Marketing Firms for Hardware Startups

Part
01
of three
Part
01

Digital Marketing Dirms

This is an analysis of the digital marketing firms, Markitors, WebFX, Fuel Online, Thrive Internet Marketing, and Disruptive Advertising. For each company there is an overview, information on the service offerings and contacts for one C-level executive. The names of previous and current clients, and B2B testimonials is also provided.

Markitors

  • Markitors provides SEO, social media marketing, technical SEO, and digital public relations services to the small business community in Scottsdale, Arizona.
  • A contributor to Forbes magazine, Markitors has nine employees, has been in business for over seven years, and currently services 35 clients. The firm's content has also appeared in Time magazine, TEDx and the Huffington Post.
  • The company's value proposition addresses the uniqueness of its clients, its innovation, a bias for action, service delivery, and overall strengths.
  • Markitors was founded by its CEO, Brett Farmiloe. Mr. Farmiloe can be contacted at (480) 550-6336 or via his email, brett@markitors.com.
  • Previous clients of Markitors are Sportique Apparel, Go Clean Credit, and Mc. Fate Brewing Company. The Print Authority, is one of the 35 current clients of Markitors.
  • The Co-founder of Y Scouts, Brian Mohr, stated that Markitors increased visits to the company website from zero to over 60,000 monthly visits. Steve McFate, the founder of the McFate Brewing Company, appreciated the monthly summaries.

WebFX

  • WebFx is an internet marketing and SEO company headquartered in Harrisburg, Pennsylvania. The company provides SEO and lead generation, content and analytics, and creative and user experiences services to mid to large sized companies.
  • The privately held company has over 700 clients and has driven over $1 billion USD in revenue and 3 million leads for its clients. With over 200 employees, the company has offices in Harrisburg, New York, Tampa, Baltimore, Washington, Dallas, Boston, Philadelphia, Minneapolis, Detroit, Charlotte, and Atlanta. WebFX lists a 91% retention rate, an average traffic increase of 23%, and was the best place to work in Pennsylvania three times.
  • WebFx's value proposition emphasizes the need for a happy team to ensure happy clients, clarity in ROI reporting, maximizing the opportunity, ethics and integrity in leadership, and deliverables that are transparent and impactful.
  • The president and Co-founder of WebFX is William Craig. Mr. Craig is a regular contributor to Forbes, Entrepreneur, and The Street and can be contacted at (888) 449-3239, or via email at wcraig@webfx.com.
  • Previous clients of WebFx include Auntie Anne's, Hilton Hotels & Resorts, Verizon, and Wrangler. Biocytogen, Unilek and the Spine Institute of America are current clients of WebFx.
  • The marketing manager at a trailer company remarked that organic search results and web traffic has improved steadily over the course of the year the company has been working with WebFX. The President of a manufacturer in New York stated traffic increased and there has been substantial improvements in placements. An account manager at a telecommunication service provider appreciated the increased visibility, improved website, and overall improvements to the online experience for customers.

Fuel Online

  • Fuel Online is a full service digital agency headquartered in Boston and New York City. The company has additional locations in New York City, and in Portland, Maine.
  • Fuel Online provides SEO, social media, pay per click management, enterprise SEO, digital strategy, inbound marketing, and content and creative services to mid to large companies. With just over 50 employees the company offers 24/7 support to its customers and has worked with 925 clients on over 1650 projects.
  • The CEO of Fuel Online is Scott Levy. Mr. Levy can be contacted at (888) 475-2552, or via email at scott@fuelonline.com.
  • Previous clients of Fuel Online include Umbro, Audi, Fujitsu, and the United Nations. Current clients include Kred and Gold Rush.
  • Alex Jarmolych stated that sales generation from the website increased by over 75% from SEO and PPC management. Jason Hudson saw a drastic increase in geo-targeted traffic rates, social media numbers, and geographic retention from its engagement with Fuel Online.

Thrive Internet Marketing

  • Thrive Internet Marketing is a full service digital agency in Toledo, Ohio. Thrive offers web design and development, website creation, digital marketing, and ecommerce services to both small and large organizations across the United States.
  • Established in 2000, Thrive Internet Marketing has 13 employees listed on its website. Thrive identifies as web designer hybrids, strategists and innovators.
  • The founder and director of Thrive is Ian Hartten. Mr. Hartten can be contacted at (419) 776-7000 extension 200, or via email at ian@thrive.com.
  • Previous clients of the company include The Arts Commission, Toledo Symphony, Metroparks Toledo Area, and the Zepf Center. A current client is the YMCA.
  • The vice-president of marketing and communications at the metropolitan YMCA of the Oranges in New Jersey, Mr. Greg Albers has worked in partnership with the Thrive team for over 15 years. Mr. Albers highly recommends Thrive and found the team to be technically impressive, flexible, put customer first, and budget friendly. He stated that Thrive is the best agency to have as a digital provider.

Disruptive Advertising

  • Founded in 2012 as FoundROI, Disruptive Advertising assumed the current name in 2013. Headquartered in Lindon, Utah, Disruptive Advertising had annual revenues of $20 million and 152 employees in 2019.
  • Services offered by Disruptive Advertising include PPC management, site testing, and analytics reporting. The company aims to enable the achievement of objectives and goals for both clients and the company through client and employee growth. Core values include extreme ownership, radical candor, growth mindset, and caring for each other.
  • Jacob Baasgaard founded Disruptive Advertising and is the current CEO. Mr. Baadsgaard can be contacted at (877) 956-7510 or via email at jacob@disruptiveadvertising.com.
  • Previous clients of Disruptive Advertising include Penny Mac, Blooom, Guitar Center, and Maple Mountain Marketing Group. There is no publically available information about the current clients of Disruptive Advertising.
  • The director of digital marketing at iTOK, Andrew Parker, stated that Disruptive Advertising has doubled leads for the company for four straight years.

Research Strategy

To analyze Markitors, WebFX, Fuel Online, Thrive Internet Marketing, and Disruptive Advertising, the research team began with a search of the company websites for each of the companies. This search yielded information on the company, C-level executives, clients, and testimonials from B2B customers. Where contact information was not on the company website, the research team used the email outreach tool, Viola Norbert. The initial searches provided the information requested in the research criteria except for the current clients of Disruptive Advertising.

In attempting to source information on the current clients of Disruptive Advertising, a comprehensive search of the company website was undertaken, but this did not yield the required information. Next, the research team reviewed activity over the past year on social media accounts for the company on Twitter, Instagram, Facebook and LinkedIn. Unfortunately, once again the team did not find any pertinent information. Finally, the research team reviewed social media accounts of the CEO, and the LinkedIn profiles of employees, but no information was found.

Part
02
of three
Part
02

Obtaining Investments for High-tech Hardware Start-ups

Venture capital firms and corporate strategic investors are some of the ways in which high-tech hardware startups can obtain investments.

Venture Capital Firms

  • Venture capital (VC) firms offer temporary investments, as venture money is not intended to be a long-term investment. The purpose of a VC firm is to invest in a company until it reaches enough credibility and sufficient size so that it can be sold or provide liquidity. The VC buys a stake, nurtures it for a period, and then exits, usually four to six years after the investment, through a merger, acquisition or initial public offering (IPO).
  • In a venture capital (VC) deal, the ownership of the company is diluted and sold to investors through independent limited partnerships established by venture capital firms. Seed rounds usually dilute around 10% to 25% of shares. Series A, on average, 25% to 50%, while Series B roughly 33%.
  • Companies must submit a business plan (or pitch) to a venture capital firm. If the VC firm is interested in the proposal, a "term sheet" is prepared and presented to the entrepreneur. This document signals that the firm is serious about the investment and wants to proceed once the due diligence is complete.
  • Due diligence is a meticulous investigation of the company, the management team, and the product. Several factors go into the process (they can vary depending on the VC firm), including, social media posts of the founders; the capitalization structure of the company and any prior investment agreements; competitor analysis; and confirmation that all employees and consultants have signed appropriate Confidentiality and Invention Assignment Agreements.
  • The firm will also review financial statements; financial projections and reasonableness of underlying assumptions; corporate charter, bylaws, minutes, and other corporate records; review of material contracts; any "related party" transactions (transactions with officers, shareholders, or directors or their affiliates); any litigation or claims; key intellectual property; litigation, bankruptcy, or governmental proceedings involving any of the founders; and any harassment, misconduct, or discrimination claims involving any of the founders.
  • Once due diligence has been completed, VCs will pledge an investment capital in exchange for equity in the company. The funds are typically provided in rounds, and the VC then holds an active role in the funded company, guiding and observing its progress before releasing additional funds.

Requirements

  • In order to mitigate possible risks, VC firms these days are more likely to invest after the pre-seed and seed fundraising is complete.
  • The requirements vary from firm to firm; however, most VC firms expect to see a proprietary intellectual property, a large market size, an experienced management team, and a valuation that enables a good return on the investment made.
  • VCs usually expect market size analysis to be a part of a comprehensive business plan. It should be presented from the "top down" and from the "bottom up," meaning, providing third-party market estimates and feedback from potential customers, including their willingness to buy and pay for the product. For VCs, a significant addressable market opportunity typically means $1 billion or more in revenues.
  • VC firms will usually invest in three possible ways: a convertible promissory note, SAFE, or convertible preferred stock investment. A convertible promissory note has a maturity rate (often 12 months) and bears interest (usually 4% to 8%). If this is the preferred method, the company does not need to go through valuation. The investor often keeps the right to convert their notes into the stock issued in the next round of finance at a discount price (commonly 20%). This form is common in seed rounds.
  • Simple Agreement for Future Equity (SAFE) bears no interest and has no maturity. The investor makes a cash investment that converts into stock in the next round of financing. VCs are less prone to invest in SAFEs.
  • A convertible preferred stock gives investors a preference over ordinary shareholders on the sale of the company, and it also has the potential of being converted to common stock. Series A rounds are usually done in this form.

Investors

  • For hardware startups, there are small funds that work exclusively with hardware companies, such as Bolt. It invests up to $1 million with an average pre-seed check between $200,000 and $500,000. It is usually the company's first institutional investor and often leads a funding round. The company tends to focus on early-stage investments, but occasionally participate in Series A rounds, albeit it does not lead later-stage investments.
  • Bolt is open to a wide variety of markets and stages, and "particularly interested in technically-leaning teams and business models with recurring revenue potential." The startup must be based in North America., preferentially in Boston, the Bay Area, New York City, Los Angeles, or Montreal.
  • Kleiner Perkins is a large investment firm that also invests in hardware technology. Wen Hsieh is the General Partner leading the HardTech team, which invested in companies such as DJI, Desktop Metal, Relayr, Dust Identity, among others. He favors hardware companies that produce "hardcore science/engineering," hardware in addition to software, and products that are hard to do and hard to copy.
  • Other VC firms investing in HardTech include TechStars, Defy.Vc, Shasta Ventures, Comcast Ventures, NEA, Khosla Ventures, Lemnos Labs, Grits Labs, General Catalyst, Greylock, DCM, Lux Capital, among others.

Strategic Investors

  • Hardware companies are more likely to have a strategic corporate investor than other industries. These investors, also known as corporate venture capital (CVC), primarily seek strategic benefits rather than financial returns.
  • Companies like IBM and Microsoft have implemented subsidiary investment groups to manage their own startup investments. "Corporate venture capital (CVC) groups regularly invest in new technologies that are compatible with or disruptive to their existing operations."
  • The ultimate goal of a strategic investment is to improve internal processes and efficiency, secure a competitive advantage, or differentiate a product by gaining access to key technology or product. Strategic investors are usually advised for those seeking a relationship with a meaningful player in the industry.
  • Strategic investors tend not to invest at the seed stage and usually pursue later rounds. CVCs are now a critical part of the startup ecosystem, as they accounted for 52.7% of the total VC deal value in the U.S. in 2018.

Requirements

  • Unlike venture capitalists, strategic investors expect more than just financial returns. For that reason, they are usually more flexible and less aggressive on the valuation of the company and willing to take a smaller equity position for the same amount of money.
  • However, they are more likely to pursue other requirements, such as a license arrangement, a marketing or distribution arrangement, exclusivity arrangements, a collaborative development agreement, or the option to buy the company.
  • Michael Schwerdtfeger and Danny Piper, principals at NewCap Partners, claim that corporate investors often “lament over the number of opportunities they see with unique technology being marketed by a team of PhDs without a sound business plan or strategy.
  • Corporate investors are more likely to invest in mature incremental technologies than venture capitalists. However, they also seek intellectual property, competition potential, and scaling technology.
  • The funding process usually takes more time than with VC firms, as it requires internal approval and moves through the in-house legal department. Startups should be careful when negotiating the terms of the investment, as these investors tend to have greater leverage than most.
  • One common term CVCs seek is the "Rights of First Refusal." This term requires the founder to offer the shares to the company, and then to the investors before they can be sold. Rights of First Refusal can be damaging to the startup, as it can interfere with future bids.
  • Corporate investors don't have a timeline and can follow the startup in the long run, which also means that the strategy of the fund belongs to the corporation and can change according to its interests.

Examples

Part
03
of three
Part
03

Recruiting Top Talent for High-tech Hardware Start-ups

    Two ways that high-tech hardware start-ups recruit top talent in the US are by using professional events via virtual platforms and specialized recruitment agencies. Professional events via virtual platforms allow companies to meet top talents as potential candidates while specialized recruitment agencies offer exclusive services, which offer more depth in the recruitment process.

    Professional events via virtual platforms

    • High-tech hardware start-ups in the U.S. may recruit top talent for their companies by leveraging virtual professional events to advertise and engage their potential candidates using platforms such as Meetup. This platform facilitates meetings for people globally but is located in New York.
    • One such event is the “Start-up Founders, Cofounders, Entrepreneurs and Engineers”, which takes place every 4th Tuesday online. It consists of seminars as well as business panels designed to match start-up companies with potential cofounders or highly skilled employees, which might attract top talents who are looking to obtain a high position within a start-up.
    • High tech hardware start-ups may choose to create a group of its own or join an existing group, where potential candidates are also encouraged to join groups on the platform.
    • Information about the positions are made available and highlighted in the group’s description and potential candidates are invited to email their résumé even if a close match is not listed in the description. This is because there might be other job opportunities for potential candidates elsewhere.
    • However, to ensure the successful recruitment of top talent, the experts/hosts on the platform allow companies to meet potential candidates who are matched according to their experiences, expertise, industries, technologies and the needs of the start-up company.
    • These events are also advertised on sites such as Evensi.

    Specialized recruitment agencies

    • The services of specialized recruitment agencies may also be used, for example, High-Tech Professionals Recruiting and Staffing Services. This company also has “a large network of recruiters to source for talent”.
    • High-Tech Professionals is considered as a top agency and is used by companies known to hire or that are likely to hire top talents such as Amazon, Oracle, HP, Black & Decker, and CH Products.
    • With their exclusive service, clients can expect to get “the best selection of skilled candidates”. The process entails submitting a request/ job order to the company and indicating the type of services required of the potential candidate (e.g. temporary or permanent).
    • The high-tech hardware start-up might opt for exclusive services where only one recruiter is tasked with the job of finding the top talent. In this case, they might be able ensure the successful recruitment of top talent because they’d have the full commitment of the agency, gain access to thorough screening, which lightens the workload of the hiring manager, recruit from competitors easily and privately and have fewer concerns for losing the same candidates to other companies.

    Research strategy

    We identified two ways that high-tech hardware start-ups recruit top talent in the US, by looking for recruitment strategies and agencies/platforms specifically for high-tech hardware start-ups. High-Tech Pro was included because its target audience includes high-tech hardware start-ups, and Meetup was included because their target audience is top talents and experts who are ideal for high positions to form the executive team of the company, across various industries.
Sources
Sources

From Part 01
From Part 02