Why your venture capital firm needs a content strategy
Venture returns boil down to one thing...deal flow.
Sure, your firm can pick better, but if you're picking from a weak pool, then what?
Sure, your firm could differentiate itself by helping startups grow, but how much can you really help a second or third rate team?
The best founders and deal flow goes to the most visible, trusted, and differentiated venture capital firms - those with the strongest brands. So perhaps it’s no surprise that most industry estimates see the top 2% of firms generating about 95% of venture returns.
But how do you build visibility and trust in a world of several thousand active VC firms, with hundreds of new firms launching each year?
You could pound the pavement, and spend tens of thousands of dollars attending conferences and taking weeks out of your year with the hope of meeting the right people.
Or you could run a targeted content strategy, geared towards getting you in front of the best founders in line with your fund's mandate.
It's no big secret. In today's world, content captures attention, and attention gets monetized. But based on our review of 100randomly selected VC firms, only about 10% of firms have a decent content footprint, and most are either not doing any content or are doing it sporadically and poorly.
The high cost of missing out
The world's biggest and most successful incubator, Y-Combinator, has incubated well over 3,000 companies.
But its 137 Top Companies (5%) account for most of its returns. And if YC missed out on just three companies, Airbnb, DoorDash, and Stripe, more than half of its Top Companies returns would be wiped out.
The high cost of missing out is also reflecte in the return profile of VC firms globally, with top quartile funds generating the 20% IRR that most LPs require to justify locking their money up in an illiquid asset. Everyone else either falls short, or dismally fails with bottom quartile funds failing to beat the S&P500 average return for the past 10 years according to Cambridge Associates.
Without quality deal flow, most venture funds are poised to under-perform or fail altogether. Missing out on a deal that could have returned your fund because you didn't invest in cultivating your online brand with content is borderline negligent.
Content is an investment, not an expense
Let's say you're a seed stage fund and spent just $200,000 over three years on a modest content strategy with the subsequent visibility and brand leading to a $1M investment in one seed stage company whose valuation grew by 10X. At a $10M seed valuation, your 10% ownership stake, undiluted, would be worth $10M at 10X. Assuming a 20% carry, you would have made $2M for the firm on the back of a $200K investment.
But here's the kicker. Content doesn't disappear. It's not a transient thing like an appearance at a conference. The content will continue to generate inbound traffic, and your online footprint and visibility will only grow the more you do it.
VCs turning to content to build a brand
Given all of this, forward thinking VCs are turning to content to build or further solidify their brands. Here’s some we love.
Harry Stebbings started his venture capital podcast, 20VC from his mum’s kitchen table. He was just 19 and had no contacts in the VC industry.
He used the podcast to build relationships with prominent VCs and startup founders, and break into VC. The eventual popularity of the show and the personal brand and contacts it helped Stebbings develop led to his raising US$140M to start his own fund at the age of just 24.
One of Australia’s biggest venture funds, AirTree, has diligently used content and startup resources in particular to become a go-to online destination and a top-of-mind VC fund for Australian founders looking for capital. Specifically, it publishes countless how-to guides, administrative templates, and open-source contact lists for potential capital sources, that differentiate it from other Australian firms.
Even after marking down many portfolio companies by 30% in the recent downturn, AirTree’s IRR on its funds is 49%, also making it one of the best performing venture capital firms in the world.
Mac the VC
In fall 2020, McKeever Conwell II (Mac the VC) left his job.
He had just 2,500 followers on Twitter. A year later, he had 60,000 followers, having actively worked on building it on what is the social media platform of choice for entrepreneurs and VCs.
He used his newfound online brand to start a $10M venture fund investing in Black and Latin founders outside large tech ecosystems. Mac says that 80% of the money he raised came through connections on Twitter.
Australia’s Blackbird VC has published hundreds of articles, videos, and podcast episodes, which it uses to further its brand and visibility amongst Australian founders.
Its content features a mix of guides on leadership, product and culture, marketing & sales, capital raising, as well as founder stories that serve to highlight its portfolio companies.
Blackbird closed its fifth fund in 2022, worth $1B, and as of June 2022, had recorded an IRR of 56% and a return of $10B, making it Australia’s and one of the world’s best-performing venture firms.
Check out my interview with Blackbird founder and partner, Niki Scevak, below.
Long before the All-In podcast made him a household name within the broader business and politics community, Jason was using content to build his personal brand and get access to quality deal flow. His podcast, This Week In Startups, was launched back in 2009 and today boasts over 1,800 episodes. His book, Angel, was also used to help him establish a name for himself amongst the broader community of investors and prospective LPs in his funds.
Calacanis recently used his brand to raise a $100M fund publicly via Twitter using the 506(c) designation, and was quickly oversubscribed.
First Round Capital
First Round Capital is a prominent Silicon Valley venture capital firm that implemented a content marketing strategy with great success.
The firm's Medium bloghas more than 50K followers and its podcast attracts thousands of listens per episode.
First Round has made approximately 460 investments and recorded 170 exits to date.
So, what kind of content should you consider creating?
Whether it’s on your website, Substack, or on third-party publications that can get you in front of your target market, nuances articles that demonstrate your perspectives and are relevant and useful to your audience, help establish your firm as industry leaders, build trust, and generate organic inbound traffic from prospective portfolio companies and partners.
Most founders listen to podcasts religiously, as they seek an edge in their thinking.Get inside their heads, literally, with a branded podcast, or curated guest spots on popular shows.
Whether it’s YouTube, Instagram, TikTok, or X, video captures attention, ranks higher in search engines, is very shareable, and can help your firm establish a friendly and familiar face in the market.
Whitepapers and eBooks
Well-researched whitepapers and eBooks on topics of interest to your target market are a great way to demonstrate expertise, generate inbound traffic and build a mailing list full of prospective investments and partners.
Like them or hate them, tweet threads help VCs build a personal brand, get noticed online, and become a desired partner of startup founders across the globe.
Short form snippets
Short-form video and imagery for social media is one of the most effective tools in every digital marketers arsenal, and we can prepare engaging and humorous snippets to help your content get noticed.
Email is the best way to engage your audience, but crafting compelling emails that will grab a founder's attention takes time. Let us do it for you.
Distinguish yourself by providing value-adding resources to founders and teams such as how-to guides, resource lists, and useful templates.
Showcase your worth
The best founders want to work with firms that can help them succeed. So many VCs I speak with tell me that the founders they work with really appreciate their coaching and guidance, but don't have much of an online presence. Why not package up your insights in a way that will demonstrate your worth to prospective portfolio companies?
Showcase your personality
It doesn't have to be all business. Founders want to work with VCs who not only get sh*t done, but are fun to work with. Life's too short. Numerous VCs like Matt Turck, Jason Calacanis, and others, have used humour and personality to make themselves more appealing to prospective investee companies.
Spotlight your portfolio companies
It's about them at the end of the day. A content strategy can not only help your firm stand out, but also your portfolio companies. Many VC firms are making their portfolio companies the heroes by spotlighting them in articles, podcast episodes, and short videos - assets that the startups themselves can use to better promote themselves.
A well honed content strategy should be a key pillar of your long-term deal flow generation strategy, along with in-person networking, direct outreach, partnership cultivation, generating word of mouth by actively helping founders and their companies grow, and building a reputation over time.
In a world where the average person is spending three to four hours a day looking at their phone, and countless more hours online on their desktops, your chances of success will radically improve if you make yourself visible via these mediums.
Of course, this might seem like a lot of work, and it is. If you want some support designing and delivering on a content strategy for your firm, schedule your free content strategy call here.