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Unbranded and Unrecognizable: The Risks of Neglecting Branding for Startups

Branding identity
Image credit: Canva

I expected to learn more about why startups fail by reading various reports. According to 2022 CB Insights Data, the list of an explanation is quite long, with those having more than 10% of the poll:

  • 47% – lack of investors/financing
  • 44% – running out of cash
  • 33% – Covid-19 pandemic
  • 21% – poor timing
  • 21% – disharmony among team/investors
  • 19% – legal challenges
  • 16% – lack of business model
  • 16% – burnout
  • 14% – economic uncertainty
  • 12% – poor marketing

 

Looking at the reasons provided, I realize they seem to be the final results rather than the root causes. Apparently, this is what you get when asking ex-founders. 

What is most striking is that the top two explanations, a lack of financing and a shortage of liquidity, are obviously a consequence of a different reason, something far more profound. There must be a better reason investors didn’t put money into such firms other than just saying no.

I believe there are two significant root causes of startup failure: unsatisfactory product-market fit and missing brand identity. The first one is far more complex and could potentially be influenced by, among other factors, demand, competitors, costs, or price. Meanwhile, branding for startups is considerably more applicable to my field, and I found startup brand identity fascinating to investigate.

Yes, a deficiency of brand identity may be one of the leading causes of why so many startups struggle to get traction, have difficulty getting funding, and consequently, go bankrupt.

Why and when should you focus on brand identity

There is widespread popular opinion that brand identity is  nothing more than an official logotype (a logo that uses only the brand’s name, ed.note). Some more informed people might say that these are also all the visual characteristics of the brand. Most of the above are correct, however, regarding startups, brand identity reflects the idea that the market (both clients and investors) will soon verify it, so it needs much better awareness.

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Brand identity is the physical manifestation of a startup’s vision, mission, and personality. The lack of solid brand identification indicates that the founders did not do their homework carefully. Multiple areas need to be explored alongside offering input to be thoroughly processed to become what the brand is eventually. They can be categorized as follows:

  1. Market research
  2. Defining the mission and vision
  3. Creating a brand person
  4. Designing brand experience

 

In many situations, startups go through the first two phases of learning everything they can about the market, clients, rivals, or value propositions and defining what they do and where they intend to go. Combining all the findings, they simply glue all the various bits and pieces together and pitch them to investors or potential clients. Founders know and feel their ideas profoundly; therefore, they often assume that everyone will grasp them similarly. 

However, brand identity is not what the startup or its product is but how others perceive it. Even though the idea might seem simple, consumers will not buy the product if they cannot emotionally connect with it easily. And investors will not invest in it unless they feel it is genuine and unique. 

So, while developing a startup, the brand identity is far more than simply a means of advertising to convey the brand. Founders must create a brand identity from the very beginning. If they don’t, a startup may find itself on a fast track to becoming one of the 90% that will go bankrupt very soon.

Branding for startups: Key elements

Branding for startups includes more than just a set of actions. In fact, creating a brand personality is the most exciting component of working on a startup. 

Think of a  startup or product as if they were a person. When you meet people, you may like or dislike them; they may inspire or bore you, be intellectually captivating or funny, and so on. A person may look, speak, smell, or act in a particular manner. An emotional aura indicates if someone is a people person or an introvert. Of course, you might experience various feelings or judgments while meeting real people. And usually, when you meet someone you know again, you can anticipate what you should expect because people typically are pretty predictable; everyone has a unique personality that is not changing rapidly. The same must apply to brands.

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You may personify a brand’s identity when designing it. A brand persona is a fictitious representation of a brand’s attributes, values, and personality. It can help startups create a more distinct and engaging brand identity that resonates with their target audience.

The brand persona should include the following:

  • Key characteristics that the brand reflects and that differentiate it or make it unique
  • An appeal to a specific target audience
  • Brand voice, which includes a tone of voice, language, and messaging that are compelling and understandable to a specific target audience
  • Visual identity reflecting brand characteristics and brand voice that resonate with a target audience
  • A reflection of the company’s mission, beliefs, and ambitions

 

Designing brand identity is just a starting point. When discussing a startup, it is crucial to also maintain consistent communication across all channels, while ensuring that each touchpoint with the brand conveys a distinct brand identity. It may be refined over time and should be questioned and explored frequently. 

However, setting up a startup without a well-crafted brand identity heightens the risk of being rejected for failing to reach the appropriate audience.Even if the product idea is fantastic and well fit to market demands, a startup lacking a solid brand identity could end up overlooked by the market and investors alike.

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https://therecursive.com/author/pawel-poltorak/

Pawel Poltorak is an experienced CMO and Strategic Advisor in the tech sector, driven by a passion to help founders, entrepreneurs, and investors to succeed. As an author, he explores and writes on CEE startups and new technology through the lenses of marketing, economics, sociology, and geopolitics.