Attracting investment is one of the key success factors for a business. But how can companies convince investors that their project deserves attention and financial support? One of the most important tools is branding. It's not just a pretty package but a powerful mechanism that helps a company stand out in the market, build trust, and demonstrate its uniqueness. For example, the fashion house "HERMES," famous for its "Birkin" and "Kelly" bags, is a great example of brand originality. Among other things, the company’s brand is built on more than a century of history, which is reflected in its logo—a horse-drawn carriage.
Logo Hermès International What is branding and why is it important for investors
Branding is not just a logo or a beautiful website. It's a strategic tool that defines how a company is perceived in the market. IKEA is a well-recognized brand in Europe and around the world. Its concept is based on a "do-it-yourself" principle, providing customers with functionality and savings. Their catalog has become an important element of the brand, being one of the most printed documents in the world. If we need a simple and practical solution, we know where to go. Branding plays this role of a “road sign.”
IKEA. Outdoor living. Buying guide 2024 IKEA. Outdoor living. Buying guide 2024
For investors, branding is crucial because it demonstrates how well a company understands its customers, product, and market. At the core of any brand lies consumer trust.
Investor trust is based on consumer trust in the brand
Consumer trust directly influences a company's financial results. If a brand has a high level of loyalty and positive reviews, it usually means stable demand for products or services, which in turn can lead to increased sales and profits. Additionally, brands that inspire trust can reduce marketing and customer acquisition costs. Loyal customers often recommend the brand to their friends, reducing the need for expensive advertising campaigns—a key signal for investors.
Most often, consumer trust is based on the emotional connection they have developed from interacting with the product, whereas investor trust is not always limited to that. Quantitative metrics like Brand Awareness, Net Promoter Score (NPS), and Return on Brand Investment (ROBI) reflect consumers' trust and loyalty towards the brand. These are consumer loyalty metrics, but in the language of investors.
For example, Keller's model helps marketers understand how to build strong and sustainable brand associations, which is important for long-term loyalty.
Keller's model The model includes two key aspects: brand awareness and brand associations.
An emotional connection with a brand can be built through its story. It doesn't matter if the story is about the company’s mission or its latest award. What matters is telling these stories in a way that resonates with people.
Storytelling is the best way to tell about your brand
A strong brand story helps investors understand who is behind the company, its mission, and values. It’s not enough to just write about the mission and concept or how the company was founded. Every business solves numerous problems every day, and in doing so, it changes (its processes, products, and markets), just as consumers and societal trends change.
A good brand story creates an emotional connection that enhances trust. But investors are usually more interested in the company’s real challenges and its future. By telling how the company solves real problems, you demonstrate that your brand has meaning and purpose.
For example, GreenGourmet, in its early advertising campaigns, highlighted how their products are grown on family farms using organic methods and preserving biodiversity. In 2022, GreenGourmet attracted 8 million euros from eco-oriented investors interested in supporting a business with a clear story and sustainable approach. Investors noted that the brand’s story played a key role in their decision, as it demonstrated long-term commitment to values and sustainability.
We need to mention that even after successful advertising campaigns, many businesses experience losses, go up for sale, or close down after several years. Telling the company's story and decisions is crucial, but inconsistency in global positioning can deter investors.
Building long-term potential and consistency
By nature, investors are risk-averse. They seek startups that not only show immediate potential but also have a clear path to sustainable growth and profitability. Casper was one of the pioneers of the direct-to-consumer (D2C) model in the mattress industry. The company started with a simple idea—to create one universal mattress that would suit most people and sell it directly to consumers online. Consumers were offered a 100-day trial period with free returns, which was revolutionary for the industry. In the first month, sales reached $1 million. The story the founders communicated resonated well, but perhaps due to the lack of long-term vision and the inability to scale the business model based on high marketing costs, the company was eventually sold.
How investors look at a brand
Investors thoroughly examine various aspects of a startup’s brand before making an investment decision. We believe that many factors influence attracting investment, but we’ll highlight the fundamental ones.
Consumer trust and loyalty to the brand
If consumers don't trust you, investors won't either. Trust is built from a number of factors: product or service quality, honesty, reliability, customer service, innovation, reviews, and reputation—all these elements should be present in a healthy relationship with consumers.
Examples of well-known companies:
Apple has earned trust through consistently releasing high-quality products that meet users’ expectations. Everlane emphasizes "radical transparency," explaining how their products are made, where the materials come from, and why they set certain prices. Starbucks provides a standard level of quality and service worldwide. Amazon actively engages with customer reviews, helping potential buyers make informed decisions. Tesla attracts attention with its innovations in the automotive industry, strengthening trust from both consumers and investors. Brand quantitative metrics
Every brand needs a design that highlights its uniqueness. Logos and slogans "stick" in people’s minds, triggering associations and memories, encouraging buyers to promote their purchases to others. However, it's important not to forget that behind the packaging are real numbers that describe the company's position and capabilities more accurately. Above we have already mentioned quantitative metrics for measuring brand strength. This can include Market Share, Customer Acquisition Rate, Customer Retention Rate, Brand Equity, Organic Traffic, Customer Acquisition Cost, and other metrics. If a company can interpret this data correctly and present it in a clear format, it’s a significant step toward potential investors.
History and positioning
Clear brand positioning simplifies interactions with the company for customers and investors alike. Due to the vast diversity in various markets, many businesses pale in comparison to monopolies or companies that have been around for many years. Startups desperately need a clear concept and a deep understanding of their customers and the market. A brand story can be a powerful tool for demonstrating a company's positioning, even if it’s not explicitly stated.
During a trip to Argentina, Blake Mycoskie noticed that many children walked barefoot because they had no shoes. This inspired him to create a company to help solve this problem. For every pair of shoes sold, TOMS promised to donate a pair to children in need (this program was called "One for One").
This September 2010 photo shows Blake Mycoskie, founder of TOMS Shoes, in the Misiones provinces of Argentina, giving away the company's 1 millionth pair of donated shoes. Through this story, the TOMS brand demonstrates its positioning as a socially responsible company that not only sells shoes but also helps the community. The story of shoes helping children around the world reinforces the idea that buying TOMS products is a contribution to charity, even though it’s not directly stated. The brand positions itself as a partner in solving global problems.
Long-term potential and consistency
It’s important to note that a good brand, backed by identity, history, and loyal customers, can face serious challenges if it’s not consistent in its actions. Long-term potential and brand consistency are reflected in the brand’s ability to maintain its values and mission while adapting to market changes, all while retaining customer trust and loyalty. A brand with a consistent message creates a stable impression, which strengthens its reputation and attracts both consumers and investors in the long run. For decades, Nike has adhered to its philosophy of "Just Do It," consistently inspiring people to achieve more through sports. This consistency in positioning and focus on motivation has built long-term loyalty and recognition, ensuring stable growth for the brand.
Let's sum it up
Branding plays a key role in attracting investment because it helps a company stand out in the market, build trust, and demonstrate its uniqueness. Proper branding goes beyond just a logo or packaging; it involves strategically managing the company's perception and building an emotional connection with customers. Examples of successful brands like HERMES and IKEA show how a brand’s story and unique elements can attract investors by demonstrating the company’s values and potential.
For investors, it's not just emotional connections that matter, but quantitative metrics as well. A company’s history and consistency in its actions contribute to building long-term potential. Ultimately, consistency and long-term strategy play a crucial role in attracting both customers and investors.
