment channels.
I suggest the key to success for many cleantech start up companies is to effectively leverage the environmental consulting and engineering & construction channel (that is, the services firms that provide consulting, design, construction management and facility operations) to sell and deploy solutions, thereby accelerating cleantech adoption.
Here’s why:
- Solution requires a range of engineering expertise: Clean technologies in most cases will require specialized engineering that can be provided by the services team in the cleantech company, but will also require traditional engineering design & construction management expertise.
- Target customers already work with E&Cs: Target verticals that may adopt cleantech include process and discrete manufacturing, transportation, telecom, government, real estate and infrastructure. Companies in these verticals rely upon global E&C firms to build business cases, develop conceptual and detailed designs, manage construction operations, and in many cases, actually operate facilities as well; E&Cs are 'trusted advisors' for capital expenditure projects.
- E&Cs are already engaged with cleantech: E&Cs have vetted a number of clean technologies, especially in waste-to-energy, green building and wind and solar power. But projects, training, and alliances with cleantech vendors are scattered at this point, creating opportunities for new vendors to step in. Cleantech execs should familiarize themselves with key strategic initiatives at global E&Cs today in order to build an ecosystem of focused and trusted partners.
- E&Cs are actively seeking new technologies to leverage: Why? The desire to capture higher margin consulting projects (which could include cleantech due diligence consulting, for example) in what is traditionally a low margin business, as one reason. Driving more growth and market share in core markets of water, building design (including building information modeling, or "BIM'), IT (for ‘green’ supply chain management, for example) and energy development, is another reason. Their question is: can cleantech serve as a ‘catalyst’ for more E&C growth?
Sales strategies
What are some key takeaways for sales and growth strategies for cleantech companies?
- Business development and strategy should focus on building a partner ecosystem and driving sales from these channels, especially with larger engineering & construction firms. The business development team should have strong domain experience in core tech areas, but should also possess a very good background in developing a go to market strategy with a significant alliance/channel component, possess a good rolodex or set of relationships with a broad array of E&C business unit executives and certainly have a consultative sales approach.
- The alliance & partner development process will involve roadmap & technology discussions with key E&C practice leaders. Within most global engineering & environmental firms there are thought leaders (individuals and groups) that take the lead in developing and disseminating technology for new business opportunities within the company.
- Target key executives within E&Cs. The corporate strategy executive (in itself a relatively new role for the E&C industry) is chartered to leverage internal expertise and nurture emerging growth opportunities across the enterprise, and as such, is a natural ‘executive sponsor’ for a cleantech partner.
- Develop a network of investors and key advisors that have relationships both within E&Cs as well as at their target client accounts
Leveraging the E&C channel should facilitate more rapid growth and quicker profitability for cleantech companies. Keep in mind that the E&C industry can be conservative at times and is focused on the total engineering solution, of which cleantech plays a part. Your objective should be to communicate the value your technology (and expertise) provides to both the E&Cs and their target accounts.
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