Let Marketing Capital Drive Your Business Growth

Authored by Karun Arya, Chief Growth Officer, GetVantage

The ‘give-and-take’ rules of business financing are simple when it comes to dilutive and non-dilutive capital. However, when a founder incurs expenses like Meta/Google Ads, where significant funds are poured back into the system to keep the ads running, surrendering equity for financing marketing expenses may not look like an attractive option. 

While it’s true that founders need to invest in marketing, sales, hiring, and other growth-related areas, diluting equity and ownership is not necessarily the best option. In such cases, non-dilutive equity funding lets the founder retain control and ownership while accessing the working capital required to invest in growth. 

Equity funding can be a godsend in the early days and or once a business is more mature and looking at long-term risk. Short-term working capital is typically used to bridge certain seasonal periods or a cash-crunch due to delayed cash flows and often to double-down on marketing, inventory, and other areas of growth. This growth capital can be a boon for any business and when leveraged correctly can have a significant impact on business outcomes. 

Non-dilutive funding bridges smaller funding rounds and larger equity fundraising, helping the business stay afloat and maintain a position of strength. Such bridge rounds of non-dilutive capital are mostly used to create the much-required noise around the business to tap bigger and better investors in the upcoming equity fundraise, gaining crucial traction before potentially diluting ownership. 

It is estimated that 40-60% of every venture capital dollar raised by startups around the world goes straight to Google and Meta for digital marketing. For every founder, this is effectively the most expensive form of capital (that you’ve given up a percentage of your company for) that’s going straight to someone else. When working capital is allocated towards marketing, we call it Marketing Capital. Accessing this strategically to boost sales, increase revenues, drive customer engagement, is something we’ve seen hundreds of small business owners do multiple times a year, and year after year. 

New-age companies are also looking to find every advantage over their peers as every sector is seeing an increase in competition. These companies also aim to invest in areas like consumer and market research and customization of products and services, inventory planning, and operational efficiencies. A Hanover study suggests that 85% of companies receive 4x returns on market research investments. This improves profit margins, meets consumer demands, improves CAC, and boosts revenue. Leveraging working capital towards areas like marketing research can be time-intensive and not result in short-term gains. However, once your strategy is recalibrated based on distinct insights and data, the results are often more impactful and drive long-term value creation. 

Most importantly, marketing capital directly impacts a business's bottom line. A 2020 brand marketing effectiveness study by Deloitte reports that 64% of marketers planned to increase their upper-funnel marketing spend over 18 months for better brand awareness. Additionally, brands spend more during economic downturns to keep themselves afloat, proving the direct impact of marketing on business revenue. Such consistent branding efforts can increase revenue by 23%, as these companies are generally perceived as more trustworthy and reliable. This can lead to a higher customer LTV, with customers being more likely to return and spend more. According to Salesforce, 83% of marketing leaders use social publishing and advertising as a customer and prospect communication channel, justifying spending in this domain.

In India particularly, Tier 1 businesses must expand beyond the metro consumers into newer markets. The Bharat of Tier 2 & 3 cities and beyond is aspirational, hungry to buy and evolve their tastes and purchasing patterns. Reaching and convincing them requires newer marketing strategies, like campaigns in regional languages on smaller platforms, contextualized messaging highlighting product benefits, and endorsement by celebrities and influencers. While the operations teams work towards better service delivery, this segment needs innovative content delivery, too. This new strategy, content creation, and distribution require specialized teams and hence more capital. It is clear that if you are building for billions, you must plan to market to billions as well. 

Marketing capital from non-dilutive funding can come through grants, low-interest loans, merchant cash advances, invoice factoring, revenue-based financing, cash flow-based financing, and more, helping you avoid surrendering equity for marketing spend. 

Clearly, exchange-based equity financing no longer has to be the only option for business owners. As businesses aim to expand and thrive, non-dilutive funding provides a crucial safety net, enabling sustained growth and market penetration. GetVantage as a fintech platform has helped thousands of small business owners access marketing capital to supercharge growth. 

It's now time for founders to embrace this financing approach, unlock new opportunities in emerging markets, and remain competitive without compromising their vision and ownership. Marketing capital is, and will continue to be, the catalyst for growth, ensuring both immediate returns and long-term success.

 DISCLAIMER: The views expressed are solely of the author and Adgully.com does not necessarily subscribe to it.

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