Brand Matters in Venture Capital

Today the NVCA in partnership with DeSantis Breindel and Rooney & Associates released a study that, for the first time, looks at the influence of brand in the venture capital industry.  The topic is one that is near and dear to my heart – and to the hearts of more than 100 members of the NVCA Strategic Communications (StratCom) Group, many who gathered last week in Santa Clara to talk about brand management, investor relations, public relations and other marketing and communications topics.  The group previewed the results of the study – which is aptly called the Brand Influence Guide for the Venture Capital Industry or BIG: VC — and immediately understood the implications for their respective firms.

The fact that “brand matters” came as no surprise. Since the technology bubble of 2000, venture capital firms have comprehended the importance of differentiation when it comes to attracting deal flow.  In the last decade, a shrinking industry and challenging fundraising environment has made the practice of brand management that much more critical.  When we began the StratCom group in 2003, NVCA could identity about 20 firms that had a full time marketing professional on staff or under contract.  Today that number has quadrupled and hiring is on the upswing.

The BIG: VC study – which surveyed more than 370 venture capitalists, CEOs of startup companies and, to a lesser extent, limited partners from the NVCA and Dow Jones VentureSource data base — offers a strategic road map for brand marketers in our industry. You can view the data deck and get more information about the study here where you will read about some very interesting findings beyond the fact that brand is important.  Specifically:

  • There is a gap between what VCs say about their firms and what company founders want to hear.  Both like the term “entrepreneur friendly” but opinions diverge after that.  CEOs prefer “trustworthy” and “collaborative”, while VCs are communicating “experienced” and “hands-on.”  This latter term scored extremely low with CEOs, suggesting a fear of micro management.
  • Individual partner brands resonate more with CEOs than firm brands. Yet, many LPs want to see strength in the firm and not rely on a few individual partners. The results suggest a need to strike a careful balance – promote the partners without having any single person replace the identity of the firm.
  • Word of mouth trumps anything written.  CEOs get their information and form perceptions more from what they hear than from what they read. This is particularly true when talking amongst themselves.  No blog or news article or conference speech can outweigh what entrepreneurs and trusted third parties are saying about a firm.  BIG takeaway – VCs have to walk the talk.

Of course, all of these perspectives depend upon where you sit.  Life Sciences VCs and CEOs think differently about brand than those operating in Information Technology.  And the BIG: VC study covers those differences as well.

We encourage you to review the full results and we plan to share more on this topic in the coming months.

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