Existing Markets and New Markets for Startups

Some startups operate in existing markets where they take customers from a legacy vendor and migrate them to a new solution. Some startups operate in new markets where customers don’t have a vendor (they’re unvended) and the solution is the first one they’ve used. It’s important to be cognizant of the differences when building a startup.

Here are some ideas to keep in mind when thinking through existing markets vs new markets:

  • Unseating an existing vendor is going to be more difficult and require a longer sales cycle than new markets
  • Startups in new markets are often dependent on how fast the new market grows whereas existing markets have a more predictable market size
  • New markets require more of a missionary sales process where the prospect has to be educated why they need it at all vs an existing market where the conversation is more on why one thing is different and better than something else
  • New markets benefit more from agressive sales and marketing as those efforts help grow the market whereas existing markets still need sales and marketing but it’s more about positioning and differentiation

Existing markets and new markets each present their own challenges and opportunities. Startups need to recognize their type and play to their strengths.

What else? What are your thoughts on existing markets and new markets for startups?

2 thoughts on “Existing Markets and New Markets for Startups

  1. Would you classify marketing automation as new/growing market or an established market? If its a new market, would taking institutional investment and growing faster make sense or waiting the till market matures and then going full throttle would be a sensible approach?

  2. Startups in new markets take longer to generate revenue vs. existing markets. Startups in new markets typically have larger opportunities because they will be the #1 or #2 company in the category, if successful. New markets typically require VC $$$

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