Solving the Chicken-and-Egg of Enterprise Sales

Part 3 of the Coral Guide to Go-To-Market Execution for Climate Startups

Billboards

Have you heard a podcast in which the smug host asks a guest “if you could create a billboard with a word or sentence that would be seen by millions of people, what would it say?” While we find most of the people doing the asking to be braggadocious nitwits, it’s a good question, and especially interesting to write down an answer every year and map how your thinking chances over time. 

If Coral was going to write such a billboard for the climate tech community in 2024, we would say this; “Funding is currently a mirage. Stop chasing it and get people to pay you.” Long billboard, we know. 

Today, in part 3 of our guide to go-to-market execution, let’s look at what we’re calling the chicken-and-egg problem of GTM. Namely, how do you get people to pay you to fund development of a science-heavy product that won’t be ready for a period best measured in years, rather than months?

One last note from the sponsors we don’t have. Here’s Part 1 of the series, on top-of-the-funnel pipeline development, and Part 2 on the best hack we know to keep your internal teams aligned and working on the right things. Operators, please forward to your colleagues! Allocators, send them to your portfolio founders! We’d love feedback, questions, and to hear your success stories. 

Farmers

For those wondering “are they about to torture this whole chicken and egg metaphor to death in service of a long-winded point?” I mean, of course we are. There is, however, a bit of method to this madness. We see a common problem with climate founders; They think the only things needed to build an iconic company are to find ways to produce a product (chicken), and wait for it to produce eggs (money), without ever understanding how the farms actually work. This is where companies die. 

We’ve written about this problem extensively. Deep-tech climate companies take a while to produce at scale, standing up manufacturing is expensive, and customers who pay money generally want their stuff sooner rather than later. “If you build it, they will come” is a pleasant fantasy. 

What to do? It helps here to understand how enterprise buyers (our farms) actually buy. There are generally a few paths available to vendors seeking to work with these customers. . 

The core buyer. In part 1 of this series, we went through the concept of an Ideal Customer Profile, or ICP. Go read the piece for more depth, but in short this is the corporate customer which the climate startup is targeting via sales efforts. As part of this outline, you’ll likely come up with a title or set of titles for the ultimate executive buyer whom you’re trying to reach. For example, a next-gen industrial material company replacing copper wire and selling into the electronics manufacturing industry might ultimately be targeting a VP of Hardware Development, or similar title. Most startups try to sell directly to their executive buyer. This is deeply logical and a generally terrible idea. 

Functional-area executives at medium to large companies are measured on their ability to improve 1-4 key metrics for the business per budget cycle, as measured via a productivity system such as OKRs or KPIs. Want to understand what your buyer cares about? Get to their quarterly financial reports for public companies, or the interviews with themselves or their boss, if not public. Read carefully and study their projects, initiatives, and where they’re spending money. 

Here’s the question that you need to ask; Am I, as the founder of a climate startup, in the position to help my executive buyer hit one of their top 1-3 goals for the cycle, with minimal risk and full confidence of delivery? If you’re still trying to fully capitalize your company and stand up manufacturing….. Sorry, but no. The answer is no. You are not ready to sell full-scale commercial contracts to these buyers. Their job is to mitigate risk, not necessarily to drive innovation. Incentives run the world. 

Now, we fully endorse talking to these folks anyways. Get in front of them, send product samples, build relationships, get permission for product updates every few months, buy lunch if you’re in the neighborhood. Just… don’t ask them for money yet. Don’t worry, hope is not lost. 

The innovation arm. BigCos almost universally have an innovation or product testing wing. You’ll see them called labs, special projects, development, emerging products, and many more vaguely threatening acronyms. Start here. These groups are massively less risk-sensitive, buy from startups constantly, and are more open to creativity in contract structures. Pick the 10 largest companies in your space and get to google. 

Even here, there are nuances and pitfalls. The danger of selling to innovation groups is that contracts are often seen by the company as pilots, and not indicative of a larger commitment or process. If you connect with or are introduced to an innovation manager, ask them this; “What was the most recent product with a comparable contract size to ours that you guided into a full production deal with the corporate parent?” If there is no answer, continue your internal networking with the buyer. You’ll need more, and likely more senior, help. 

Long games. Every team leader at a BigCo has a discretionary budget, which they can deploy to solve a few key problems and unstick their teams annually. The dollar amounts vary immensely. We’ve dealt with middle managers at large restaurant conglomerates with discretionary spend of over $50m annually, and VPs at much larger companies who need approval for $50k. It’s very difficult to map this from the outside looking in, so get on the phone with as many folks as possible and ask, respectfully but with great detail. 

Here’s the corollary question; Is your GTM aiming exclusively for massive deals? If it’s early and you’re still working on crossing the commercialization chasm… maybe downshift. Look for lightweight, lower-cost potential SKUs that could be sold to the middle-management tier at customer companies, and supported through POC-scale production resources. 

Is this the ultimate path to IPO? No, but that’s not our current game. We’re playing to get companies to inevitability, remove risk, make cashflow abundant, then go conquer the world. Act accordingly. 

Chicken and Eggs

So, tactically, what should early stage climate companies take from this piece? We don’t have all the answers, and don’t know your market as well as you do. Take it with as much salt as you like. However, here’s what we’re advising our clients and friends. 

• Spend most of your GTM resources seeking relatively quick, manageable wins at your ideal customer companies. This will probably be 2-3 levels below, and 2-3 orders of magnitude smaller, than your original models for sales and growth. It will feel like a grind. Keep going. 

• Enterprise budgets are slowly growing, and this should get easier by late 2025 or early 2026. Until then, assume every deal is a grind. Manage cash accordingly. 

• Let GTM have significant input to the product roadmap for the next 24 months, with the lens of winning more of the aforementioned transactions. Sit in these meetings and ask many questions. Shitty sales teams use product gaps as an excuse for lost deals, great sales teams push on the org in the most productive ways possible. It can be difficult to tell the difference. 

• Look for sources of non-dilutive capital.  Bank revolvers, government grants, etc. Don’t spend it. This is the rainy-day fund for when you really, truly, need to juice production in order to service your first full-scale client. Wait as long as you need. 

• Focus your sales conversations on mitigation of risk, and deprioritize rosy statements about future value. This is where buyers are focusing. 

We hope this helps and wish you great success. As always, team Coral is here to support you in any way we can. 

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