Distribution Advantage noun
A distinctive method, channel or approach that enables a company to deliver its products to customers in a more effective way.
Distribution Advantage is the fundamental determiner of future success for those building software now.
New distribution models make the business rather than their buyers carry the risk: freemium, try before you buy and monthly subscriptions with easy cancellation terms aim at letting buyers experience the value of a product first.
This has defined the enterprise software winners of today such as Slack, Dropbox, Airtable, Notion and Zoom - all willing to de-risk their buyers to achieve a Distribution Advantage. They put the ease of use and time to value of their product front and center. They have built something people not only want to use – but also talk about, and share.
At Lightbird, we partner, early in the journey, with companies that lead with distribution. We believe that establishing this from the beginning is the only way to win in today’s continually sophisticated market. From their inception, they are combining a product predicated on user centricity with a distribution strategy derived from solid assumptions and unit economics, the potential for scale and virality, and the team to deliver.
Typically, we see a focus on Distribution Advantage manifest in three ways.
PLG - Product virality. Enterprise software where each new user has the potential to bring new users with them. (Products with a positive k-factor.)
Community. Products where groups of customers take on a life of their own.
Network effects. Companies that, by their nature, increase the value of their product as more end users use it.
For teams taking their product to market, the task is harder now than it’s ever been before. It requires a collective passion, commitment and skill that is unprecedented – and all from the earliest stage.
Teams that decide to embark on this together must have the common values to push themselves and each other, with the conviction to reach the point where each new customer compounds and improves their offering. This journey is not linear; it’s exponential.
And they shy away from none of this. In fact, they embrace it, and can’t wait for the journey. These are the teams we choose to back, to support and to grow alongside.
When one meets them, it’s clear that the sum is greater than the parts. They are diverse groups of unique individuals who are brought together through attitude, a deep obsession with a problem and a compulsion to build. Together, their cooperation is turbocharged and, therefore, their output too.
We are deeply passionate about these kinds of teams, and we’re here for the journey, too. Our priority is to provide them with the flexibility and commitment they need to be supported in their success – and with the same energy and dedication that we know they are putting in. We’re at the end of the phone anytime, to share in both the highs and the lows. Exponential growth requires an intensity which we know both how to support and that we want to support. We can prepare and help you because we’ve been partners on this journey before.
And we’ve got the structure to match. We can be entirely flexible; we’re happy leading or co-investing, being the first money in and last out – whatever best suits your team.
If this sounds like a good fit, we’d love to hear about your Distribution Advantage.
Geo focus: Europe
Our sweet spot: Pre-Seed/Seed (occasionally Series A)
Ticket range: $250k-$3m
Average Check size: roundabout $1m
Are we leading rounds? yes (77% of our portfolio)
Latest fund announced: 2021