The new capital comes with new responsibilities, and one of the responsibilities is the allocation of new funds. On one hand, you are excited to add new features to your product, and on the other, you want more people to know about your startup. And though, product development is a priority, marketing becomes another priority, very quickly.

Seed stage marketing is very different from any other stage. At this point, you are likely looking for rapid growth, but you want to be very efficient.

This seed stage marketing guide is designed to help you understand:

• Your seed stage priorities
• Why marketing at the seed stage crucial
• How to hire a marketing team
• Budgeting for early-stage marketing
• and more…

Your Seed Stage Priorities

As soon as you raise seed funding, the clock starts ticking. At least, it feels that way. Investors are now looking over your shoulder to prove your concept, bring in new customers, and establish a foundation for future growth. But what do you prioritize?

Product Development

Seed funding is an important first step towards improving your product. You are looking to bring in additional resources, add new features, and make advancements towards user experience. Post-seed you are not only trying to ensure your product is viable but it also resonates with your target audience. Based on initial user feedback, most likely, product development and refining your MVP is a top priority. Based on research by CB Insights, 38% of startups fail — because they quickly run out of capital due to poor product-market fit.

One of the most common mistakes startups make post-seed is premature product scaling. Often teams end up building too many features that their audience does not need or ignore customer feedback. Keeping both into account will help your product scale efficiently and without draining your funding.

Customer Acquisition

Now that you have your seed funding, how do you build on that to generate and retain new customers? This is crucial. At this stage, it is all about gaining momentum. It is important to validate your market and this often hinges on marketing — or more specifically, seed stage marketing. Acquiring customers early does two things mainly:

1. Proves that your product is valuable and you have an audience for it
2. Open avenues to generate valuable feedback about your product

With initial traction, you can further your investor’s trust and belief in your product. Startups that achieve high customer acquisition rates early on are 3.3 times more likely to see a significant scale.

Why Marketing is Crucial at the Seed Stage

Many startups fail, yes, many! 21.5% of startups fail in the first year, and 30% in the second year. By year 3, most of the startups you know today won’t exist. A major reason for this failure is an MVP — product! But another top reason why startups fail is neglecting marketing. Marketing helps you take your startup to users, gain feedback, improve, and consistently iterate. But marketing also helps build the trust your potential customers need in a new company.

Marketing is usually misunderstood at early stages. A lot of startup founders might think it will cost them half of their seed funding. And if you do a bad job at it, it likely will. Early-stage marketing isn’t about investing every dollar allocated to marketing, it is about finding cost-effective ways to reach your audience. This could be done through content marketing, SEO, or posting on LinkedIn as a founder regularly.

Now, brand isn’t something you build overnight. It takes time and might not even happen until Series A or B. But like seed funding itself, you begin to plant the brand seeds. This is where identity plays a major role. It’s not usual to have multiple companies or startups trying to do the same thing — but they want to do it differently. Your brand identity establishes what makes you different from your competitors and why must customers choose you.

And no, your brand is not your logo or the colors you use. Every startup has core values, these values drive your company, and culture and influence all your decisions, including your brand. Your brand identity also comes from knowing your audience and this groundwork is crucial.

Moreover, marketing will help you drive new customers which is essential for investors to see to remain confident in your product.

“G2 is a major player in the industry today when it comes to buying software. Working with a seed stage LMS startup, I knew it was important for brand awareness and customer acquisition. I built an email marketing campaign — enrolling customers based on their in-app feedback. The company increased its G2 reviews from 13 to 414 within 24 months. This helped reassure investors about the market-fit and see high-ARR customers come through too. It influenced the Series A round the company raised the following year.” – Founder, DVC

Budgeting for Seed Stage Marketing

If we’re being honest, seed stage funding will mostly go into product development and improvement. That’s one of the things that never stops. But for all your seed funding to go into your product is a costly mistake that can prevent you from raising other rounds. Typically, startups raise $1m – $5m during their seed stage and though it’s not up to their full potential, this is more like proof your idea money. 

From here on, you are looking to prove your product, market fit, and ability to lead your team to greatness. Building a strong, efficient, and scalable marketing strategy helps a lot. But with limited resources and funds, how do you allocate your spending?

A general rule of thumb for investing in marketing at the seed stage is 10-20%. For context, if you have raised $1 million then you are going to invest $100,000 in marketing. Speaking from experience, and based on your stage, this is a healthy budget to cover both, customer acquisition and brand-building efforts.

Though 10% is a significant budget to get things off the ground, startups can potentially drain this money very quickly. This happens when you go into seed stage marketing without a strategy, testing, or expertise. This helps any startup quickly find high-impact channels. Whether it is content marketing, search optimization, paid acquisition, or founder-led marketing — your goal is to find what’s working and iterate. Simultaneously, investing in analytics to understand your audience and how your channels are performing is worth it.

Hiring for Early Stage Marketing

Even if you are not looking to hire 20 people (well, at the seed stage you can’t), you are looking to bring in at least a few experts. Now, you can either bring them in full-time, on contract or find an agency to do what is required. And this is one of the most significant decisions to make – do you hire an in-house marketing team or hire a marketing agency?

We are not going to debate which is better because both in-house and agency can be very effective but it depends on how you approach it. Seed stage startups are often careful with spending their funding. Working with an agency, you can access the experience and expertise that you currently don’t have. You can have an agency work on multiple growth marketing channels while your in-house marketing team member will quickly become overwhelmed. 76% of companies that hired a marketing agency saw an increase in leads within the first six months, demonstrating the potential impact of specialized expertise on early-stage growth. Marketing agencies are less risky and more cost-effective especially because you do not have any overhead charges.

But if you think that is our bias, we also know that in-house marketing teams can pick on the product quickly and their product knowledge can be unmatched.

Examples of Successful Seed Stage Marketing

Many companies that we know and even love today, all started marketing early on. Their seed stage marketing strategies set the stage for becoming a household name later on. Here are a few examples:

Dropbox

When Dropbox launched, it wasn’t a completely new idea but marketing it brought it to many people who thought it was. Dropbox famously used a referral program that drove exponential growth at the seed stage. The company offered extra space to whoever referred their friends and created a viral loop. Want more storage? Refer a user! This increased Dropbox’s sign-ups by 60% and within 15 months Dropbox grew from 100,000 users to 4 million.

Dollar Shave Club

Before Dollar Shave Club, the razor industry was just revolving around Gillette. But Dollar Shave Club broke that. Dollar Shave Club released a video that went viral and captured the brand’s personality perfectly. The video received 12,000 orders within the first 48 hours and eventually led the company to be acquired by Unilever for $1 billion.

Conclusion

Seed stage marketing is not just about getting your name out there. It is about laying the foundation for sustainable growth. Not all your seed funding will go into marketing and IT SHOULDN’T. But ignoring marketing early on can also be crippling. In most cases, marketing is neglected by seed stage startups because they are unsure of where to start, and how to effectively optimize and scale. But now that you know it is important, it is time for you to get started on it.

DVC is a growth marketing agency helping startups establish a concrete foundation and tailored marketing strategies. We help you capitalize on marketing channels that are tested and are working for you. Book a strategy call today and learn more.