Venture Capital and PR Agencies

There is an unusual story out today about a venture firm retaining a public relations agency. Why unusual? Because a) it is not common for venture firms to have PR agencies in the first place, and b) the piece contains a paraphrased quote from Leapfrog Ventures’ Peter Rip that I’m sure he’d disagree with:

Peter Rip, one of [Leapfrog's] managing directors, said the VC business has changed so much in a few years that his company needs a marketing agency to help it find entrepreneurs to invest in.

While Rip undoubtedly said that venture capital has changed in recent years, and I can imagine him saying that a higher profile would help his fund find more entrepreneurs, I’m doubtful that he implied nearly so strongly that he needs a marketing agency to find investable entrepreneurs.

So, should venture firms have PR agencies? One first-tier venture firm sniffed at the idea a year ago in a meeting with me. “We don’t even put out press releases,â a managing partner said. People who need to find us know where to look and who to call.” While I think that it’s extreme and I generally think that most venture firms a) need to do more marketing and b) are hopeless at it, I’m still not convinced we are going to see a press of VCs becoming ad-firm clients.

Related posts:

  1. Serial Persistence, the Kleiner Effect, & Lead Swaps in Venture Capital
  2. Venture Capital Business is a Dud
  3. Paying for Top Venture Capitalists
  4. Speaking of Venture Capital and Innovation …
  5. The Institutionalization of Venture Capital

Comments

  1. Great post Paul. The kind of everyday business-y decisions I’d love to see dissected more often by venture guys.
    I think the wider question is credibility and professionalism.
    Entrepreneurs look up to venture capitalists as the demi gods of business. It’s a natural predisposition. You guys get to work on so many ventures over time that one would think the typical vc would make an extraordinary entrepreneur. So it makes sense to take lead from venture capitalists for how one would run a company.
    Alas, sometimes, the reality is often somewhat different and what venture guys really do has nothing in common with building a business, but everything to do with managing money; a job complete with its own specialized description.
    To that end, venture firms are sometimes not the presumed all knowing demi-gods of entrepreneurship, but typical small businesses trying to make a buck buying and selling securities. So we’re all in small business, and venture firms struggle as anybody else does to professionalize their operations, stand out and get a brand happenening.
    If Leapfrog understands that, and acknowledge that they need to take steps to compete and get better, then all the luck to them. The venture guys who drown in flattering them selves with “oh, we’re too cool for that” can go and get stuffed. Failing to accept fallibility is a guarantee for screwing up. Even market leaders shouldn’t take their position for granted. It’s strategically dangerous and socially speaking- uncool.
    From my perspective, it seems Leapfrog is reacting to increasing competition in the industry. Whether putting out press releases is a good way to get more business is an open ended question. Marketing 101 would suggest not. Seth Godin would spell out how to do it properly. Then again, I’m not there and Leapfrog is not stupid, so the guys must have reasons for doing exactly what they are doing.
    What ever is going on, I wish them the best of luck, because if they put in the effort, they deserve to succeed, and they probably will judging by how Peter’s blog is taking shape.

  2. Peter Rip says:

    OK, so why *did* we hire a PR firm?
    Sure we’d like to be better known, but not to generate deal flow. Deal flow from PR doesn’t work.
    Our visibility makes it easier for our portfolio companies. One of our CEOs put it this way. “When I’m a tiny startup, I need to make myself more credible by basking in the reflected reputation of my partners. If you guys aren’t well-known outside of the small Sand Hill community, it doesn’t help me recruit and partner with other companies that aren’t plugged in.”
    It took us five years to realize were were too stealth. Don’t anticipate a bunch of puff pieces and hype from us. We’re not that type. You won’t see it in my blog and you won’t hear it when my partners are speaking at conferences. We are a small firm of 3 managing directors and no associates. Part of our reason for paying another firm to work with us, was to have someone constantly pulling us to communicate with the outside world. Otherwise you get wrapped up in the day-to-day, and lose sight of the need to have a conversation with the market.
    So you will see a small number of announcements over the coming months to tell the world who we are, what we’re doing, and why. Not everyone reads blogs, yet. ;-)

  3. Nothing revolutionary here folks…very common for vc firms to either hire PR firms and/or internal PR/marcom support (there’s even agencies that specialize in this particular niche). These moves have played a big role in creating and strengthening VC brands (as well as those of their portfolio co’s) during the last 10 years or so, including some of the most well known and respected firms.
    BTW, not to talk smack, but Alarm Clock (which is how I found these posts) has a lot of ignorance and naivete when it comes to PR and tech marketing in general.