5 learnings from startups facing challenging times
Many times in enterprise software, products need to be partnered with support to provide a complete solution.
In June 2022, SpaceAG was selected as the Best Early Stage AgTech startup in the world. Three months earlier we had been accepted by SVG THRIVE, the most active agtech accelerator in Silicon Valley as one of the 10 startups participating in its 2022 cohort. We won the program and an additional investment by SVG THRIVE.
Winning THRIVE and positioning ourselves as leaders in digital agriculture of the Latin American region is a result of many years developing technology to optimize agriculture operations. However, much of what consolidated SpaceAG as one of the most promising agtech startups is how we faced and responded to a very challenging 2022.
In this blog post, we want to share some of these strategies and learnings.
Optimize your revenue model
The first move we made was to review our pricing and revenue model. We restructured our product in 5 different modules to attend to specific needs of different types of users. Instead of offering our software as an open and adaptable solution to digitize any type of farm process, we grouped features and use cases in specific categories such as pest & disease control, farm labor management, phenology monitoring and irrigation. This allowed us to increase our pricing and shorten our sales cycle. We backed the pricing of each module with a ROI analysis, explaining the economic benefits and impact of our solutions in our customers P&Ls.
We also developed a well structured onboarding process and started to charge fees for these projects and implementations. Set up fees and higher prices could seem counterintuitive to exponential growth. However, if you provide tangible value to your customers they will help you grow with upselling and referrals. Our new revenue model worked out. We have doubled our revenue from software in the last 12 months.
Be proactive about customer success
Many times in enterprise software, products need to be partnered with support to provide a complete solution. There are many features and settings, so users need instructions and assistance to make the most of some products. In these cases, customer support should be a key component of the product strategy. It is part of the user experience. Providing the right level of support and assistance, and developing processes to replicate and scale this support could make you stand out from the competition.
We have developed a proactive approach to customer success, engaging with all our customers on a weekly basis, sharing dashboards to monitor ongoing requirements, measuring key users’ satisfaction levels and driving new use case implementations.
Focus on performance and goals
Something that has worked really well for us to keep our focus in uncertain times is to relentlessly focus on our metrics. This could sound very obvious. However, creating a metric driven business with processes, systems and incentives supporting those metrics is not an easy task. Early this year most of our focus was on MRR, our primary metric. But besides MRR, we wanted to increase our ticket per customer and eliminate churn.
We started to measure secondary KPIs such as the number of upselling quotes per week and the percentage of use cases implementations over total use cases. Secondary metrics are really important because they help you understand if the growth of your primary metric is healthy and sustainable. To create discipline around our new metrics, we linked them to goals in our performance reviews and compensation plans.
Find the right partners
In traditional industries like agriculture, digital channels such as social media or emailing sometimes are not the best option. Farmers are used to face to face meetings with sellers and suppliers. This could be a challenge for startups with limited resources that cannot invest in building large sales teams to visit customers. In this case, finding the right channel partners is critical.
Well established companies with positioned brands and strong distribution networks can really accelerate a startup go-to-market efforts. Since we launched our first product in 2019, we have been actively searching for these channel partners. Same as with investors, these companies need to see the evolution of a startup to make the final decision. After 3 years talking with potential channels, last quarter we signed partnership deals with two of the largest agricultural companies in the world: Netafim and Corteva.
We are now working together to reach their wider audience with specific use cases that provide value added to their product offerings.
Keep building your capacity to learn and execute
This year tested our capacity to learn fast and to build on those learnings. Twelve months ago we realized 2022 was going to be a tough year for the world's economy, for farmers and investors. We have a great team and a culture focused on execution. We relaunched our product in modules and redefined our customer success. We closed channel deals with two of the largest agricultural companies in the world and are closing a seed round with SVG Thrive to accelerate our growth.
We know there are many challenges ahead but we believe that companies that can execute and learn fast have a great advantage. This requires structure and discipline, processes and rituals to capture and share those learnings, and to quickly iterate different actions. In difficult times, fast learning and execution could be the most important ingredient to turn a challenging situation into an opportunity.