It’s a tale as old as time. Without clear revenue growth, you can’t get buy-in. Without buy-in, it’s difficult to drive revenue.
Some partnership leaders are leaning into a quick-to-ramp-up solution that can generate recurring wins. No, we’re not referring to that travel rewards card you just signed up for to tally up points and get a free trip to Ibiza. We’re talking about startup partner programs — when SaaS companies offer their product at a discount to startup communities through venture capital (VC) firms, accelerators, or incubators.
A startup partner program benefits the buyer (the startup), the seller (the SaaS vendor), and the channel partner (the VC firm). This is what happens when a VC firm shares perks from SaaS companies like yours with their community of startups:
- SaaS vendors get a continuous stream of ecosystem-qualified leads (EQLs) and partner-sourced revenue. Startups can easily sign up to use SaaS products through their VC firm’s community marketplace or via direct links to perks in their email inbox.
- VC firms can help their portfolio companies grow by providing them with the best deals from SaaS companies they trust.
- The VC firm’s portfolio companies can adopt a mature tech stack without the high overhead cost.
It’s a win-win-win.
In his first three months at Help Scout, Ben Wright, Director of Strategic Partnerships and Business Development, made the company’s startup partner program a top priority. This investment has led to a boost in startup users and more buy-in and resources for Wright to grow the help desk software company’s partner ecosystem.
Help Scout has observed the following success from its startup partner program:
- 70% of users who join through Help Scout’s startup partner program convert to paying customers
- Wright has generated net new EQLs in a matter of just three days from initial outreach to a prospective VC partner to the partnership’s activation
- Help Scout is now prioritizing the hire of a business development role dedicated to working with startups in Q3 of 2022
While building a startup partner program does require a thoughtful approach, it does not require as much effort as launching a tech partner program or a reseller program. If the stars align, you could generate quick wins and long-term, recurring revenue that fuels the growth of your entire partner ecosystem.
Below, we’ve compiled insights from partnership professionals who have launched successful startup partner programs — everything from the signs that you should launch a startup partner program to how to do it right. What to expect:
Part I: 3 Signs You Should Launch a Startup Partner Program
Sign #1: Startups are one of your core user groups
Alessandra Andrenacci, VP of Growth Partnerships at Issuu, had developed startup partner programs in her previous roles at Dropbox and DocSend (acquired by Dropbox). Andrenacci suggests looking for partners who can help expand specific user groups in your customer base. A startup partner program can help you expand into the startup ecosystem — similar to expanding into a new market.
“A lightbulb went off,” says Andrenacci. “How do I accelerate the growth of this huge user group, which is already finding value in our product? And who can influence that specific group?”
If startups are already one of your core user groups, you should determine:
- How do startups convert from free to paid over time (if your company uses a product-led growth (PLG) strategy)
- How do startups contribute to your overall retention rate? How often do they churn? Are startups some of your most loyal customers over time?
- How easy is it for startups to use your product right away? Do they have bespoke needs that require the support of a customer success manager (CSM) or services team to achieve value in your product right away?
For example: Help Scout knows that 70% of its startup users convert to paying customers. They can use this data to invest more heavily in their startup partner program. If you’re just starting out, think about the potential revenue partnering with VC firms could generate, and use the data to get initial buy-in.
- 25% of your user base consists of startups
- 70% of your startup users convert to paying customers
- There’s a high percentage of startup users who stay with you as they scale and/or they stay longer than other use groups
- 30% of your potential VC partner’s portfolio companies already use your product
Then, you’ve got a lot of good data to help you get buy-in.
Use the template below from our Partner Playbook to determine the immediately addressable market via a new VC partner, and bring that data to your next leadership meeting. If your average deal size for a startup is $X, then…
“If you sell into SMB companies, you can drill down into that data and figure out, ‘A lot of these companies are startups,’” says Wright.
He adds, “Think about the potential of that program. If we’re converting at 70% and even 10% of those grow into unicorns or large, revenue-producing companies, we get money back on all of the people we provide benefits to.”
Help Scout has customers in a variety of verticals, including education, real estate, and financial services. Rather than targeting each vertical and its respective ecosystem, Wright decided to focus on a user group that theoretically overlaps with every vertical.
“Let’s focus on where we’re already having success. We have proof in the area [of startups]. Let’s figure out how to accelerate that channel,” says Wright.
Sign #2: Your product supports key moments in a startup’s evolution
Think about all of the make-or-break moments and milestones for startups, and identify if and where your product fits in. Could your product play a critical role in:
“Our product fit really went into a key moment for startups,” says Andrenacci. “One of the binary moments that makes or breaks the success of a startup is the fundraising. You either get it or you don’t. DocSend was the perfect tool for startups to fundraise.”
Bruno Guerra Cunha, Partnerships Lead at Oyster, saw an opportunity to provide value to startups that were hiring for VP-level roles. As Guerra Cunha accelerated the global HR software company’s growth in the remote work space, he reached out to VC firms offering to help their portfolio companies hire and onboard the best talent from anywhere in the world.
“[If a company connected to a VC] found an amazing VP candidate, but she doesn’t want to move to the country, they start to ask, ‘How can we do this?’ And then the VC could say ‘Actually, you can use Oyster.’ And this all started bringing a lot of new revenue for us,” says Guerra Cunha.
He adds, “This is something that I started after three months [at Oyster] and was hugely successful.”
Partnering with VC firms was one piece of a larger, year-long strategy that Guerra Cunha implemented. Watch how Guerra Cunha’s startup partner program contributed to the growth of Oyster’s 100+ partner ecosystem in the below episode of “Crossbeam Explains”, or check out the full story here.
Sign #3: Your company uses a product-led growth strategy
If your company uses a PLG strategy, it’s easy for individual users and teams to get started using your product right away. An employee at a startup can sign up for your product in a matter of seconds and generate wins before ever signing a contract. Free, quick-to-spin-up tools are easier for a startup to say yes to from the get-go compared to a sales-led growth strategy that requires payment before seeing a return on investment (ROI).
VC firms want their portfolio companies to outperform their annual recurring revenue (ARR) goals and to outperform their cash burn. For a startup, every dollar counts. In fact, Silicon Valley Bank cites “running out of cash” as the number two reason that nearly a third of startups fail.
An affordable, yet high revenue-generating tech stack contributes to better cost efficiency. Once a startup sees the value in your product and the resulting revenue, they can make the case to internal stakeholders to buy your product.
In Help Scout’s case, their startup users can begin using their software immediately due to its simple user experience (UX) and self-serve functionalities.
“You can sign up and have your account implemented in minutes,” says Wright.
Typically, their users don’t need the support of a professional services team and don’t have bespoke development needs in the early stages of their startup’s maturity.
“It’s a harder argument to have internally to say, ‘We’re going to offer six months free, but I also need you to put a sales rep and a CSM on each of these accounts’, because then the return probably isn’t going to be there,” says Wright.
He adds, “We’re going to deliver leads, they’re going to go through this automated process, they’re going to onboard themselves. It’s easy. There’s no real argument about why we shouldn’t do it.”
Part II: 4 Tips for Launching a Startup Partner Program for the First Time
Tip #1: Leverage community-based marketplaces
A community-based marketplace is similar to a tech marketplace. But rather than hosting integration listings, its listings include custom offers or “perks” from SaaS companies. VC firms can curate their own white-labeled, community-based marketplace to provide their portfolio companies with the best deals from SaaS companies they trust. For SaaS companies, inclusion in a VC firm’s marketplace translates to net new EQLs, partner-influenced revenue, and partner-sourced revenue.
Tip #2: Personalize your messaging for each VC community
When reaching out to potential VC partners, lead with data. Compare your customer base with the portfolio companies listed on your potential VC partner’s site. How much of your user base consists of the VC firm’s portfolio companies? Which of their portfolio companies are long-lasting customers of yours? Do you have any case studies featuring their portfolio companies?
“Hyper personalize any messaging that you send,” says Andrenacci. “For example, ‘Congratulations on closing your last round with XYZ.’”
She adds, “Find out who of their portfolio companies are already users of [your product]. ‘I think this would be a great fit for the other 50%.’”
Wright suggests thinking creatively about why your product offering matters to a startup and to its investors.
“Customer support matters to startups because it increases renewal rates and customer satisfaction. There needs to be that tie in,” says Wright. “There’s certain things that are critical for startups to get their seed funding or their Series A, and renewal is one of those [metrics] that VCs look at.”
Alternatively, a complex analytics tool may not be the best fit for an early stage startup that hasn’t hired for any analytics roles and that prioritizes select metrics to kickstart early growth.
On its startup partner program page, Help Scout has value statements from startups that have scaled with them — including Zapier, Reddit, and Basecamp. This enables VC firms to understand which of their existing portfolio companies are already using Help Scout and to see the types of startups that have stayed with Help Scout as they’ve scaled.
Additionally, you should personalize your sales and onboarding messaging to resonate with each community of startups.
“We were very intentional. Every startup that came through a specific [VC] partner had a unique experience,” says Andrenacci. “I wanted to make sure I was creating a hyper-tailored community.”
She adds, “Every time we saw someone do something cool with DocSend, we would share that back to the other startups.”
For example: Andrenacci’s team sent emails to their startup users sharing:
- Fundraising success stories from their startup community
- Case studies for how other startups were using DocSend
- General startup best practices and trends they were observing through their customer base and through their original research
You should custom-tailor your messaging for:
- Your email outreach to potential VC partners
- The startup partner program page on your website
- Your startup users’ onboarding journey
- Your one-pagers for VCs and their portfolio companies
Tip #3: Give value back to your VC partners
Think beyond the value you’re providing through your product and how you can provide additional value to your VC partners through your network and your subject matter expertise.
“Provide value not just to your end users — or the startups — but also the VCs,” says Andrenacci. “We were able to share insights about the market trends of fundraising. We were really able to quantify those anecdotes into data-driven points. We saw so many [pitch] decks and had an incredible research team.”
DocSend leads a research program, where it sends survey questions about the latest fundraising trends to its community of startups. DocSend then analyzes the data they collect to produce content like “The Startup Fundraising Playbook” and their weekly trends on fundraising pitch decks. They also invite their VC partners to contribute their insights and to get a first look at the reports when they’re ready.
Additionally, in 2020, Andrenacci’s team launched The DocSend Fundraising Network to provide complimentary reviews of pitch decks for startups and to connect them to investors in their respective industries.
“All of a sudden VCs recognize that we’re not just giving a discount, but they’re actually getting warm leads for investments,” says Andrenacci. “All of the startups were vetted by my team.”
The second someone on Andrenacci’s team viewed a pitch deck a startup submitted for review, the startup would receive a notification.
“We were actually practicing and mimicking the usual VC behavior, and this [would help] startups immediately understand the value of our product,” says Andrenacci. “We would review [the pitch deck], provide feedback, educate them on our product, and provide additional value by introducing them to VCs.”
Help Scout also produces a monthly newsletter specifically for their VC partners, which includes articles relevant to the startup community.
Tip #4: Invest in technology partnerships to help your startups scale with you
As your startup users mature, your product needs to be able to keep up. Over time, those startups will hire new employees, develop new business functions, and grow their tech stacks, and you’ll need to prove that your product is a critical component of their business processes. Otherwise, your users will churn when they outgrow your product and need something more.
Help Scout has observed a 7% increase in retention for customers who have at least one integration. Invest in new features and integrations to enable more complex use cases and automate workflows — As a result, your product will become indispensable.
Knowing your startup users’ tech stacks will help to inform your product strategy and integration roadmap. Identify potential tech partners relevant to your startup users by:
A few ways you can accelerate the growth of your tech partner program and meet the needs of your growing startup users:
- Adopt an integration platform as a service (iPaaS) solution to go to market with new integrations, like Typeform did when they went from 30 integrations to 100+ in just one year
- Make the case for a professional services/solutions engineering team that prioritizes the development of bespoke solutions that extend beyond your integrations’ typical functionalities, like RingCentral did
- Hire a developer focused on integrations (like Lucky Orange) or invest in an integrations team
Ready to try out a startup partner program for your company? Start small, generate some wins, and iterate on your process.
“You can buy a list of VCs, you can create compelling messaging around it, send it out and see which response you get,” says Wright.
Want to learn about more tactics your partnership peers are using to generate revenue? Get your copy of The Partner Playbook below.
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