The Importance of Brand Strategy for Venture Capital Firms

Venture capital firms are familiar with judging the potential success of startups by a variety of factors: product/market fit, market opportunity, product roadmap, expansion potential, brand strategy, even founder like-ability. Any or all of these could be a reason to sign or withhold a check. 

However, VC firms rarely use these lenses on themselves to judge their own potential success. Most surprisingly, a lot of venture capital firms lack a clear brand strategy that sets them apart from their competition.

Differentiation is especially important when the cost of capital is low. In times of prosperity, startups have their pick of available capital. While VCs are busy deciding whether or not they should invest in companies, those companies are fielding checks and need a way to decide which firm(s) to accept checks from. A strong brand strategy will help make that decision clearer, and possibly even expedite good investments for both parties.

What is Brand Strategy? 

Brand strategy is the way a company creates their desired perception in market.

Aligning on a brand strategy begins with defining your target audience and determining what you want that audience to think and feel about your business. 

Through a combination of the right words (positioning and messaging), the right visuals (brand identity), and the right activation of both (marketing materials), any desired perception can be accomplished. 

Why Should VCs Care about Brand Strategy? 

Most VC firms have tight marketing budgets. Even those with a Head of Platform are often focused on outreach rather than inbound activities.

Sure, “when we get in front of them and have a conversation, it becomes clear how we are different.” But VCs shouldn’t need to have a hundred hit-or-miss conversations to make three good investments. What if they could have twenty qualified conversations instead? 

The right brand strategy enables audience self-selection: if the words and visuals we’re using resonate with you, then you are our target audience. If they don’t; you’re not. 

This type of self-selection narrows pipelines and increases lead quality for startups every day. Clear positioning and a strong brand strategy are the most important factors in helping startup founders scale out of founder-led sales and enabling their marketing to sell for them. 

With the right positioning, messaging, and visuals activated in a clear, compelling website (and other marketing materials), venture capital firms can scale out of their own type of “founder-led sales,” communicate benefits and differentiators more effectively, and increase the quality of conversations they’re having with startups. 

Takeaways

In addition to actual capital, venture capital firms have a lot to offer their portfolio companies, including founder mentorship, deep domain expertise, and access to talent networks. But a lot of this value gets lost in translation today. 

It’s not always clear to founders how to differentiate between firms, or where they’ll get the most value for the equity they’re handing over. Brand strategy clearly communicates these benefits and differentiators – it doesn’t always have to be a conversation. 

Getting your brand strategy right will free up the right people to have the right conversations, when those times come, leading to better investments for all. 

Find out how our brand experts can help your VC firm.