VCs And Marketing: How The Big Players Play August 6, 2012Posted by Ian Cheng in Funding.
“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.