Mentors, Markets, and Money: How Entrepreneurs Can Leverage Feedback Loops with Stakeholders to Articulate Value Propositions

28.1 Introduction

An Austin, TX-based cleaning company (“Company A”) began services in 2003 with a mission to provide “The quality cleaning you want. The lifestyle you deserve.” However, after 13 years of operation, their business had stagnated due to competition. To learn how to differentiate themselves from this competition, in 2016 Company A enrolled in the IC2 Institute at The University of Texas at Austin’s FAST Forward program offered in collaboration with the City of Austin. As a key part of this program, business owners communicate with their customers to learn why the customer might choose them, purchase from them, and return to them again and again.

At the program onset, Company A hypothesized that personal trust was the key driver for customer selection of a cleaning company. Personal trust in their definition was that customers wanted to know that their valuables were safe during a cleaning. After engaging current and prospective customers, Company A learned that personal trust was indeed important to their customers—but they were surprised by how the customers defined “trust.” Yes, customers wanted reputable cleaners to work in their homes, but they were not highly concerned about theft or breakage. The lack of true incentives and existing legal system significantly reduced this particular risk. Rather, customers, especially the purchasing decision-maker—the female homeowner—were most concerned that they could trust the cleaners to clean their home as the homeowner would.

Upon learning this new definition of trust—one provided by their actual customers—Company A explored their cleaning methodology, training protocols, and track record for evidence that they could be trusted by new, prospective clients. Company A routinely hired many Spanish-speaking individuals as house-cleaners. To assist with training, the founder and CEO provided colored towels that were matched with a particular room and/or surface for cleaning. For example, green towels were for kitchen counters, orange towels for living surfaces, yellow for bathroom counters and sinks, and red for toilets. This allowed for easy checking that the full job was completed by collecting the colored towels at the end of a service and monitoring for usage.

Reflecting on the customer’s meaning of trust, the CEO presented the “towel strategy” to some of her existing customers. Upon hearing of the training method, customers were delighted to realize that the colored towel system provided a safeguard against mixed use of cleaning towels on inappropriate surfaces. They saw that this strategy provided the kind of trust they needed: knowing that the cleaners were trained and monitored to use particular-colored towels on particular surfaces, and not to mix uses. Company A had unknowingly systematized a strategy to clean a home as the female homeowner would.

After listening to their customers’ responses, the CEO reached out to prospective customers and detailed the “towel strategy” as part of their cleaning offering. Business increased. According to the CEO, they were able to increase “our revenue by 20% in the subsequent 3 years and were able to live through 2020 with a small profit.” The growth in the business made Company A resilient to the social distancing and business recession of the COVID-19 pandemic.

The story of Company A reflects an important part of business communication that is often overlooked: the interplay of hearing directly from customers, co-creating fitted value propositions, and then communicating with customers to receive further feedback. It is this co-creative feedback loop with external stake-holders that we focus on in this chapter.

28.2 Background

To understand how startups such as Company A co-create value propositions with stakeholders, we first review the basics of these two aspects: stakeholders and cocreation.

28.2.1 Six Kinds of Stakeholders

As Company A’s experience shows, research into startup communication suggests that healthy startups conduct ongoing dialogue among different stakeholders, both internal and external. From our work with small businesses and technology startups, we have identified key stakeholders required for company success. These stakeholders include three internal stakeholders and three external ones we collectively refer to as the 6Ms:

Internal stakeholders include:

  1. Makers: the innovators;
  2. Management: the venture’s leadership; and
  3. Members: the venture’s research and operational team

External stakeholders include:

  1. Mentors: those who provide external expertise, advice, and networking;
  2. Market: product sales and partnerships; and
  3. Money: financial funders.

Much has been written regarding effective communication between internal stakeholders in new and established firms and its importance for success (reviewed in Men (2015)). Our attention has been drawn to how the 6Ms function beyond internal communication as they move external to secure and grow market opportunities. In the case of Company A, the CEO played both the Maker and Management roles within Company A and training relationships were ongoing with the Members, or cleaners. The CEO’s communication with external Market members—the female homeowner, for example—revealed new meaning to the value of “trust.” Established communication channels, dialogues built on mutual respect, and transparency allowed this external exchange to flow quickly to an internal exploration with her Members. The “towel strategy” emerged as a potential point of value from the internal communication. The strategy was shared by the Management with Market representatives and was found to resonate strongly with the now shared, specific definition of “trust.”

From the Company A example, one can see that each stakeholder brings different expectations, motivations, and values to a dialogue, yet all must perceive the same or a shared value for business success. This value is most often summarized in a value proposition. After careful separation of many common yet different “value” phrases, Payne et al. (2017) define a customer value proposition as: “a strategic tool facilitating communication of an organization’s ability to share resources and offer a superior value package to targeted customers.” The journey of Company A demonstrated that a clean house was an insufficient offering for a complete value proposition. The actual process of house cleaning must proceed “as the female homeowner would perform herself” to have a full and superior value proposition. Moore (1999) argues, without an easily communicated value proposition (often in a positioning statement—or the points of product/service differentiation in a consumer’s mind; (Payne et al., 2017), internal and external stakeholders can become misaligned, yielding problems from sales to engineering to R&D to management. The dialogue externally and internally becomes incoherent and the venture itself disintegrates. Alignment requires communication between several different stakeholders—Management with Mentors or other advisors, Management, and the Market in the form of customers, or Management and Money if they seek external funding. So how do startups define value at this most vulnerable phase of the business: when they are still trying to figure out the problem, solution, and customers they are addressing and the business model they are attempting to develop?

In this chapter, we focus on communicating with the external stakeholders: Mentors, Market, and Money (funders), and especially how startup leaders (Makers who have become Management) must engage in value co-creation with these three stakeholders.

28.2.2 Co-creation 

Successful entrepreneurs co-create with their stakeholders by conducting a dialogue with them—a dialogue in which entrepreneurs and stakeholders learn from each other so they can collaboratively develop a value proposition (Karami & Read, 2021; Kowalkowski et al., 2012; Kristensson et al., 2008; London et al., 2015; Lusch & Vargo, 2014; Re & Magnani, 2022; Spinuzzi et al., 2014).

Co-creation must happen early in a startup’s lifecycle—preferably in the incubation phase, long before the decision to execute. As Company A’s experience shows, founders (Makers or Management) must begin with a hypothesis about the value they bring to their customers. But before they execute, a startup can benefit from testing that hypothesis: shaping and refining a venture concept during an incubation period in which it explores different configurations of customer segments, customer needs, and resources and capabilities (Vogel, 2017). In best practice, a startup will work out and evaluate that venture concept before deciding whether to move forward with the venture opportunity. This decision point is sometimes termed a Go/No-Go decision (Spinuzzi et al., 2020), and it is sometimes signaled in accelerator programs through a concluding pitch in which founders declare their decision to “Go,” “No Go,” or “Pivot” (Spinuzzi et al., 2018, 2020, 2023).

In our research into entrepreneurship training programs, we have found that firsttime founders need much scaffolding in order to understand the needs of their customers. This is especially true for technology startups: First-time technology founders have strengths in technology development (primarily acting as Makers), but often do not have entrepreneurship training, so they lack a mental map for identifying customer segments, conducting market dialogue, and constructing appropriate pitch arguments. Among other things, they must transform the value proposition from a technical description to a business or value exchange proposal (London et al., 2015), one that speaks to the values of the audience (Belinsky & Gogan, 2016; Varas et al., 2023). Such founders are often very comfortable making arguments in their own domain, where they are confident and know the conditions that underpin a successful argument. But they can be very uncomfortable when making arguments about value (Spinuzzi et al., 2018). Entrepreneurial arguments require a great deal of guesswork and are inherently risky—a far cry from the accepted arguments in the domains of engineering, physics, or biology, for instance. So we’ve found that founders need heavy guidance and coaching to help them feel comfortable with making their best guesses, to test these guesses with market feedback, and to proceed more confidently with decisions to execute. In providing this guidance—both before and after the decision to execute—one pivotal role in this coaching is that of Mentors.

28.3 Mentors: How They Mature Pitches for Market and Money Stakeholders

Mentorship is frequently discussed in the entrepreneurship communication literature: new entrepreneurs need more experienced guides to help them with the complexities of entrepreneurship (Cohen, 2013; Miles et al., 2017; Rigg & O’Dwyer, 2012). Without this experienced guidance, entrepreneurs find it difficult to even approach market and money stakeholders. But what is involved in mentorship? What makes it successful? In our research, we’ve investigated mentorship in three forms: In pitch audiences, in assigned mentors, and in technology commercialization reports. These forms are not exclusive.

28.3.1 Mentors in the Audience

Startups who engage in pitch competitions frequently find mentors in the audience of their pitches. These mentors might provide feedback in Q&A sessions and via written feedback such as surveys. Such mentors are typically experienced entrepreneurs themselves who are interested in supporting the next generation of entrepreneurs.

For instance, in one program we investigated the Gyeonggi Innovation Program(GIP) in Korea, an audience mentor asked probing questions during Q&A that suggested a company embark on a radical pivot (Spinuzzi, 2017), while others tested startups’ assumptions about market fit, business model, and value (Spinuzzi et al., 2016). In another program (Student Entrepreneur Acceleration and Launch – SEAL), audience mentors provided written feedback on initial pitches, using a survey to evaluate and rank startups in terms of market space competence, problem–solution description, revenue model, and investment potential (Spinuzzi et al., 2018, 2020). In these programs, audience mentors provided useful formative feedback that startups (sometimes) drove into their subsequent arguments and offerings. The form of dialogue encouraged by pitching that is amenable to more than information transfer, but questioning of assumptions, provision of more detailed findings, extending even to co-creating the definition of value through interactive conversations.

28.3.2 Mentors Assigned in Accelerator Programs

Startups in incubators and accelerators often are assigned mentors as well. For instance, in the SEAL accelerator program (Spinuzzi et al., 2018, 2020, 2023), each startup was assigned 2–5 mentors in a relevant sector (e.g., healthcare, internet, water technology, transportation). Mentors then met at least once with the startup to discuss areas of concern. These meetings were unstructured and varied considerably by mentor. Adding to the complexity, startups in SEAL were often involved in other accelerators and incubators at the same time, where they had been assigned different mentors—mentors who did not share the same expectations or even timeline as SEAL’s mentors (Spinuzzi et al., 2018, 2023).

We also examined the roles of mentors after the execution phase. For instance, London et al. (London et al., 2015) examined four cases in which mentors helped startups to iterate their value propositions after they began the execution phase, as they realized that their initial hypotheses were incorrect: their offerings did not adequately solve problems for their target market. With the insight and advice of their mentors, the startup Management were able to pivot product offerings and messaging to effectively reach new markets. The benefits of “assignment” in a formalized program like an accelerator ensures multiple meetings between startup Management and Mentors allowing more information to be exchanged than in a pitch competition, new business hypotheses to be tested, and iterative molding of value propositions through Mentor insight.

28.3.3 Assigned Mentors in Incubator Programs

Incubators programs offer longer lasting engagement with startups compared with accelerators (Lange & Johnston, 2020). The manner mentors are engaged in incubators, the duration they assist companies, and the value they offer is illustrated through the Austin Technology Incubator (ATI) model studied between 2012 and 2016. During this period, the admissions process of ATI began with a highly informal process led by ATI Directors, who manage startup technology verticals, information technology (IT)/wireless technology, clean energy technology, and life sciences. ATI Directors first met with CEOs of startups to hear pitches and business strategies informally. These meetings often happened in coffee shops, at the ATI offices, or at local pitch events. Companies communicating promising value propositions were encouraged to apply to ATI membership through an online application.

Key to the ATI process is that the Directors per se did not choose companies to be admitted to ATI, but the Directors involved community mentors who participated actively in the acceptance decision. Acceptance consideration happened through a “Success Committee” model where the company leadership pitched company value proposition and business growth goals to ATI Directors, UT student interns (who provided research support to ATI companies), and community mentors. After the “pitch” the company answered questions posed by Success Committee attendees. Then the company was asked to leave the meeting and the ATI Directors engaged mentors about their opinion of the company fit and readiness, as well as their willingness to support a company realize its growth goals. A vote was taken and companies that received support by both the Directors and the mentors were admitted. Those not receiving mentor support were not invited to join ATI.

During 2012 and 2013, ATI received 471 company applications, ATI Directors rejected 424 applications as being incomplete, at too early of a company stage of formation, or not having market ready products or services. The companies passing the Director screening process, 47 in number, were invited to present at individual Success Committee meetings. Of these 47 companies participating in the Success Committees, 40 were accepted into ATI through joint agreement of ATI Directors and community mentors, and 7 were not offered membership. The total acceptance rate was 8%.

What are the characteristics of mentors engaged with Success Committees? In unpublished research, we studied the composition of 31 of the 47 Success Committee meetings hosted between 2012 and 2013 (Pogue, unpublished data). Of these Success Committees, 24 companies were accepted to join ATI and seven were rejected ATI membership. During the 31 Success Committees, we found that ATI engaged 190 community mentors to attend, in addition to 63 members of ATI, including Directors and student interns from The University of Texas at Austin. Overall, 253 individuals participated in 31 Success Committees; on average, eight ATI and community mentors attended each Success Committee. Average re-use, or attendance of each member was 1.6 – most repeat attendees were ATI Directors. The background expertise principally offered by the 190 community mentors was varied: 49% business management, 29% technical or engineering, 16% funders—angel or venture capital, 6% service providers including attorneys and accountants. Interestingly, a significant proportion of community mentors engaged for the studied Success Committees were selected specifically to match expertise with the company’s technical focus. Life science companies saw the largest proportion of specially invited mentors— 40%, followed by clean energy with 23%, and IT/wireless inviting the remaining 17%.

The mentors were asked after agreeing to accept a company into ATI to support the company’s business goals. Technology-based startups often share common goals with mentors and receive support in customer discovery to improve and polish products and value propositions (Alexy et al., 2012). This role for mentors is discussed elsewhere in this chapter. Most incubator mentors help to establish relationships with Market and Money representatives which requires longer periods of time compared with a typical accelerator period of 30–90 days (Alexy et al., 2012; Lange & Johnston, 2020). Introductions to Money or funders are quite important as most technology companies require equity investment to “buy time” to develop and launch their products.

We explored the impact of the ATI-associated community mentors helping companies achieve their funding goals. We reviewed company status in 2016, allowing 3– 4 years for companies to identify and acquire seed capital after entering ATI in 2012– 13. Of the 24 companies accepted into ATI and receiving mentor support, 22 remained in business. Twenty of the companies had secured external equity funding totaling $114 million dollars with the median funding amount of $1.15 million dollars. In addition, two of the accepted companies were acquired by larger companies. Of the seven companies rejected ATI admittance and not receiving mentor support, six remained in business in 2016; only one had raised external funds, totaling $30,000; and none were acquired by external companies. From this study, we concluded that mentor relationships providing wisdom and business connections greatly support companies achieving funding and liquidity business goals. Companies lacking this mentor support show comparatively poorer performance achieving these goals.

Mentors in Technology Commercialization Reports A final mentorship mechanism we studied was that of technology commercialization reports. In the GIP, a 9-month entrepreneurship program structured as a pitch competition, Korean startups provided information on their startup’s offering. This information was sent to a case manager, who sought the reactions of market representatives, typically in the United States. The case manager would then summarize the findings in a technology commercialization report known as a Quicklook (Cornwell, 1998).

These Quicklooks were not just written by the analyst, they were also edited with the help of GIP staff in “an iterative production process characterized by an intensive professional collaboration between report author and supervisor” (Rigg & O’Dwyer, 2012, p. 31). That is, the staff played an invisible, yet crucial, role as mentors. Their feedback served the co-creation of arguments and social aims such as encouraging the author and expressing appreciation for the work done. By doing so, the supervisors acted in different roles and developed a professional partnership (Rigg & O’Dwyer, 2012; Schöpper et al., 2022).

After being completed, Quicklooks were presented to the startups, two weeks before their final pitches (Spinuzzi et al., 2016). Startups sometimes ignored this feedback—to their detriment (Spinuzzi et al., 2015a)—but most reused feedback from the Quicklooks in their final pitches. In this dynamic, we found that entrepreneurs in this program went beyond copying feedback from the Quicklooks; as they learned to make their pitch arguments, these entrepreneurs had to weigh this feedback and engage with it critically. This reuse can be characterized in terms of three strategies: Accepting (repeating verbatim or in close paraphrase), Continuing (extending lines of argument), and Resisting (rebutting lines of argument) (Spinuzzi et al., 2015b). The key finding was that entrepreneurs needed to engage mentor feedback provided in the Quicklook to fashion a value proposition fitted to the new international market they sought to engage.

Another study (Schöpper et al., 2022) examined how entrepreneurs in the energy industry arrive at innovative value propositions. The results of the study show that mentors play an essential role in iteratively identifying and refining novel approaches to products and services and adapting these to different market requirements. By engaging early with mentors and receiving feedback on value propositions at the drafting stage (for example, via commercialization reports), such interactions enable disruptive innovations. One interviewee pointed out that in comparison, traditional methods such as market research and customer surveys would often only allow to optimize individual aspects of known products and services (such as the cost).

28.4 Markets: How Market Feedback Impacts Value Propositions

Whereas Mentors function as more experienced guides to help entrepreneurs with the complexities of entrepreneurship, Markets are the potential customers, partners, and distributors who might be interested in the value proposition. For instance, in the story of Company A, direct engagement with existing and potential customers revealed the unexpected correspondence of the use of colored towels as a tool to train staff with the need for trust to be ensured with decision makers in the Market. Once understood, the colored towels moved from the background of business operations to the foreground of the value proposition presented to prospective customers with successful effect.

In the Quicklook example above, Mentors reviewed, summarized, and interpreted feedback from Market representatives. This distinction is key, since ultimately the value of an innovation emerges from market conversations. The Quicklook mentors acted as surrogates for international entrepreneurs seeking to enter U.S. markets by questioning, recording, and communicating market representative feedback concerning market problems, shape of desired solution, and possible interest in an entrepreneur’s offering.

How do entrepreneurs shape their value propositions with market feedback? The literature details many such techniques, such as customer interviews (Blank, 2013; Blank & Dorf, 2012), Design Thinking (Osterwalder & Pigneur, 2010), and guided workshops (Kristensson et al., 2008). In our research, we observed two mechanisms for market feedback: formal investigations and informal customer discovery. 28.4.1 Formal Investigations: Technology Commercialization Reports Above, we discussed how the GIP produced Quicklooks, or reports in which a technology commercialization expert interviewed representatives of a given market

28.4.1 Formal Investigations: Technology Commercialization Reports

Above, we discussed how the GIP produced Quicklooks, or reports in which a technology commercialization expert interviewed representatives of a given market about an offering. In such reports, the expert selected appropriate market representatives, and those representatives in turn identified weaknesses in claims that related to accepted facts or local conditions. The expert then synthesized the feedback to provide an overall recommendation Jakobs et al (2015). For instance, one Korean startup claimed to have discovered a new principle of magnetism, a claim that was disputed by a physicist; another Korean startup offered a food disposal appliance, but potential customers in the US noted that U.S. food disposal regulations are more lax, obviating the need for the appliance (Spinuzzi et al., 2015b). In both cases, the expert then summarized the objection along with other feedback, producing a formalized synthesis of market feedback.

28.4.2 Informal Customer Discovery

The Lean Startup approach involves opportunistically interviewing potential customers to rapidly iterate one’s value proposition by better understanding the customer’s needs and pain points (Blank, 2013; Blank & Dorf, 2012). This approach informs the SEAL program, and in our investigations (Spinuzzi et al., 2018, 2020, 2023), we found that SEAL startups often engaged in informal customer discovery by interviewing multiple people in their customer segment. At times, they found through these interviews that they were interviewing the wrong customer segment for their envisioned value proposition, inducing them to pivot to a new segment. At other times, they learned more about the customer’s needs, allowing them to better address those needs and bring value.

Pogue et al. (2016) similarly examined how six Portuguese startups in the University Technology Enterprise Network (UTEN) program iterated their value propositions by presenting their initial value propositions to prospective customers, gathering feedback from them, then pivoting—sometimes significantly. As described, Company B who offered a smart “pill box” to address medical adherence had to engage many different market segments before finding fit and interest. They first engaged medicine manufacturers and insurance providers with two arguments “for” the pill box: increased medicine usage and associated increase in sales, and lower long-term patient costs when patients faithfully take prescribed medication, respectively. Unfortunately, the lag between pill box use and realization of return decreased collaborative motivation among these market segments. Company B then reached nursing homes and other domicile health facilities who must receive, organize, dispense, and tract medicine for many residents. Although interested in the benefits of the smart pill box, these organizations lacked funding through principal payers to afford to add this product to their workflow. Finally, Company B reviewed requirements in the U.S. for hospital performance provided in the then-new Affordable Care Act. Company B learned that medical adherence could significantly reduce hospital readmissions and improve care metrics of hospitals. Indeed, hospitals engaged with Company B with funding for clinical testing of the smart pill box.

Market studies of existing products and services can also provide startups with key insights into what customers are looking for in value propositions. For example, a study by Digmayer (2022) used social media comments to identify barriers to the use of automated financial investment systems (robo advisors) that can be harnessed by fintech startups to develop their value proposition and next-generation robo advisors—for example, by integrating principles of explainable artificial intelligence or risk communication.

28.5 Money: How Funder Feedback Reframes Value Arguments

Beyond Mentors and Markets, Money—that is, funders—constitutes a third stakeholder. And this stakeholder is exceedingly important since funding is critical to venture growth. The success of any entrepreneurial endeavor depends heavily on the entrepreneur’s ability to effectively communicate their value propositions to potential funders such as angel investors, venture capitalists, and private equity firms.

Each type of funders has a different approach to investing:

  • Angel investors are typically individuals who gathered considerable financial resources in their careers and are looking to invest in early-stage startups. They are often more willing to take risks than other types of funders, and are therefore interested in the motivation of the startup’s team and the innovativeness of the product.
  • Venture capitalists are typically firms that invest the capital of other parties in early-stage and growth-stage startups which they perceive to have potential to generate high growth rates and above-average returns. Often, they are more interested in the financials than in the team or the product and require a proven track record and a customer base before investing.
  • Private equity firms usually buy 100% ownership of mature companies, are less hands-on than either angel investors or venture capitalists, and are unwilling to take risks in their investments.

Stevenson and Jarillo defined entrepreneurship as “the process by which individuals—either on their own or in organizations—pursue opportunities without regard to the resources they currently control” (Stevenson & Jarillo, 1990, p. 23]. Chief among resources required by entrepreneurs and one that is often outside of their direct control is the funding required to develop their new product offerings and build an organization to deliver the products to market. Entrepreneurs must seek out funders—Money—and convince them to invest resources into the entrepreneurial venture. An entrepreneur’s ability to shape arguments that align with the interests of potential funding parties can mean the difference between a successful venture and one that fails to generate sufficient capital to move forward. Funders are more likely to invest in a venture if they are provided with a clear and compelling value proposition and a thorough understanding of the potential return on investment. Consequently, the feedback that funders provide to entrepreneurs is a critical tool in helping to reframe and strengthen the value arguments that entrepreneurs make.

The experience of Company C—a Portuguese technology company seeking to reach the U.S. market—illustrates this process. Company C developed as a vehicle to commercialize European Space Agency technology related to big data analysis. It thought that the new Market of wind turbine power could be an ideal setting to benefit from its “just-in-time” data analysis approach (Pogue et al., 2016). However, the conservative nature of the energy business slowed the realization of energyrelated partnerships. The lack of Market traction reduced U.S. funder interest in Company C. Interestingly, through a Mentor relationship, Company C was exposed to several problems financial companies experienced with regards to ATM monitoring and identity confirmation during credit card transactions. The needs of the financial industry were examined using informal customer discovery of Market opinion and the value proposition pivoted to reveal the advantage of Company C’s technology to process credit card big data “just-in-time.” This pivot proved critical as funders, or Money, were discovering the lucrative potential of financial technologies or Fintech.

Company C became an early mover in this Market and secured a small but validating partnership with a U.S. company. This relationship demonstrated the concrete nature of Market interest to U.S. funder’s regarding Company C’s products. In 2013, Company C raised additional Money, a $2.3 M (million dollar) Series A round that was closed followed rapidly by a $4.2 M Series A extension round. Only 25 months after the Series A round closing, a $17.5 M Series B round was raised, allowing Company C to launch new Market partnerships, products, and grow to support its new Market leading position. Market feedback and pivoting of the value proposition to meet revealed opportunity was critical for Company C’s success with Money relationships. Considering Company C’s story, let us consider ways that funders may provide feedback to entrepreneurs. Firstly, funders are often able to provide entrepreneurs with the opportunity to discuss their ideas and concepts in greater detail and in a more structured way than they normally would. This provides entrepreneurs with the opportunity to identify their unique selling points and gain insights into how potential funders view their business model and how it fits into the “business model” of the funders.

When creating a value proposition, then, entrepreneurs must be aware of the needs of potential funders. Funder feedback can be used to refine existing arguments or introduce new ones. For example, feedback from a funder may indicate that an argument should be tailored to their specific needs, such as emphasizing the team’s experience, the product’s features, the potential market size, the company’s revenue growth potential, and/or the potential for a return on investment. This can help entrepreneurs to better frame their arguments in a way that resonates with funders. Additionally, feedback from a funder can help entrepreneurs to identify potential weaknesses in their arguments and address them accordingly.

In addition, feedback from funders can also help to reframe the value arguments that entrepreneurs make. For example, funders may suggest that entrepreneurs should focus their value proposition on a specific market or customer segment to maximize the potential of their value propositions or to make the value proposition more appealing to customers, such as by offering discounts or other incentives. Company C’s experience showed that positioning a value proposition in the center of future opportunity—in this case Fintech—creates more interest among funders than traditional industries—such as energy management—and encourages more conversation and collaboration to find the correct market fit.

Feedback from funders can also help to strengthen the value arguments that entrepreneurs make. By providing feedback on the merits of an entrepreneur’s value proposition, the funder can help to build a more convincing case for why the value proposition is worth pursuing. This can include providing data or evidence to support the entrepreneur’s argument, as well as helping to refine the value proposition to make it more compelling.

Arguments that convince investors often cannot necessarily be used for other stakeholder groups. In fact, in some cases, the effects of arguments on stakeholder groups can be diametrically opposed. In such cases, arguments that represent a reason for investment for one stakeholder group represent a significant obstacle for other stakeholder groups. For instance, one study (Schöpper et al., 2022) examines companies that aim to introduce direct-current (DC) technologies in (commercial) buildings and neighborhoods. This includes power generation (e.g., PV, small wind turbines), storage (battery storage), consumption (e.g., charging stations for electric vehicles), and distribution (via DC lines). Changing the entire energy infrastructure towards DC in buildings and neighborhoods competes with the prevailing asynchronous current (AC) infrastructure. The study reveals several advantages and disadvantages that the novelty of this technology offers for the communication with stakeholders (Table 28.1)—showing a clear divergence between the interests of funders and those of other stakeholders. In this regard, pitches had to be tailored to the needs, requirements, and concerns of individual stakeholders.

The results show that the value proposition must be adapted to the different requirements of the individual stakeholder groups. The data from the project described above and a study on innovation communication by startups (Digmayer & Jakobs, 2022) indicate that this process takes place in reciprocal internal phases (idea generation and revision in the team) and external phases (alignment of perspectives on the technology with stakeholders), whereby the value proposition is developed both divergently (sharpening the focus, removing inappropriate aspects, aligning expectations of the technology) and convergently (expanding the focus, adding new aspects, adding new expectations of the technology). Thus, the initial ideation is usually done within the team. In several cases, however, external experts and institutions have also been contacted to build innovation networks that can further expand the initial idea. The following quote describes how a German energy startup was able to expand and refine its value proposition with the help of external actors after a phase in which an initial concept was developed:


We were inspired by a demonstration center on sustainable energy in Switzerland. There are partly conventional products and products that are becoming conventional. In any case, you get a wide range of information and you also get basic knowledge. […] And that’s how we got a network of people who we can ask what we can do.

The communication and thus the pitching of the technology often take place not only when the product is completed, but already during development. The reason given below for this is the time it takes to diffuse the value proposition to different channels:

Because we know that the process of communicating innovation takes time, and in the time it takes and we have the reach and it’s permeated, we’re done with the product. […] You build the story up to the point where the product is launched and don’t just start from launch.

In the further process, as in the example from the DC technologies, different stakeholders influence the technology development and thus the value proposition due to which both are continuously developed. In addition to an expansion and enrichment of the focus, however, such steps also lead to value propositions having to be narrowed down—for example, regarding the demands of other market participants and new laws. In this way, competing companies influence entrepreneurs in deciding on the technology-development paths to be taken and thus the pitching of the technology.

Please note that the first paragraph of a section or subsection is not indented. The first paragraphs that follows a table, figure, equation etc. does not have an indent, either.

28.6 Responding to Mentors, Market, and Money: Pivots and Co-creation

As these examples show, the regular, recursive feedback provided by mentors, market, and money stakeholders can help co-create market-fitted value propositions for startups. However, two question remain:

  1. In what ways do the communications with mentors, market, and money stakeholders produce pivots in value propositions?
  2. What is the impact or importance of co-creation of value propositions pivoted to fit markets?

In our investigations of Korean, Portuguese, and U.S. companies, we have identified four dimensions in which co-creation can iterate value propositions to fit new market opportunities (London et al., 2015; Pogue et al., 2016; Spinuzzi et al., 2018):

  1. Rhetoric or argumentation: How value is expressed in words as arguments focusing on key aspects of market-spoken or defined value.
  2. Use or application: Where the use or application of the innovation is modified to address market need.
  3. Design of innovation: When aspects or characteristics of the innovation are altered to respond to market requirements. 4. Financial incentive or articulation: Where the flow of financial reward (such as revenue, profit, or cost savings) from the use or purchase of an innovation can be increased for a particular market partner.

From stories presented in this chapter, Company B found that pivots related to financial incentive were most critical—moving from the idea of partnering with insurance companies to that of hospitals who were incentivized to use its smart pill box to reduce costs they must bear for hospital readmission and other penalties. Company C found through market investigation that pivots related to their big data technology’s use model was critical. The algorithm could be effectively used for monitoring energy production from wind turbines, but market forces showed low interest in this value proposition. Pivoting to Fintech and monitoring identity in credit card transactions allowed the same innovation to have a highly attractive value proposition. Finally, Company A found that the design of the service had to be augmented to include the use of colored towels in the training of cleaners as well as in their use in homes. Other examples are provided in London et al. (2015) and Pogue et al. (2016) to illustrate the function of each of these dimensions for co-creation and value proposition pivoting.

What were the impacts of these pivots on company Market and Money relationships—in other words, is pivoting essential and profitable to engage in? We followed value proposition pivots of 40 Portuguese companies participating in the University Technology Enterprise Network (UTEN) program conducted between the government of Portugal and the IC2 Institute of The University of Texas at Austin from 2011 to 2016 (Pogue, unpublished data). Companies in the UTEN Global Startup program were engaged by mentors and business development team members provided by the IC2 Institute to meet with market and money representatives and seek to establish market or funding relationships in the U.S. The value propositions provided to UTEN business development members at the initiation of a company’s engagement with the UTEN Global Startup program were compared with the value propositions articulated by companies at the end of tenure in the program. Value proposition pivots were characterized, and the major pivot was recorded in the Table below. Further, the partnership outcome for each company was recorded. Partnership types included product testing agreements, product purchases or distribution agreements, strategic partnerships, research agreements, grant relationships, collaboration agreements, or funding relationships with U.S., Portuguese, or global entities.

Table 28.2 shows the importance of value proposition pivoting to obtaining business relationships with market and money stakeholders. Of the 40 companies participating in the program, 33 actively co-created value propositions with market players resulting in pivots. Of these, ~67% successfully obtained business or funding partnerships during the tenure of the UTEN program. All four dimensions were deployed by companies as major or principal pivoting strategies—although some arguably used multiple methods (we similarly found multiple methods used in Spinuzzi et al. (2018). Of the seven companies that chose not to co-create with the market and “stuck with” their original value propositions, none achieved business partnerships. Review of the UTEN program’s impact on the Portuguese economy was conducted by interviewing company leadership from all companies and asking them to attribute financial outcomes directly flowing from the UTEN program or market/money relationship begun during the program. Companies reported the following economic impacts (UTEN University Technology Enterprise Network, 2016):

  • $27 M in new committed revenue;
  • $27 M in new investment capital;
  • $27 M in new strategic capital and/or partnering co-investment;
  • $35 M new wages paid;
  • 3 new company spin-outs; and
  • Total of $116 M realized direct economic impact.

Taking these quantified impacts of business market and funding outcomes with Table 28.2 data detailing company value proposition pivoting argues for the importance of active communication and co-creation of market fitted value propositions with market and money stakeholders. Further, the economic impacts of such communication to fuel business partnerships is significant.

28.7 Conclusion

We began this chapter by talking about Company A, an Austin-based cleaning company that was able to listen to its customers (Market), better understand their needs, and deliver a value proposition and business offering fitted to those mutually understood needs. As we have seen, businesses like Company A need value propositions that are “talked into existence” (Pollack et al., 2012). That dialogue must involve external stakeholders (Mentors, Markets, and Money) in order to yield a coherent value proposition, one that not only communicates value but also provides value by aligning efforts and unifying them in service of a shared concept. In the early life of a startup, this is quite a trick since the value proposition constantly evolves through this dialogue—with the company’s product/service and business strategy following close behind.

This chapter overviews some of our research, in which we have examined how startups make discursive moves with these external stakeholders. These relationships are not just binary—the startup speaking with either Markets and Money, but may involve intermediaries such as Mentors. Mentors assist by providing valuable data, tailoring value propositions, or making introductions to important business partnerships offering access to Markets and Money. Through such dialogues, startups weigh advantages and disadvantages, pivot their argument, use case, design, or financial incentive, and co-create a meaningful value proposition with external stakeholders. By developing a co-creative feedback loop, startups can identify new opportunities and realize them as a business.


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Gregory P. Pogue Ph.D. is Deputy Executive Director of the IC2 Institute at The University of Texas at Austin and Assistant Professor of Instruction in the Department of Manage-ment at The McCombs School of Business. He leads “think and do” programs surrounding early venture creation, entrepreneurial ecosystem development, and expanding opportunities of well-being for all members of communities.

Clay Spinuzzi Ph.D. is Professor of Rhetoric and Writing in the College of Liberal Arts at The University of Texas at Austin. He studies how people organize, communicate, col-laborate, and innovate at work. Spinuzzi has conducted multiple workplace stud-ies, resulting in several articles and four books.

Dr. Claas Digmayer Ph.D. is a research associate at the Human-Computer Interaction Center at RWTH Aachen University (Germany). He graduated in technical communication and computer science at RWTH Aachen University. His research fields include the design and diffusion of innovative technologies, usability/UX, artificial intelli-gence and text mining, as well as productdesign methods such as open innova-tion and design thinking. He serves the board of governors of the IEEE Profes-sional Communication Society as a member-at-large.