High-tech companies in Ottawa and across the world are failing to attract potential investors because they do not pour enough money into promoting their products, according to local marketing and investment experts.
A common tendency for startups is to focus on technology, said Debbie Weinstein, a co-founding partner at LaBarge Weinstein LLP. As a result, these companies "are left with scarce financial resources to have a proper marketing and sales launch", she said.
To attract larger venture capital deals to Ottawa, companies need to be "out there pushing and selling their product so they can monetize their R&D", said Rob Woodbridge, manager of the Ottawa Capital Network.
"We need to generate interest in Canadian products so the larger deals can flow."
Many startups do not understand the impact and importance marketing and public relations have on their success in the global marketplace, added Larry Keith, president of North America sales for Orbit IQ.
Orbit IQ aims to address the enormous costs startups face when conducting in-house marketing directed at international audiences. Created by a contingent of Canadian executives, the New York-based company gives companies in such countries as Israel and the United States a "jumpstart" on their global marketing efforts by using existing marketing channels set up by Orbit IQ. This ensures a startup's message is communicated to the right people, Keith said.
"The one thing that's very difficult (for startups) is to take the next step of sales and marketing because of the extreme expense involved," he said. "To take that step too early causes the company to run out of funds very quickly. The real problem ends up being: How do you get from the technology to commercial success?"
Keith said companies don't realize how much it takes to successfully market a product.
"A lot of people feel that once the product's available, it can sell itself and that all you need is to give the product to someone who has access to a potential customer and off you go. But there's a tremendous amount more that's required."
Orbit IQ is a viable alternative for startups since it can provide "a bigger infrastructure without having to hire local infrastructure that they can't afford", said Weinstein.
She illustrates the importance of marketing by looking at one of her current clients. Faced with downsizing, the client had to choose between shrinking its R&D or its marketing department. The company decided it could not afford to lose any of its scarce resources in sales and marketing because its survival in the next year would be determined by its "traction on the revenue side, not whether it can build a second or third product", said Weinstein. Woodbridge points to Cognos as an example of a company that understands the importance of marketing.
"Cognos has a large marketing tab that is an effective means to put this Ottawa company on the global market," he said.
Cognos allocates more than $50 million a year to marketing, representing roughly 10 per cent of overall revenue.
- by Scott Foster
