One of the most important decisions that Maryland startups must make is how to allocate the funding they receive from investors. There are many possible ways to spend money; but not all of them are equally beneficial for the growth and success of the company. The key is to ascertain, at the outset, where businesses might find most value in fund allocation.
Fund Application – Prioritizing is Critical
It’s true: When fledgling business entrepreneurs review their project plans, everything is “top priority!”. While some Maryland startup funding agencies only offer targeted financing (which mandate use of funds to specific needs), many investors allow owners to decide the best use of the money. Here are five critical uses of startup funding that provide the greatest value to fledgling companies.
1. Product development. The core of any startup is its product or service, which should solve a real problem for a specific market. Investing in product development means improving the quality, functionality, and usability of the product, as well as adding new features or expanding to new platforms. For example, at its fledgling stage, Airbnb used its funding to improve its website and mobile app, as well as to launch new services like Airbnb Experiences and Airbnb Plus.
2. Marketing and sales. Without effective marketing and sales strategies, even the best product will not reach its potential customers. Investing in marketing and sales means creating a strong brand identity, generating awareness and demand, acquiring and retaining customers, and increasing revenue and profitability. For example, when it first launched, Uber used its funding to expand its global presence, launch aggressive campaigns, and offer incentives and discounts to drivers and riders.
3. Talent acquisition and retention. The success of Maryland startups depends largely on the quality and performance of its team. Investing in talent acquisition and retention means hiring the right people for the right roles, providing them with competitive compensation and benefits, creating a positive and collaborative culture, and offering them opportunities for learning and growth. Case in point: Spotify used its startup funding to attract and retain top talent from the music industry, as well as to offer them perks like free music subscriptions and stock options.
4. Customer support and feedback. The relationship between a startup and its customers is crucial for building trust, loyalty, and advocacy. Investing in customer support and feedback means providing timely and helpful assistance to customers, resolving their issues and complaints, soliciting their opinions and suggestions, and incorporating their feedback into product improvements. For example, Slack used its funding to create a dedicated customer support team, as well as to launch a user feedback forum and a customer advisory board.
5. Research and innovation. The startup world is constantly changing and evolving, which means that startups must keep up with the latest trends, technologies, and opportunities. Applying Maryland startup funding towards research and innovation means exploring new ideas, testing new hypotheses, experimenting with new solutions, and launching new initiatives. For example, Netflix used its funding to invest in original content production, as well as to develop its own recommendation algorithm and streaming technology.