Investor Relationship Marketing for Start-ups

Diploma Thesis from the year 2001 in the subject Business economics - Offline Marketing and Online Marketing, grade: 2,1 (B), Leipzig University of Applied Sciences (Marketing Management), language: English, abstract: The declining stock markets in 2000 and 2001 have made it more difficult for entrepreneurs to obtain the financing for new ventures and have had an impact on existing relationships between young companies and their investors. Investor relationship marketing addressing the specific and varying requirements of investors is crucial as professional investors in particular apply stringent criteria for investments and as it is becoming increasingly difficult for start-ups to raise funds . Entrepreneurs face significant difficulties when acquiring capital for a start-up . Having at their disposal a variety of potential sources founders sometimes fail to chose the optimal alternative. This can impose considerable limitations on growth and development potential, increase the susceptibility to crises and threaten the very existence of the company . Professional management of relationships to potential and actual investors ought to be one of the main focuses of entrepreneurs¿ attention as inappropriate financing has been identified as the most frequent reason for the failure of new ventures . Entrepreneurial activities considerably influence the growth of an economy and have a positive effect on prosperity . In the Federal Republic of Germany (FRG) small and medium-sized enterprises (SME), which most new ventures are , account for more than half of the gross value added of all businesses and for over two thirds of all jobs . SMEs are not only essential for labour markets. Because they can react faster and more flexibly to changing market situations they contribute to an economy¿s ability to compete internationally. Since only a limited number of them survives ¿ in Germany approximately 50% of new companies fail within the first five years ¿ an economy must dispose of a sufficiently large base of young and growing ventures . A systematic investor relationship marketing for these ventures is essential for their survival and prosperity, because they help them to acquire the capital for sustaining loss-incurring periods and consolidating their operations. Investor relationship marketing for start-ups is particularly important because the investment can be a prerequisite for the establishment of the venture and ultimately a determinant for an economy¿s base of new ventures.