While people who follow the venture capital world spend a lot of time talking about deals, everyone who’s successful in this industry knows it’s first and foremost about people.
“The fact is that the VC business is a people business, not a ‘deal’ business,” writes Ajay Chopra, a general partner with Trinity Ventures. “[That’s] why it is so important for VCs to be honest, fair and upfront with the 99 percent of the entrepreneurs who they happen to turn down.”
Honesty, of course, is only the beginning. Because customers, partners, competitors, shareholders and pundits all converge in this space, here’s how we recommend VCs maximize their people power:
Invest in storytelling. Smart VCs are willing to invest in marketing and communications, sometimes by bringing big-name journalists on board.
As a VC, you know there’s substantial opportunity to take an active role in marketing your new investments, and storytelling is a powerful way to help others understand abstract facts, figures and events. But spreading the word has value beyond just bringing attention to the VC and the portfolio company’s brands.
As Andreessen Horowitz co-founder Marc Andreessen put it, sharing stories gives your firm a chance to “foster transparency and to articulate how it thinks about the world,” which “gives entrepreneurs a great deal of comfort to already understand us before they walk in the door.”
Know your story and how to tell it. We’re all bombarded with information, but stories take facts and data and make them meaningful and, more importantly, memorable. Whether your story is the idea behind a product or the people behind the business, take time to figure out the specific, relatable tales that can help your business accomplish its goals.
A number of large companies, including FedEx, Kimberly-Clark and Microsoft, are teaching executives to tell relatable stories as a way to improve workplace communication. VCs need to follow their lead.
Because people are such an integral part of our work, VCs as well as portfolio companies should keep in mind not only your message but also your audience. A story that resonates with an investor may be very different from one that speaks to a customer. The savvy business person who is a good storyteller can quickly modify their story for their audience, sharing the information that matters most.
Focus on the human side of venture capital. Many of the VCs we work with recognize that a successful startup is more about the right people being in the right place at the right time than the technology or solution.
Successful VCs seek out the best entrepreneurs — the people behind the ideas and products — to back and collaborate with to grow highly successful companies. And you know as well as we do that entrepreneurs and those looking to partner with a VC should also focus on the people within the company before pitching their plan.
Rely on key partners to help share your message. As part of your storytelling efforts, VCs can and should rely on key partners to help others understand critical messages. If you become an expert at identifying key influencers, you can then use those people to reach your target market. Often it is citizen influencers — everyday people who take pride in building an audience around particular topics of interest or expertise — who are at the center of a successful message.
Marketing partners can also bring value. I often find that from the outside, several funds are perceived to be similar, but in reality, each fund is unique with specific strengths, focus areas and added value. The marketing opportunities for strategic VC firms are endless because they are always looking at the road ahead. Recognizing this and knowing how each firm operates and engages the market is how Tenor becomes an effective partner. Our strength is in looking at market opportunity and figuring out how to best help firms engage entrepreneurs, limited partners, co-investors and many other stakeholders — all the players that make this business about people.