This may seem like it should be obvious to people who operate startup businesses, but brand names are important. This is especially true for startups that are seeking outside funding to grow their business. Not only does this seem intuitive, but there is a study that shows the importance of choosing a brand name.
Check out this tweet from Evergreen, a domain brokerage and consulting firm:
The name of a startup can have a huge influence on how much funding it gets (via @BIAUS) https://t.co/Ap2R01XJc1 #fact
— Evergreen (@evergreendotcom) July 20, 2017
The tweet links to a Business Insider Australia article that cites an industry study with insight about how brand names can impact the funding a startup receives at different stages. From the Business Insider article:
“Names are are easily pronounced, such as Uber and Lyft, are preferred by both early and late stage investors. They tend to be offered more money, whether its through crowd funders, angel investors, VCs or IPO investors.
Uniqueness is also virtue, but only with early-stage investors. The study found that since very little is known about a company in the early stages, unique names give the impression there is something special about the company.”
Evergreen and others in the domain consulting space could probably share more insight than I can, but when it comes to naming, I believe domain name availability is something that is very important to startups. A startup most likely doesn’t want to have a difficult to spell or super-long domain name, and they most likely want something that is easy to remember. These domain names can be invaluable to a company looking to grow – and seeking funding.
The next time a startup inquires about one of my domain name and balks at the price, I will probably share this article with them. Like a prime piece of real estate, a great domain name is expensive. Not having an intuitive domain name that resonates (with customers – or VCs / PE companies) could be even more costly.
Short, Pronounceable, Unique, Creative, Memorable, Simple – is usually a pretty good formula for branding.
Here we go with the “short, short, short” myth and dogma all over again. And both Uber and Lyft fail the “radio test” miserably.
“There is just not much of a benefit to having a unique name in later stages, according to the study.”
It is all about creating a word/Name.. Your unique identity that is easy to trademark and looks creative and smart, like Lyft and Uber.