It is incredible to think that it was ever the case, but there once was a time when Venture Capitalists were perceived by entrepreneurs as almost mythical creatures - shy individuals who shunned publicity and were barely traceable online.
That clearly isn't the case anymore as VCs jostle with each other to garner the most followers for their blogs and Twitter accounts. So why this sea change? What has happened in the VC world to bring this about, and crucially do VCs really need to employ PR companies?
Ramping up the deal flow
The first indication of a change in attitude of VCs to PR emerged at around the turn of the decade. Perhaps inspired by the profile of some angel investors - such as Jason Calacanis best known for selling Weblogs Inc to AOL - VCs broke cover and began to blog about their expertise and experiences. The first to rewrite the rule book was Andreessen Horowitz, started by Marc Andreessen, the co-founder of Netscape, and Ben Horowitz, a former executive at the video content business. In an age of economic uncertainty post the 2008 crash, the pair hit upon a strategy that entailed aggressively chasing startups to secure a constant deal flow.
To achieve this they systematically marketed their expertise to the reporters and bloggers, and appealed directly to entrepreneurs in blogs and on Twitter. For the first time a VC company took PR very seriously - and it worked effectively too with the pair establishing very high profiles which gave them an edge when it came to courting hot startups.
As The New York Times reported in 2015, “a survey by the law firm Dorsey & Whitney, a Silicon Valley law firm with a designated venture capital practice, asked 336 entrepreneurs to name the top venture capital firms. In metropolitan areas like San Francisco and New York the entrepreneurs said they would rather take financing from Andreessen Horowitz than any other firm.”
Fairly soon VCs from rival companies began their own blogs and in some instances, like David Skok, created their own mini online portals. The content that they created was both insightful and practical and highly valuable to would-be entrepreneurs. Some, like Paul Graham of startup incubator Y Combinator, have assumed the status of rock stars of the investment industry.
So what prompted the surge of VC created content? The first reason why VCs have embraced content is that to attract companies now they don’t really have a choice but to maintain a high profile. The days when they were able to hide away and stealthily approach companies they thought had potential are gone.
This shift has largely been prompted by the fact that there are now many more ways that startup companies, and scale-ups too, can secure finance. The last few years have seen an explosion of angel investors and crowdfunding options. There are, however, many advantages to securing investment from VCs - credibility, connections, wealth of experience to name but a few - but VCs are not the only option. Because of this, any startup seeking investment is likely to spend a lot of time undertaking due diligence to find the correct fit for their business. The obvious way they do this is to examine a VC’s online presence for evidence of expertise, experience and success.
The centrality of content marketing
To underline these factors VCs need to be cognisant of both content marketing and the potential of social media and PR. What PR companies bring might not necessarily be content creation skills - most VCs are more than adept that at this - although keeping a constant stream of content coming is a big ask and companies may need external assistance. Rather the skills PR agencies bring are in the areas of content strategy and content scaling or distribution.
There is very little point in creating content that has not been strategised properly and for which a content calendar hasn’t been created. Once the content has been created, PR agencies with their wealth of connections can help VCs to distribute that content beyond their owned channels to earned channels - like existing media sites - and also paid-for channels using aid for social advertising.
Individuals vs companies
One of the key issues that VCs face which PR companies can help solve revolves around the tension between the promotion of individual VCs and the companies they work for. VCs can create a lot of noise for their blogs and generate a cult following among startups for their insight and intelligence, yet their content doesn't always reflect the core concerns of their company. Agreeing messaging and the process of how individuals create content that pushes that messaging is essential for VC companies.
Another way in which PRs have started to work effectively with VCs is the promotion of individual client companies. Although startups may have invested in their own PR, from the VC’s perspective the use of their clients is a reflected glory which helps build their brand awareness.
Clarity has worked with a number of VCs and accelerators and has vast experience and working in content strategy, content scaling and media relations. To find out more, get in touch.
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