The benefit of marketing venture capital (VC) has always been an enigma to many, but is relatively straightforward – to showcase the value of putting capital to work to help innovation prosper.
The ultimate goal is always the same: support entrepreneurs who are taking risks and putting their hearts and souls into work that will hopefully benefit millions of people.
The act of marketing a VC firm started when Kevin Fong, a partner at Mayfield Fund, hired me in 1989 as an adviser and a strategic marketing professional.
Mayfield was interested in raising its brand image with entrepreneurs. We worked together to develop marketing programmes that made Mayfield stand out in the eyes of the entrepreneurs.
Fong had a marketing background and so understood the power of building a brand and how that could help Mayfield and its portfolio companies.
As part of the strategic process, I conducted extensive research – a Swot, or strengths, weaknesses, opportuni-ties and threats, analysis – to determine what challenges and opportunities existed for the top-tier venture firm.
This perceptual research became the back-bone in the development of the all marketing during our 15-year relationship.
From 1989 to 1995, Mayfield stood alone in its use of a strategic marketing adviser. Not many people knew about the cottage industry, as during that time there was only one reporter covering venture capital at a top-notch business publication, so there was a need for the industry to be explained.
Mayfield was unusual in trying to do so and was more transparent by educating reporters, entrepreneurs and analysts.
It also began co-hosting events with law firm Wilson Sonsini Goodrich & Rosati and investment bank Goldman Sachs, and spending marketing dollars to build its brand awareness.
Then the success of internet browser Netscape’s initial public offering brought a whole new level of attention to its funding by VCs and sparked the first real wave of awareness of venture. It was clear as VC firms received an increasing amount of money it would turn from a cottage profession into an industry.
Today, US trade body the National Venture Capital Association has about 100 firms in its strategic communications group that was set up in 2004. Corporate venture marketing today appears similar to VC marketing before 1995. Few corporations think strategically about how they should be positioning themselves as they evaluate their corporate venturing programmes.
The backgrounds of the partners at corporate venturing units are similar to those at VC firmsin the late 1980s – the firms are often staffed by corporate people, ex-VCs, financial investors and entrepreneurs.
Recently corporate venturing groups have been learning from the VC industry by sponsoring conferences and establishing programmes at universities, but it is unusual to see groups that recognise the benefits of marketing. Intel Capital has been an exception to the rule – it seems to have been more strategic in the last few years.
It seems the corporate venturing units have partly struggled to gain attention or understanding from in-house marketing teams. Allying the strengths of established businesses with messages that resonate with entrepreneurial communities is a difficult task.
Those that do so will grasp an advantage and often become the partner and investor of choice for entrepreneurs and others in a syndicate.
It seems that corporate venturing operations would be smart to observe what their VC brethren have done historically in marketing and try to apply some of that learning to their programmes.