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VCs And Marketing: How The Big Players Play August 6, 2012

Posted by Ian Cheng in Funding.
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Leslie Hitchcock

“Marketing is the name we use to describe the promise a company makes, the story it tells, the authentic way it delivers on that promise.” –Seth Godin

In an effort to appear in touch with Silicon Valley, the traditional media has recently turned its eye on venture capital’s marketing efforts.

Venture capital is certainly a changing landscape, especially as of late. With the chattering classes abuzz about the current state of VC, the tech industry seems to be taking the recent visibility of local investors personally. Traditionally a quiet industry, firms are now actively touting themselves and it is making some people uncomfortable.

Brooklyn Bridge Ventures’ Charlie O’Donnell explains,”A lot of the VCs are feeling the need to explain to the market what you get by going with us versus the other guy.”

We marketers hate to break it to you (traditional media) but this effort is old news i.e. something that our niche industry has been following for some time.

Not all VCs appreciate marketing but a few are currently to breaking into the forefront by establishing their differentiating factors aggressively. So which firms are in the lead? Well lets take a look at the big player’s efforts, and what they means from a marketing perspective.

Andreessen Horowitz: The Partners

Brash. Larger than life. Successful. Philanthropic. When news comes out about Andreessen Horowitz, it is about Andreessen and Horowitz themselves. Interchangeable, they are the fund, the fund is them and it captivates the Valley. Prolific bloggers, both Marc Andreessen and Ben Horowitz are open about what they look for in startups and founders, how they invest and the influence they command. And let’s not forget standing on their pedigree (or as some see it, star power) as founders with substantial exits themselves.

In my experience, the only problem with linking the brand with people is that people are fallible. If they fall, the fund can fall. But clearly that is a risk they’re willing to take, and at this point it is working well for them. As Andreessen himself has said about being so open: “We wanted to tell our story. Venture capital has traditionally been behind the scenes. How does Sequoia or Kleiner Perkins build a company? I don’t know.”

Greylock Partners: The Portfolio

Attempting to take a page out of the Andreessen’s playbook, Greylock brought on Reid Hoffman and immediately increased its visibility in doing so. But the firm appears to have no interest in putting all of its eggs in one basket, if you take a look at its marketing exposure. Above all, the firm appears to stand on the shoulders of their investments, letting them speak for themselves, enterprise and consumer alike. Cloudera, Pandora, Instagram, OpenDNS, Tumblr — Greylock wants you to know that they are reputable, disruptive, entrepreneur-friendly and ultimately stable.

This is a more subtle marketing tactic, but has less potential to trigger the collapse of a firm unless we see a gigantic shift in the financial market. A fall-off is always possible, as those of us who lived through the dotcom bust of the early 2000s are all too aware of, but a steadiness through volatile times stands for something as the industry rebuilds.

Kleiner Perkins Caufield & Byers: The Services

A panel held during the TechCrunch Disrupt NYC conference in May featured some of the best known VC’s in the industry, including Kleiner Perkins partner Mike Abbott. What was particularly interesting to me when I attended the session was the topic of what value a VC adds to the startup they’re backing. KPCB specifically led the charge on this a decade ago. They take this mandate seriously, going well beyond writing a check to offer services like recruiting, perspective, market analysis and advice, as Abbott pointed out.

VCs adding marketing/communications advice to their already established service offerings is a logical step. KPCB specifically states that their marketing efforts are not for the firm but are in the best interests of the startups they fund, a brilliant distinction. “Who cares about us? We care about you!”

As an aside, with the recent legal debacle the firm has found itself ensnared, in it will be fascinating to watch the effort to help it regain its reputation — And if that effort will succeed.

Sequoia Captial: The Success

Shepherding a startup from seed to exit is a hard job, but Sequoia makes it clear that they’re up to the task if their dizzying homepage is any indication. Palo Alto Networks, Kayak and ServiceNow were all funded by Sequoia in early stages, and are all successfully listed companies today.

An entrepreneur’s dream is leading a startup from idea to IPO and the backing of a proven VC quantity is one way to get there. Sequoia’s branding all but says “If we anoint you, you will exit.” Heady stuff for a young startup looking for backing and guidance.

As far as guidance is concerned, Sequoia gets an honorable mention for including a “How to write a business plan” link on their site.

All of this already established discussion around positioning begs the question, “Why damn investors for differentiating and branding themselves, if everyone else is already doing it?”

Well, the entrepreneurial “Change or Die” becomes “Innovate or Die” which becomes “Differentiate or Die” as competitors crop up. Investors know this and the fact that they’re branching out and hiring marketing/PR staff means that they see the need to stand apart in the saturated market.

Incubators, angels and smaller venture firms are poised to position themselves in a different way, and succeeding. It make sense that the big guns would take a page from their playbook.

6 Tips To Rapidly Raise Funding on Angel List August 1, 2012

Posted by Ian Cheng in Funding.
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by Rick Perreault. co-founder & CEO of Unbounce.

I recently had the opportunity to use Angel List (http://angel.co/) as part of raising a Series A for Unbounce and wanted to share a few things that I learned along the way.

First off, Angel List is a pretty awesome service that makes it easy for introductions to happen between entrepreneur and investor, kinda like a mini Facebook for investors and entrepreneurs. However, there were some things I wish I would have done differently or had known before I got started. I made some mistakes. In some cases, I was not as prepared as I could have been and learnt alot on the fly. So today I want to take the opportunity to share the top 6 things I did that helped me raise capital with Angel List.

Tip #1 Use video to tell your story

In hindsight, probably the most effective thing I did was include a link on our profile and in all my email correspondence to a video of me giving our pitch I had the opportunity to pitch at the last GROW Conference here in Vancouver and lucky for us, they recorded it. I included it on our Angel List profile and almost everyone that contacted me commented that they watched it and especially liked the Q&A. Here is the link to the video: http://www.youtube.com/watch?v=1WcpFqKA7So

You don’t need to spend any money doing this either. Record yourself giving your pitch and providing answers to all the typical questions that you get from outsiders and post it on YouTube. Your passion, conviction and knowledge of the problem you are solving will come across in ways that a deck can never achieve and by presenting your own Q&A, you’ll skip all the typical questions and have a much more constructive meeting when you get on a call with an investor.

Tip #2 Get commitments for endorsements early

You probably have advisors and/or commitments from investors already or at the very least, someone of influence that likes what you are doing. Let them know that you are going to raise investment via Angel List and ask them in advance if they would endorse your company. Once your profile goes live, your first email(s) should be to them asking them to comment & share your profile.

There are a lot of companies posting on Angel List and having people of influence endorse your business will help you stand out and give visitors to your profile page a reason to take a good look at your startup.

Reality Check: If you can’t get at least one person of influence to endorse your business, you are not ready for Angel List.

Tip #3 Prepare your email responses in advance

In our first 24 hours on Angel List, we received a lot of followers and request for introductions. Both are opportunities to pitch your company as both enable you to contact the investor but unless you are prepared in advance, it can be overwhelming — I was not prepared on our first day.

Typically, those who follow you may simply be curious while those who request an introduction are interested so use your available meeting times on those who are asking for an introduction. Additionally, there are those who fit your criteria as an ideal investor better than others and reality is, you may get more interest than you can handle so remember to focus on those who fit your criteria as an ideal investor first.

Prepare your initial communication in advance and save them in a text file. Here are the three responses that I used.

a) For those who followed us:

Hello [Name]

Trust you are well and thank you very much for your interest in Unbounce. I’ve attached our current deck and I’m including here a link to a short video about our company [link to video]. Let me know if you have any questions about Unbounce and please feel free to share this information with others.

Best Regards,

b) For those who requested an introduction:

Hello [Name]

Trust you are well and thank you very much for your interest in Unbounce. I would love the opportunity to introduce you to our business. Would you be available [day] at [time] for a quick call? In the meantime, I’ve attached our current deck and here is a link to a short video about our company [link to video] for you to review. I look forward to talking soon.

Best Regards,

c) I had a third response for those who I really wanted to speak with:

Hello [Name]

Trust you are well and thank you very much for your interest in Unbounce. Having read your profile, I would love the opportunity to introduce you to our business. I’m hoping to have a short list of investors by [short time period] and currently have [investor] and [investor] confirmed. Would you be available [day] at [time] for a quick call? I’m also free for the next hour if you have a few minutes to give me a call on my mobile [your number]. In the meantime, I’ve attached our current deck and here is a link to a short video about our company [link to video] for you to review. I look forward to talking soon.
Best Regards,

I tweaked this a little for each individual however, having these on hand saved me from having to write 100+ emails from scratch.

Tip #4 Prepare an investor data sheet

You’ll need an effective way to keep track of all your investor contacts and conversations – your leads. You’d be surprised how easy it is to not remember who’ve you’ve spoken to or how the conversation went. Seriously, after your first dozen calls, your memory will fail you so get into the habit of writing stuff down.

As contacts are made, you will need to keep on top of your leads so prepare a spreadsheet in advance (recommend Google Docs). I organized mine by name, email, contact #, VC firm [If applicable], Links to Angel List & Crunch base profiles, a field for notes and finally, amount they typically invest. The beauty of Angel List is that you can learn a lot about the investors that contact you and based on their profiles, almost predict if they will be a good candidate or not. For this reason I also included a rating for each potential investor on my spreadsheet.

Sub-tip: speaking about bad memory and calls, it’s hard to take good notes when you are pitching so I found it helpful to have someone else on the call with me when possible to act as a second set of ears & take notes.

Tip #5 Rate your investor contacts (just like you would your prom date potentials)

Related to my investor data sheet, I also created (truthfully, by evolution than by design) an investor rating system. Nothing too complicated but effective. Why? Because we were not interested in all investors equally and investors were equally not all interested in Unbounce to the same degree. I gave a sets of points, one for our interest in them and another for their interest in us with low interest being 1 point, 2 points being the middle, and high interest 3 points. For example, a high profile investor with a history of investing in our space and interested in what we are doing might be something like, our interest high + their interest medium for a total of 5 points. Another example might be an investor with no previous investments nor experience in our market and for various reasons is lukewarm on the investment opportunity, our interest low + their interest low or med for a total of 2 or 3 points. By each name I had two numbers and over time these would either go up to down or replaced with a yes or no. Think of it another way, this is really no different than the process you went through in trying to choose the perfect date for your high school prom.

All this is important because you have limited time and it will help prioritize your actions and focus who you want to spend your time on. So when a #6 wants to have a call at 3PM to discuss the opportunity and a #2 wants a 3PM conference call to introduce me to one of their friends that will help #2 validate whether or not this is an opportunity, you will quickly know who to bump to a later date. Again, think of it like the prom, if you spend all your time asking people who are the wrong fit, you run the risk of not having any date for the prom.

Tip #6 Share the responsibility of raising capital with someone on your team

Finally, raising capital is a lot of work and you will not sleep well until you close the deal. However, to get it done fast and as painless as possible, you will need support from your team and you all need to discuss in advance what role each of you would play in this big step for your company. In our case, Unbounce COO Jason Murphy was the other half of this initiative and CCed on everything. We broke down responsibilities like this:

My role was to pitch and get a yes from the investors we wanted on board and was responsible for maintaining our Angel List profile, our deck, leading all the meetings and initial contacts. Jason on the other hand came in after the first meeting to provide all follow up material (CAP table, financials, corporate) and coordinated all interactions between respective legal teams. This division of responsibilities allowed us to move fast but more importantly, allowed us to support one another when either of us were feeling overwhelmed – it will happen.

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