If you walked into a boardroom and asked what drives company valuation, you’d probably hear the same answers. Revenue, profit, growth rate, market share and customer retention. They’re all important metrics and rightly receive a great deal of attention from founders, investors and leadership teams alike.
Yet after working with founders for the last decade, we’ve noticed that the businesses commanding the highest valuations often have something else in common. They have brands people genuinely care about.
Not logos. Not colour palettes. Not beautifully designed websites.
Brands.
The kind that customers actively seek out. The kind that people remember. The kind that create trust before a sales conversation has even started.
It’s interesting because brand rarely appears on a balance sheet in any meaningful way. It’s difficult to quantify and even harder to isolate from the wider performance of a business. Yet when a company is funded, acquired or valued, brand often plays a much bigger role than many financial models would suggest.
Take Coca-Cola. Strip away the history, the emotional connection, the familiarity and the decades of brand building, and you’re left with a fizzy drink. A successful fizzy drink, certainly, but not one worth hundreds of billions. The same can be said for Apple, Nike and countless other companies that have transformed relatively ordinary products into extraordinary commercial assets. Their value doesn’t sit solely within what they sell. It sits within what people believe about them.
Investors understand this instinctively because they aren’t simply buying today’s revenue. They’re buying confidence in tomorrow’s revenue.
A strong brand creates that confidence.
When a business has a strong brand, customer acquisition tends to become more efficient. People already know who the company is and what it stands for. Trust has often been established before a customer even reaches the website or speaks to a salesperson. Marketing budgets work harder because the business isn’t constantly introducing itself from scratch.
At the same time, strong brands often enjoy greater pricing power. Customers are rarely paying solely for a product’s functional benefits. They’re paying for reassurance, familiarity, status, convenience or alignment with their values. That’s why two businesses can sell remarkably similar products at vastly different price points and still find willing buyers.
Those advantages compound over time. Lower acquisition costs, stronger conversion rates and improved margins all contribute to a healthier business. When investors evaluate future earnings potential, those factors matter enormously.
We’ve seen this first-hand through our work with Eve Sleep.
When Eve entered the market, mattresses were hardly the most exciting category in the world. Most brands looked similar, sounded similar and competed on product specifications that meant very little to the average consumer. The challenge wasn’t simply convincing people to buy a mattress. It was convincing them to buy this mattress.
The business succeeded because it created distinction where very little distinction previously existed. A bright yellow identity stood apart from a sea of beige competitors. The tone of voice felt human and approachable. The proposition was simple and memorable. Suddenly customers weren’t comparing Eve solely against mattress specifications and prices. They were responding to a brand they recognised and remembered.
What investors saw wasn’t just a company selling mattresses. They saw awareness, loyalty, customer preference and a position in the market that competitors couldn’t easily replicate. Those qualities have value because they increase the likelihood of future growth.
That idea of defensibility is particularly important when it comes to valuation.
One question appears in almost every investment discussion: what’s stopping somebody else from doing this?
Technology can be copied. Features can be copied. Pricing strategies can be copied. Entire business models can be replicated with surprising speed.
Brand is different.
A competitor can launch a similar product in a matter of months, but they can’t instantly create years of customer trust, reputation and emotional connection. Those assets are accumulated gradually through every interaction a business has with its audience. They’re difficult to build and even more difficult to steal.
That’s why some brands continue to thrive despite cheaper alternatives entering the market. Customers aren’t always making purely rational decisions. Human beings rarely do. We’re influenced by familiarity, confidence and perception just as much as specifications and price.
Imagine two companies generating the same annual revenue. Both are profitable. Both operate within the same category. One relies heavily on paid advertising, competes primarily on price and struggles to differentiate itself. The other enjoys strong awareness, loyal customers, premium pricing power and a reputation that consistently attracts new business.
Which would you rather own?
Most investors would choose the latter.
Not because of where the company is today, but because of where it can go tomorrow. Future earnings feel more predictable. Growth feels more achievable. Risk feels lower.
And when perceived risk decreases whilst future opportunity increases, valuations tend to rise.
This is why we’ve always believed founders should stop viewing branding as a marketing expense and start viewing it as a business asset. The strongest brands influence every commercial metric that matters. They affect how much customers are willing to pay, how often they return, how expensive they are to acquire and how attractive the business becomes to talent, partners and investors.
Brand doesn’t simply influence marketing performance.
It influences company value.
The irony is that whilst brand rarely appears properly on a balance sheet, it is often one of the most valuable assets a company owns. Because whilst revenue tells you where a business is today, brand plays a significant role in determining where it can go tomorrow.
And ultimately, valuation is a bet on the future.