Venture Firm Brand Building: A Disconnect Between Entrepreneurs And Partners

Venture partners try harder than ever these days to build brand and influence deal flow, but their efforts may not be on target, according to a new survey

The survey offers clear evidence that brand, particularly the brand of a firm’s partners, attracts entrepreneurs and increases deal flow. Almost nine in 10 of the 158 startup CEOs interviewed said so, according to the work released Tuesday by the National Venture Capital Association, DeSantis Breindel and Rooney & Associates.

But what entrepreneurs define as “brand” and what VCs believe to be brand differs significantly. For entrepreneurs the top two brand building traits are “entrepreneur friendly” and “trustworthy.” What follows somewhat distantly are a firm’s ability to be “collaborative,” “supportive” and “experienced.”

“Hands-on” and “expert” are down at the bottom, or near the bottom, of the list.

Venture capitalists see brand differently. They emphasize their experience over their friendliness to entrepreneurs and often stress a hands-on approach over trustworthiness, the survey found.

What’s more, they underestimate the importance of gender diversity. One in four CEOs said the gender make-up of a firm’s partners matters. Only one in 10 of the 216 VCs interviewed for the survey concur.

The brand survey is the first by the NVCA and for that reason offers useful tips to VCs. For instance, while almost three-quarters of entrepreneurs (74%) say the reputation of a firm’s partners is the top criteria when choosing a venture firm, the ability to provide value beyond money ranks a close second at 72%. The two represent the top selection criteria by far.

As to value-added services, number one on the list are firm-sponsored summits where CEOs, CFOs and CIOs from portfolio companies can learn from each other. Few entrepreneurs found office hours with partners to be of great value.

Also of note is the way entrepreneurs perceive brand. Two thirds said a word-of-mouth recommendation from an entrepreneur were most influential, the survey found. Third-party recommendations ranked second best.

Venture capitalists also recognized the importance of a recommendation from an entrepreneur. But many more believed recommendations from another VC or LP was more valuable than the entrepreneurs found them.

Another difference between partner and founder is proximity. More venture capitalists than entrepreneurs said their firm’s location near a portfolio company was an advantage.

Photo courtesy of Shutterstock.

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7 Comments

  • Very interesting findings. Thanks for posting.

  • A great article.

    For years, venture capitalists have been WAY too impressed with the quality of management feedback and strategy help they offer. Entrepreneurs find most of that advice a nuisance, one they’d avoid if they could afford to. Marketing ‘advice’ is particularly odious, often coming from VCs who have never spent a day selling/marketing a real product.

    The biggest irony here is that the best and most experienced VCs understand this rule – it’s the wannabes and new VCs that don’t.

    “Bring your wallet, support your company CEO/Founder, stay the hell out of the way.”

  • I also found the disconnect entrepreneurs and VCs have regarding “hands-on” participation and “experience” to be interesting. I suspect there is a middle ground to be found between involvement and staying back. It probably varies with each founder depending on experience, age, etc. I bet finding that balance has a great deal to do with success vs. failure.

    • Yes, that is fascinating. How is it that VCs think the hands-on approach is key whereas we’ve heard for years form entrepreneurs that they don’t want a VC to be hands-on, but to be supportive and trustworthy. Apparently, VCs don’t listen well.

  • Really interesting study, especially in light of how many venture firms are focusing their efforts on marketing and branding and content creation–for themselves and their portfolio companies. We’ve seen them hire new in-house marketing personnel, contract with agencies, boost their value-add services and tap journalists to bring on board for content creation. Before deciding their next steps, VCs should consider the takeaways from this study and how far apart they are on perceptions compared to CEOs.

    • Great insight from all. It is possible that the VC’s or angels could simply ‘ask’ the entrepreneurs how much involvement they’d like moving forward? It would seem a prudent discussion point as part of a much larger partnership.

  • It would seem like a prudent discussion. It is likely made more complex than a simple yes or no with the push and pull of personal relationships and different views on how to achieve a desired aim.

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