Mastering the Foundation: Go-To-Market Strategy for Startup Success

At seed stage, defining and executing a Go-To-Market strategy is the crucial foundation for a venture-backed business. Those who can nail the execution of go-to-market can go on to raise Series A and beyond, and companies who take longer to find the right go-to-market motion may find themselves out of cash. We’re sharing here some of our learnings from working with our Bread & Butter Ventures portfolio on how to create and execute a solid GTM strategy.

What is GTM?

A Go-to-Market (GTM) strategy, simply put, is a plan for how you will launch and grow. It is a clear blueprint for how to launch a product in the market, drive demand, and generate revenue. It is the tactical plan that accompanies your huge 10,000-foot vision. This plan will look a bit different depending on what sector you’re building in.

Consider your go-to-market within the context of your sector, thinking through the key stakeholders, flow of funds, and alignment of incentives. For example, in digital health, GTM approaches could include:

• Direct to consumer: Selling your health solution directly to individuals, often through digital marketing. The key here is that it’s challenging to keep customer acquisition cost (CAC) low over time, so lean into any key differentiation or proprietary channels you have here.
• Selling B2B into providers and health systems: Partnering with healthcare providers and institutions to integrate your solution into their services or for them to refer out to you. These are incredibly coveted and sticky channels with long sales cycles. The key here is to integrate within existing workflows to avoid low utilization/engagement rates.
• Fee-for-service reimbursement or value-based care contracts with health plans and payers: Providing care under models where insurers or healthcare payers reimburse for your services, either per service or on a bundled basis, where the goal is to link payments to the quality of care patients receive. The key here is that it’s still early days for value based care as a business model, so likely a mix of both FFS and VBC makes sense where you are constantly measuring ROI.
• Selling into self-insured employers: Targeting businesses that self-insure their employee healthcare plans and thus select a range of services they will offer to their employee population. The key here is that employers see such a high volume of inbound services to select from and are wary of “point solutions.” Be clear on what the differentiation and direct ROI/applicability to their employee base is.

Key Components of a full GTM strategy:

The big problem you’re trying to solve: Start by clearly defining the problem you’re addressing. Make it crystal clear why this problem matters and how it affects your target audience.

Your product and how it solves this problem: Once the problem is identified, outline how your product offers a solution. Explain its features and how they directly address the pain points your target customers face. Focus on measuring and quantifying ROI to the customer in as concrete terms as possible.

Your ideal customer persona: Who is your target customer? Who will pay for this, why is it a “must have” vs. a “nice to have,” and how will you reach them? Understand not only who they are but why they need your solution urgently. What is the tangible ROI I’m providing to those customers? Highlight the concrete benefits and return on investment your solution offers. Identify your immediate top 25 list of target customers and your longer dream list of 100.

The competitive landscape: Think about how you fit in, differentiate, and why you are the best solution. Analyze your competitors. Understand their strengths and weaknesses. Highlight what makes your product unique and why it’s the superior choice. We love platform plays that could be the aggregator of multiple solutions playing in this space, trying to expand the pie vs. reorganize it.

Pricing structure: Determining a pricing strategy that reflects the value your product provides while remaining competitive in your market is crucial. Strike a balance between pricing that captures the value of your product and ensures accessibility to your audience. Run early pilot experiments to test a range of price points and use this data to inform your decision making.

Customer Acquisition Cost (CAC): Calculate the CAC associated with the various channels in your GTM strategy. This metric helps you understand how much you’re spending to acquire each customer. We view CAC within the context of customer lifetime value (CLTV) to understand unit economics.

Distribution Channels: Determine the distribution channels that align with your GTM approach. These could include online sales, partnerships, resellers, direct sales teams, or a combination of these. Evaluate which channels will effectively reach your target audience.

Marketing and Messaging: Develop a cohesive marketing strategy and messaging that resonates with your target audience. Craft compelling value propositions and communicate them consistently across all marketing channels.

Timing and Seasonality: Consider any seasonality or timing factors that may impact your GTM approach. Certain markets or products may have peak seasons or specific purchasing windows within that year that affect when and how you launch.

Sales Team Structure: If your GTM approach involves a sales team, define the structure and roles within that team. Determine the size of the sales force, their responsibilities, and the training they’ll receive.

Feedback Loops: Establish mechanisms for gathering feedback from customers and the market. Feedback loops can help you adapt and refine your GTM approach based on real-world insights.

Key Performance Indicators (KPIs): Identify the KPIs that you’ll track to measure the success of your GTM approach. These may include conversion rates, customer acquisition metrics, revenue growth rate, gross margins, and more.

Budget and Resources: Allocate resources and budget against your GTM with a clear plan for how far your current capital will take you and when you need to raise again, and to achieve your next set of defined milestones.

Key questions to ask when building and evaluating your strategy:

• How large is that potential market? Understand the market size and growth potential for your chosen approach.
• What are my margins and payback period on this GTM route? Understand the financial aspects, including profit margins and how quickly you can recoup your costs.
• What is the length of the sales cycle, and what resources do I need to enable that? How long will it take to validate if this approach will work? Plan for the time it takes to see results and ensure you have the necessary resources in place.
• Does this product and plan have potential for escape velocity and exponential growth? Investors want to see not just growth but explosive growth potential. Explain how your GTM strategy can lead to exponential growth and what milestones you’ll reach to demonstrate this.
• Does your GTM approach aligns with your product’s stage of development and its readiness for the market?
• Will the approach allow you to reach a broader audience without significantly increasing costs or complexity?

The importance of GTM in a fundraising pitch:

When I look at pitch decks, I spend the most amount of time on the GTM slides. It’s your ability to articulate a crystal-clear vision backed by a concrete plan that helps set you apart from the sea of startups seeking funding. A stellar GTM strategy demonstrates leadership, vision, and a focused plan for execution. It paints a picture of a future where your startup achieves escape velocity and experiences exponential growth. And most importantly, it communicates that you have a game plan to get there.

Share your ideas and chat with us anytime at our Bread & Butter office hours!