“Dear VC, now it’s your turn to pitch” – an exploratory study on Venture Capital firms’ brand and reputation
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School of Business | Master's thesis
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International Design Business Management
AbstractVenture capital (VC) firms are critical stakeholders in innovation networks, as they provide financing to high-risk entrepreneurs and startups. Additionally, venture capitalists provide non- monetary value-add to their portfolio companies, such as strategic guidance, network and signaling through their reputation, all of which have been researched in venture capital literature. A recent trend in the VC industry has been a shift towards a more vocal VC brand communication. Today, VC’s broadcast their views through podcasts, blogs, tweets and books amongst the startup community. This trend has been informally discussed in media, blogs and independent research, but to the extent of my knowledge, remains unexplored in academia. The purpose of this exploratory research is to explicate the recent trend of branding amongst VC firms. It aims to give new insights about why and how venture capital firms establish their brands. The research is based on 18 qualitative semi-structured interviews with VCs and experts. Based on the interviews, several reasons to why VC firms build their brands can be pinpointed. First, the influx of capital and new forms of entrepreneurial finance have led to increased competition. Second, a generational shift resulting in overall industry transparency has brought more entrepreneurial empathy and knowledge to the markets. As a result, VCs are strengthening their brands to provide more value and differentiation. Ultimately, the tables have turned: not only are the startups pitching their ideas to investors, but investors need to “reverse pitch” their funds to startups in order to get the most attractive deals. Previously, VCs positioned themselves by expressing their preferred stage, industry and geography of investments. Now, however, the strategic core of a VC firm has evolved. This research suggests eight new aspects of VC differentiation: (1) characteristics of entrepreneurs, (2) characteristics of firm partners, (3) investor-entrepreneur relationships, (4) culture and values, (5) support models and platforms, (6) network facilitation, (7) methodology and (8) thesis. Another key contribution of this research is the idea of viewing VC brands as a “hub of networked brands”. The strategic core is expressed by the networks’ resources, consisting of the firm brand, portfolio brands and the personal brands of the partners. Audiences then form their subjective opinions about the VC brand and reputation. The interviews show that the most important signal for a VC brand is their investment portfolio. Further, VC brands and individual portfolio company brands are, in the best cases, beneficial towards each other. It is important to note that building a brand and reputation in venture capital takes time due to slow fund cycles. Therefore, this study also presents tactics used by newly established VC firms and managerial implications for how to build a VC brand.
Thesis advisorPinto Santos, Fernando
venture capital, investor, value-add, portfolio, startup, reputation, brand, corporate identity, entrepreneurial finance, corporate brand, corporate reputation, personal brand